NCPA - National Center for Policy Analysis

Online Retailers are Beginning to Collect Sales Taxes

February 10, 2003

Major retailers have voluntarily expanded the number of states in which they collect sales taxes from Web customers. While the impact on online sales is expected to be minimal, it represents another step in a movement by brick-and-mortar retailers to persuade states and Congress to impose sales taxes on companies that operate only on the Web.

  • About 10 retailers with online stores last week expended their collection of sales tax as part of an agreement with 37 states and the District of Columbia -- under which the states promised not to press the retailers for back taxes.
  • Retailers that joined the agreement are remaining anonymous to avoid being pursued for back taxes by several states that didn't join the agreement.
  • However, Wal-Mart Stores, Target and Toys "R" Us were among the retailers which stepped up their collection of sales taxes from customers last week.
  • Internet retailers generally haven't collected sales taxes on Internet purchases unless they have a physical presence in the state from which a Web customer makes a purchase.

Experts expect five more states to join the agreement -- while California, Arizona and South Carolina have said they don't plan on joining. Five states have no sales tax.

Source: Nick Wingfield and Amy Merrick, "More Web Retailers Collect Sales Tax," Wall Street Journal, February 10, 2003.

For text (WSJ subscription required)

http://online.wsj.com/article/0,,SB1044666477744450040-search,00.html

 

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