Sunday, July 01, 2007

Sales Taxes are coming to the Internet

Earlier this week I was speaking to a client about sales taxes and how they are very complicated since each state and smaller municipalities make up their own rules when it comes to sales tax collection. Well it appears that the federal government is getting in on the issue. Right now two bills are circulating in Congress that are looking at ways to collect sales taxes on internet purchases. Backed by the state and local governments, Congress is pushing for the ability to impose sales taxes on internet purchases and charge monthly taxes on internet connections. All parties are looking at the billions of dollars that can be gained from the taxes, but at the expense of the consumer.

In May, Senator Michael Enzi (R-Wyo.) introduced a bill that would make it mandatory to collect sales taxes on internet purchases; all the while the House is considering allowing a temporary ban on internet access taxes to lapse when it expires in November of this year.

Typically sales taxes pay for state and local resources (schools, police, etc.) and most lobbyists feel that reduced sales tax revenue threatens those resources. A major hurdle to the change however is that it will be very difficult to overhaul the sales tax systems of the 7500 different tax agencies involved in sales tax collection and compliance. Will these changes affect your small business? Enzi’s bill would exempt small businesses with less than 5 million in out-of-state sales from paying the taxes, but as of now that is the only silver lining behind this dark cloud. We will keep a close watch on this situation in Congress.

Keeping your Business N Synergy

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