Tax-Free Sales on the Internet Near the End

Tax-free shopping on the Internet could soon be a thing of the past. Republican governors have shifted their position and joined Democrats who have long supported a sales tax on online purchases, The Wall Street Journal reports. Both sides are now working to speed up action on a bill that would give states the authority to make online companies collect sales taxes.

In the meantime, many governors are already making deals with Amazon (NASDAQ:AMZN). Republican Gov. Chris Christie of New Jersey has already worked out an agreement directly with the supportive online retailer.

This is surprising at first glance, as the tax will make online shopping more expensive and slashes the advantage online sellers now have over brick-and-mortar retailers. Amazon, though, has plans to implement same-day delivery in some areas, which would require more warehouses and state sales taxes as it is. And so Amazon is supportive — as long as the tax will also cover its rivals, most of which oppose the bill.

Amazon’s strategy is evident in the New Jersey deal: The company has agreed to collects state sales taxes in exchange for locating distribution facilities in the state. Virginia, Texas and Nevada have all announced similar agreements.

These states, and others following suit, could now see much-needed revenue flow in and help ease budget strains. The National Conference of State Legislatures says the bill could mean $23 billion annually and prevent many in-state retailers from having to lay off employees or close altogether.

-Alyssa Oursler, InvestorPlace Editorial Assistant


Article printed from InvestorPlace Media, https://investorplace.com/2012/07/tax-free-sales-on-the-internet-nears-its-end/.

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