Sunday, June 19, 2011

States look to Internet taxes to close budget gaps

(file) (Getty Images)

AUSTIN, Texas (AP) — Cash-strapped state governments have one place they could get $23 billion if they could agree on how to do it: Internet retailers such as
Internet retailers have to collect sales tax only when they sell to customers living in a state where they have a physical presence. When consumers order from out-of-state retailers, state law requires them to pay the tax. But it's difficult to enforce and rarely happens.
That means the seller is absolved of responsibility, buyers save three percent to nine percent, and the state loses revenue.
California alone estimates it loses at least $200 million a year in uncollected tax from online sales.
Lawmakers have proposed or passed legislation to change the law in more than a dozen states, and some are now seeking federal action.

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