Internet taxes becoming trend, CCH study says

PRNewswire

RIVERWOODS — In the last three months, both Democrats and Republicans have sponsored federal legislation to compel online retailers to collect sales and use tax and several states have moved forward with their own legislation, based on a review of online nexus rules by CCH, a Wolters Kluwer business.

“Whether legislatively compelled at the Federal or state level or through online retailers seeing it as inevitable, the trend is moving toward more online retailers collecting sales and use taxes,” said Daniel Schibley, J.D., CCH senior state tax analyst. “While it may not have significant implications for this holiday tax season, consumers should be prepared to start seeing sales tax collected on more and more of their online purchases in the years ahead as cash-strapped states look for more revenue sources.”

Overall, 45 states currently have a sales tax and 16 states have enacted or have legislation proposed to require online retailers to collect sales and use tax or, at the very least, to more strongly urge in-state customers to pay use tax.

Sales tax generally has two parts: The sales portion paid by the retailer and the use portion paid by the consumer. Under existing rules, individuals are required to pay personal use tax in states with a sales tax if the retailer does not collect the tax.

However, there is very little voluntary compliance among consumers, they study finds.