Internet shoppers in 13 states may find themselves facing sales tax on their online purchases for the first time today, two days after the deadline set for implementation of the Streamlined Sales and Use Tax Agreement.
The project, in the works for several years, is intended to simplify the process of collecting as much as $18 billion in annual Internet sales taxes that now go largely unpaid. Online retailers have agreed that while their customers may be liable for a “fair use” tax on goods, the effort of collecting that tax and figuring out how it should be divided between the buyer’s and seller’s home states has been too much for merchants to shoulder. Some retailers, such as Apple Computers and Target, have made a practice of collecting sales tax on Internet purchases by residents in states where those corporations have a physical presence.
The Streamlines Sales Tax Project (SSTP) is meant to solve that jurisdictional jam by creating a database for tracking and calculating sales tax rates as they will apply not only in the participating states but among the towns, cities and counties within them.
Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota and West Virginia have agreed to take part in the Streamline Sales Tax Project (SSTP), which began operating on October 1. Arkansas, Ohio, Tennessee, Utah and Wyoming are in the process of implementing SSTP. New York and California are working on devising their own schemes for collecting Internet sales tax, citing complicated local tax requirements.
Retailer compliance with the SSTP is voluntary. Some states, including North Carolina, Michigan and New Jersey, are holding out the prospect of amnesty from responsibility for any back sales taxes as an incentive to merchants to start collecting those fees now.
