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Most people ok with Internet retailers collecting state sales taxes

May 14th, 2012

AmazonHow do you feel about paying state sales taxes on Internet purchases? With cash-strapped states increasingly aggressive about trying to collect sales taxes from online retailers such as Amazon, the issue may not be solved until Congress steps in and clarifies matters.

An overwhelming 86% of respondents to a national survey by the the International Council of Shopping Centers (ICSC)  feel it would be far easier to pay sales tax on online purchases at the point-of-purchase.

The survey was conducted on the heels of the 2011 tax season to gauge consumer sentiment about online sales and use tax collection.

Trouble for startups

The issue even caused some troubles for startups that depended on affiliate relationships with Amazon for a considerable part of their income or for early stage revenue important in getting investors. Amazon dropped its affiliates in states such as North Carolina, which said their presence was enough to legally establish “nexus.”

Nexus is the physical presence of a company in a state that allows the state to collect sales taxes.

ICSC strongly supports two bills currently under consideration in Congress – Marketplace Fairness Act and Marketplace Equity Act – which are designed to save consumers the burden of self-reporting use taxes and to level the playing field for all retailers.

“The results of this study demonstrate that consumers are aware of our outdated sales tax system and they support a tax policy that benefits both their retail habits and embraces 21st century commerce,” said Michael Kercheval, president and CEO of ICSC.

“The bills will require online retailers to collect sales tax when a purchase is made, the same way our community retailers do. Consumers stand to benefit greatly by not having to file a year’s worth of online purchases during tax season.”

The ICSC study resulted identified a number of key findings, including:

  • 86% of consumers feel it would be easier to pay sales tax on online purchases at the point-of-purchase rather than at the end-of-the-year on their tax forms, as is the current system.
  • 61% of respondents in states that collect sales tax understand that they are required to pay state sales or use tax on online purchases if not collected by the vendor when they file their state income tax.
  • 56% of consumers support the Congressional effort to require online retailers to collect sales tax at the point-of-purchase.

“Consumers across the nation understand that this is not a new tax,” said Betsy Laird, senior vice president of global public policy.

“When they shop online they do not want the hassle of having to save all receipts, calculate the appropriate tax due and file it directly with the state. They would rather have the sales tax collected whenever they make a purchase,” added Laird.

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One Response to “Most people ok with Internet retailers collecting state sales taxes”

  1. Sten says:

    I strongly urge Congress to immediately pass S.1832 the Marketplace Fairness Act. Technology freely available on the Internet today easily enables any business to easily calculate, collect and remit sales tax already due. There is no longer any reason consumers should be burdened with having to track and remit sales tax on Internet purchases any longer.