With the debt ceiling raised and the beginnings of a compromise on dealing with the long term US debt laid down–and thus far, these plans do not include any of the rumored tax changes such as the elimination of the AMT fix–the world of tax has turned its focus back to the issue on online sales tax.
California has joined the roster of states to institute its own version of New York’s 2008 affiliate tax law. The addition of California is particularly significant because New York and California tend to be trend setters among states. Laws often start in one of those states and eventually spread to whole of the union. To have both of these big names behind the online sales tax discussion will likely add impetus to the conversation.
It was first mentioned back in April, but now Senator Dick Durbin (D-IL) has finally submitted his Main Street Fairness Act, which would allow states to charge sales tax to online retailers like Amazon and also on mail order retailers, both of which can currently avoid paying sales tax in states where they do not have a brick and mortar presence.
The Act achieves this through something first proposed in 2002, the Streamlined Sales and Use Tax Agreement (SSUTA). SSUTA has been previously endorsed by Amazon and other online retailers. It is an agreement states voluntarily join. They agree to common sales and use tax rules and in exchange they gain the power to charge sales tax on online and other out of state retailers. Currently, the sales tax systems in the country vary wildly state to state.
At present the Act has been submitted to the Senate and a counterpart is in the House.
For more information on sales tax, use tax or other tax related legal concerns, contact the Illinois tax attorneys at Horowitz & Weinstein.