Republican governors are getting on-board with the online sales tax, according to a Wall Street Journal piece out today.
In Idaho, a so-called “streamlined sales tax bill” failed last legislative session, and not for the first time. The bill was intended to create a more reliable way of collecting the state’s 6 percent sales tax on online purchases.
The WSJ article points out that online retailers have long had an advantage over their brick-and-mortar counterparts, given customers’ ability to avoid sales taxes by buying online.
Amazon, eBay Inc., Overstock.com and other online sellers have relied on a 1992 Supreme Court ruling that companies selling online didn’t have to collect sales taxes if they lack a physical presence in the state where the customer lived. The ruling, however, left open the possibility that Congress could step in. Since then, online shopping has gone from fledgling to more than $200 billion a year. – The Wall Street Journal
In light of challenged state budgets, the piece says, state and congressional leaders have begun to take steps toward granting states the ability to require online sellers to collect sales taxes.
This map from the National Conference of State Legislatures shows just how much impact collecting state sales taxes on online purchases could have on state budgets. Idaho missed out on $103 million in the most recent fiscal year due to uncollected sales taxes, according to the NCSL’s numbers. That’s more than 14 percent of the state’s budget gap in 2010.