States Pushing to Collect Sales Tax Via E-Commerce

The battle for State Sales Tax on e-commerce (online) transactions is still being fought by legislators.  In most states, the retailer does not have to charge sales tax as long as they do not have a bricks and mortar location in that state.  However the purchaser is required to pay sales tax to their state although this rarely, if ever occurs.

Online giant Amazon has been scaling back it’s online affiliate program in states which made it a law requiring they charge sales tax (New York, North Carolina (awaiting Governors approval) and Rhode Island).  This may not have a significant financial impact on Amazon but down the line, if states continue to push for online sales tax, the problem will affect smaller affiliate programs.  One of the biggest reasons online retail has continued to grow is the fact that shoppers can save by avoiding  sales tax.   Eventually, this may damper the overall growth experienced by e-commerce businesses.

Recently, Hawaii’s Governor Linda Lingle vetoed the state’s legislation as well as California’s Governor Arnold Shwarzenegger doing the same.