Nov 14, 2008

Web Sales Tax LoomsBy Elizabeth WoykeForbes.com

Attention, online shoppers! This may be the last holiday season you can dodge sales taxes by buying presents on the Web. (Admit it, you do this.) State legislators, retailers and lawyers say 2009 may be the year Internet taxes finally come to pass.

The idea, which would levy sales tax on most goods bought online, has been tossed around for nearly a decade. A perfect storm of factors, including record state budget deficits, a new Congress and continued e-commerce growth, appear likely to rekindle the issue. Experts say that cash-strapped states view this revenue, estimated to be several billions of dollars, as money left on the table.

“States are coming up with huge deficits and looking for places to make money,” says Eric Menhart, the principal of CyberLaw, a Rockville, Md.-based law firm that concentrates on technology legal issues. “All of a sudden, Internet taxation appears a lot more viable.”

Spotting an opportunity, legislators and other proponents of Internet taxation are renewing their efforts. Scott Peterson, executive director of the Streamlined Sales Tax Governing Board (SSTGB), a group that oversees states’ efforts to simplify and modernize sales tax issues, says legislators from Florida, Illinois, Massachusetts, Texas and Virginia, among others, have recently contacted him about the issue. The plan: to reintroduce legislation as early as January when the new Congress takes office.

“We’re hoping that the House and Senate will give this their full attention and we can get a bill to our new president in 2009,” says Maureen Riehl, vice president and government and industry relations counsel of the National Retail Federation (NRF), the world’s largest retail trade association. (The industry association believes that applying sales tax to all retailers is more fair to their membership than the current scenario.)

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