It would authorize states that have simplified their sales tax regulations to require all retailers to collect sales tax.
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The best way to recover the lost sales tax revenue is to require all online retailers to collect sales tax, regardless of nexus.
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Having Internet retailers collect sales tax is long overdue and still needs a vote by the U.S. House to become law.
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The 46 states with sales tax are already beginning to require out-of-state retailers to collect sales tax.
The bill maintains states can require out-of-state retailers to collect sales tax, but only if they make it simple for retailers to do so.
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Technology has made it simple for online retailers to collect sales tax across the country.
The legislative route is necessary because the Supreme Court ruled in the 1990s that states can't require out-of-state retailers to collect sales tax on online sales.
"Online and mail-order retailers should collect sales tax at the point of purchase, too, so there will be a level playing field, " says Jason Brewer, a spokesman for the Retail Industry Leaders Association, which includes nine of the 10 largest merchants.
The smart shoppers will plan ahead to hit stores on Tax Free Shopping Days, when the Department of Revenue partners with retailers to temporarily forgo sales tax on certain items such as clothing, electronics, and educational materials.
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Baucus said the bill would require relatively small Internet retailers to comply with sales tax laws in thousands of jurisdictions.
Streamlined Sales and Use Tax Agreement authority to require all retailers to collect sales taxes in the 45 states and the District of Columbia that have them.
Is it fair to require online retailers to collect and remit state sales tax?
These state mandates are likely to affect online retailers in the 4 states without sales tax, with or without federal legislation.
There is no question that online retailers based in non-sales-tax states would have to make some adjustments to begin collecting sales tax.
Legislation giving states the power to compel retailers outside their borders to collect sales tax is touchy for Internet merchants and consumers alike.
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States must also establish a single entity to receive Internet sales tax revenue, so retailers don't have to send them to individual counties or cities.
With this nifty trick of redefining what constitutes a physical presence, the tax superficially satisfies the Quill requirements and allows the state to impose sales tax collection obligations on retailers outside the state.
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Also in September, Pennsylvania will start requiring sales tax collection from online retailers who use a warehouse or other location in Pennsylvania including third-party merchants who use eBay (GSI Commerce) or Amazon warehouses for order fulfillment.
Internet retailers claim that their transactions are exempt from sales tax in locations where they do not have a physical presence.
Think about the scenario that if Internet retailers continue to gain share and not collect sales tax that the States would still have to provide benefits to their citizens and provide the infrastructure to allow commerce between the retailers and its customers.
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Online-only retailers are exploiting a massive loophole by not collecting the sales tax at the point of purchase despite the fact that the tax is still due.
As a result, many online sales are essentially tax-free, giving Internet retailers a big advantage over brick-and-mortar stores.
In theory, a consumer is supposed to pay sales tax on purchases from out-of-state retailers.
The agreement will supposedly provide a uniform sales-tax collection system that would apply to all retailers, online and offline alike.
By 2007, the traditional retailers, as well nontraditional ones such as Dell Computer were collecting sales tax on-line and half of online purchases were subject to sales tax.
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Online retailers would have to keep track of more than 9, 000 sales-tax regimes and those Internet companies domiciled in states like Montana, New Hampshire, Oregon and Delaware that have no sales tax would have to build a collection system.
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Brick-and-mortar retailers have grumbled for years that Amazon has an unfair advantage in not collecting sales tax at the time of purchase.
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The bill would ensure that all retailers brick-and-mortar and online collect and report sales tax.
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Cloud Computing appears to be another front in the effort to close tax loop holes that have seen many online retailers able charge little to no sales taxes.
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Big box retailers support this tax arguing that out-of-state retailers have an unfair advantage over brick and mortar stores, as they are not required to collect sales tax owed on products they sell.
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