My dad refuses to shop online. It's not because he's scared – he seems to live online these days (much to my mother's dismay). He wants to buy at a local retailer, not only have a place to potentially return an item but he wants to support his local economy.
Not everyone feels that way. You may have noticed that online retailers such as Amazon don't charge sales tax, which gives online retailers a huge advantage over a brick-and-mortar store. That's because Amazon's goods are ordered from one state but shipped from another. Since you're not ordering goods from an in-state retailer, the state in which you live has no way to collect its sales tax.
Legally, you're still liable for these sales taxes. If you file state tax returns and don't pay this sales tax voluntarily, you're a criminal. Really. An article on the Daily Finance Web site, "Why Your State Thinks You're a Tax Cheater," explains the tax laws we're all breaking.
This online state sales tax collection situation may be changing – and that's a good thing.
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Last week, reports started to surface that Amazon was going to attempt same day delivery. But the only way Amazon could delivery something to you the same day you ordered it is if the company built a lot of local distribution centers.
And when Amazon initiates same-day delivery is the day you're check out form will have a line including local sales tax.
Let's say Amazon builds a local distribution center in – and I'm picking a locale totally at random – Bridgewater, New Jersey (it's sort of the center of my home state). If you live in, say, Paramus and you ordered, say, a vacuum cleaner, from Amazon, you'll have to pay New Jersey's 7 percent state sales tax, just as if you bought your Hoover at the Paramus Park Mall.
Wait, that's not an if. According to Forbes, Amazon has agreed to built two distribution centers in the Garden State and will start to collect sales tax from New Jersey shoppers starting in July 2013.
In fact, Amazon is making deals with governors in several states to build local distribution centers and collect sales taxes.
This effort by governors led by New Jersey's Chris Christie to make deals with Amazon has spurred the normally do-nothing Congress to act. The Wall Street Journalreports a singular bipartisan effort to create a bill forcing online retailers to collect sales taxes.
Online sales tax pros…
My dad and state governors feel that if we all pay the sales tax we owe for online payments, several good things will happen.
First, states will recoup billions in lost sales tax revenue. According to the Streamlined Sales Tax Governing Board, an outfit advocating the collection of online sales tax via the (duh) streamlining of all state tax laws, $23 billion will be lost to states in uncollected online sales tax in 2012.
Considering the financial bind so many states and municipalities find themselves in, that's a welcome stash of cash.
Second, Amazon is going to have to hire a lot of local folks to work in each new distribution center – one reported estimate says around 1,500 fulltime and hundreds of seasonal and part-time workers. Governors like to brag that they brought jobs to their states.
Third, an online sales tax would level the local brick-and-mortar playing field. Like my dad, folks may decide that all prices now being equal, they'd rather buy local out of both loyalty as well as because they'd know who to call should something go awry with their purchase.
Not everyone agreed or agrees that forcing online retailers to collect sales tax is a good thing.
A Citigroup survey found 52 percent of Amazon shoppers would be less likely to buy goods on the site if they had to pay sales tax.
If Amazon loses half its business when it starts collecting sales tax, then the states will pull in less than that optimum $23 billion. Of course, the difference could be made up by folks now shopping in town instead of online.
A decade ago, the tech community also was vehemently against the idea for fear it would stifle a fledging economy.
Not any more.
"Although when the Internet was new, we opposed efforts to require Internet retailers to collect sales tax in states where they did not maintain a physical presence," explains Gary Shapiro, president and CEO of the Consumer Electronics Association, the folks who produce CES, "today we formally change our position as the landscape has radically changed…[t]he Internet and Internet retailers no longer need any special exemptions to flourish.
"CEA believes that, consistent with existing law regarding tax collection obligations, a unified national collection policy that applies regardless of whether a product is purchased online or in person will help ensure all retailers – big, small or online – operate fairly and competitively in the marketplace."
Not everyone thinks small local businesses will profit by this tax-induced level playing field. Slate's tech reporter, Farhad Manjoo, says even with the online sales tax, we'll still prefer to shop at home/online in the comfort of our Snuggies because "it takes time to get in the car, go to the store, find what you want, stand in line, and drive back home."
I respectfully disagree. First, we can order locally online as well and also get same day delivery.
Second, outside of our Manhattan media elite cocoon, Americans live in their cars – my parents, for instance, don't make special trips to one store for one purchase. Most Americans run multiple errands or chauffeur the kids or drive to or from work and make necessary shopping stops along the way. Most Americans are already IN their cars – no special trips necessary.
So, in about a year from now, be ready to pay state sales tax on Amazon and other online retail sites – and either do it with a smile on your face or visit your lonely local retailer instead.