March 28, 2024

Bucks Blog: Online Shopping, With Sales Tax Added

A shopper compares prices online.Isaac Brekken for The New York Times A shopper compares prices online.

Attention, all you online shoppers out there: your sales-tax-free party may soon be over.

The Senate is set to vote on the “Marketplace Fairness Act,” legislation that would help states force online retailers to collect sales taxes for Internet purchases.

The measure, supported by some revenue-hungry states, as well as brick and mortar merchants who say it would eliminate an unfair advantage for online sellers, is expected to be voted on by the Senate this week. It must then, of course, be considered by the House of Representatives.

If the proposal becomes law, a perk of online shopping would go away and shoppers would pay the sales taxes to the online retailer at the time of purchase — just as they do now in physical stores. Some of the biggest online retailers, like Amazon.com, have already started collecting them.

“The free ride is almost over,” Edgar Dworsky, publisher of Consumer World, said in an e-mail. “Shoppers will now have to figure in sales tax when they are deciding whether it is better to buy a particular item online or in a brick-and-mortar store.”

Right now, Internet sellers must collect state sales taxes on online sales only if the seller has a “physical presence” — like a store, or distribution center — in the state. But consumers are still technically subject to the tax in many states — a fact that may come as a surprise to many online shoppers. It’s often called a “use” tax, because it is levied on an item you bought out of state but you “use” in your home state.

In Florida, for instance, the state Department of Revenue’s Web site says online purchases are subject to the state’s 6 percent sales tax, even if the seller doesn’t collect it at time of purchase. Florida consumers are supposed to fill out an “out-of-state purchase return,” also known as a Form DR-15MO, and mail the payment directly to the state.

But few consumers are even aware of such requirements, said Stephen Schatz, a spokesman for the National Retail Federation, which represents large retailers and supports the legislation. The proposed law, he said, “shifts compliance from consumers, who aren’t complying or are complying minimally, to the retailer.”

He added that the law would require states to streamline their sales tax processes and take other steps to ease the burden on retailers.

It doesn’t seem to me that the law is lifting much of a burden from consumers, though. It just seems that we’ll be paying more when buying some things online. Sigh.

Of course, there’s still the attraction of shopping online in your pajamas and then having your purchase delivered to your door, often with “free shipping” thrown into the bargain. For that reason, I suspect I’ll still shop online as much as I did before, if the measure becomes law. (A report from Forrester Research says consumer behavior is unlikely to change much because of the addition of online sales taxes.)

Jack Gillis, a spokesman for the Consumer Federation of America, agreed. “People shop on the Internet for so many more reasons than to avoid taxes,” he said in an e-mail, so taxing online purchases will probably have little effect on purchase behavior. Online sellers might even offer better shipping deals or lower prices to lessen the impact, he said.

What do you think? Would broader collection of sales taxes make you shop online less?

Article source: http://bucks.blogs.nytimes.com/2013/04/24/online-shopping-with-sales-tax-added/?partner=rss&emc=rss