Wednesday, May 22, 2013
The internet sales tax passed by the U.S. Senate
So the U.S. Senate finally passed the internet sales tax to force the websites whose sales exceed $1 Million per year to start collecting sales from people in the U.S. wherever they are located. The bill was backed by major brick and mortar retailers and also by the biggest online retailer in the world Amazon ®. But some other online retailers are still resisting that it would be cumbersome for some retailers to keep track of the entire sales jurisdiction in the U.S. although the bill requires the states to give software to businesses to calculate sales taxes. And now the bill goes towards the house where it may face some resistance because it is Republican controlled. Is it a good idea or bad? only time will tell. But it was bound to happen one day even if there was resistance from some places as states are cash strapped and want to get their hands on billions of sales tax that online purchasers do not pay. But now the question is that if the field is leveled in terms of sales tax by all the retailers, how to make sure that the customers keep on coming to the internet. The only way that was happening was the lure of not paying taxes as the shipping option was increasingly been applied across various websites. Now if this new charging of sales tax becomes law, the way to distinguish will be to portray on your website no sales tax (if you revenue is less than $1 Million) or the other way is to absorb the sales tax in the price and pay it yourself or if desperate enough, lower your margins to compete. There may be other ways to entice customers but right now the bill is still not a law so maybe other ways will be found to have an edge over brick and mortar stores.