Les Jones

E-commerce > New Push for Online Taxes

Tax-free days on Web ending.

Going online to buy the latest bestseller or those photos from summer vacation may be tax-free for most people today, but it won't last forever.

Come this fall, 13 states will start encouraging - though not demanding - that online businesses collect sales taxes just as Main Street stores are required to do, and more states are considering joining the effort.

Those states' "encouragement" will have to be in the form of legislation demanding it. No e-commerce operation in their right mind will voluntarily collect those taxes without a good reason. It isn't just that charging the tax puts them at a competitive disadvantage. It's that complying with all the Byzantine tax codes of 40-odd states has enormous administrative costs that would be crippling to smaller businesses. Sure, LL Bean and Amazon could do it, but my company probably couldn't. That's why the Supreme Court ruled in 1992 that companies don't have to collect tax from residents of states where they do not have a business nexus (such as an office or agent). There's talk of simplifying the sales tax structures among the states, but that has to happen first before online collection of sales tax in all of these states is feasible.