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States Seek to Level Online Sales Tax Imbalance
States are turning their attention to collecting more e-commerce sales taxes. The effort to capture more revenue from online sales comes after years spent fighting big online retailers.
This month, Amazon expanded its sales tax collection to all 45 states that tax sales. The battle now is shifting to individuals and small companies, an increasing part of the online marketplace’s sales.
The challenge is collecting from the third-party sellers, who may enjoy a 10% pricing advantage over brick-and-mortar retailers and Amazon’s direct products. Traditional retailers say that imbalance amounts to a subsidy for online sellers, and states see it as billions in lost revenue.
Current federal law requires retailers to collect sales taxes only in states where they have a physical presence. But tracking where a product is held and sold is difficult. The shift presents complex cost and logistical considerations for consumers and sellers.
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