Legislation has been introduced in the U.S. Senate that would give states the power to require collection of sales taxes on internet purchases. Missouri’s junior member of that chamber is part of a bi-partisan group of Senators that is co-sponsoring the bill supporters are calling the “Marketplace Fairness Act.”
Senator Roy Blunt says he has long believed that internet sales should be subject to sales taxes, calling it is a fairness issue. He says so-called “brick and mortar” businesses should not be at a disadvantage to internet counterparts who can sell products at prices that are several percent lower to consumers.
Blunt says such taxes are actually due anyway. Buyers are obligated to pay sales tax to the state on purchases made online, but almost no one does. Many individuals are not aware that they are expected to pay so-called “use taxes” on those transactions. The Supreme Court has ruled that businesses do not have to collect sales tax when shipping out of state due to the complications involved. The ruling did leave room for Congress to create new rules on the matter.
With the capabilities of current technology, Blunt thinks a system could be created to make such collections possible. He says of a given address, “…it’s not that hard to come up with a computer program that knows all of the sales tax entities for that address…that’s one way to do it.”
He says another way would be for states to sign on to the Streamline Sales and Use Tax Agreement, part of an effort which sought to reduce the differences between the sales tax policies and practices of states. 44 states are a part of that agreement, though Missouri is not one of them.
The proposal itself would not create a tax. It does include an exemption for businesses that conduct less than $500,000 of internet sales annually.