Navigating The Internet Sales Tax Debate - Brief Article

California CPA, August, 2001

Anyone who makes purchases using the Internet or telephone should raise a concerned brow at Congress' recent movement to permit states to force merchants to collect sales taxes from beyond their jurisdiction, according to the Institute for Policy Innovation.

Constitutional difficulties arise, says IPI, because current law prohibits states from taxing businesses that have no presence within the state. Otherwise, states would be able to tax citizens of other states and those citizens would have no electoral recourse

A better solution is to make permanent the Internet tax moratorium--which prohibits taxes on Internet access or discriminatory Internet taxation--and to block future efforts by state cartels to fill their coffers by taxing residents of other states," says Bartlett Cleland, director of the IPI Center for Technology Freedom.

IPI says that most people don't realize that the current moratorium doesn't prohibit states from collecting taxes on e-commerce. States always have been able to enforce use taxes, which require residents to pay their state's sales tax on out-of-state purchases.