Online sales climbed 24% year over year, while Best Buy’s overall sales were flat.
The effort to simplify laws which will clarify the issue of sales and use tax collection in the e-commerce industry is making progress.
The effort to simplify tax laws which will clarify the issue of requiring sales tax for e-commerce is making progress, as 28 states representing 55% of the U.S. population now have enacted legislation to participate in the Streamlined Sales Tax project. Virginia was the most recent state to sign up as a project implementing state, according to the National Conference of State Legislatures.
The Streamlined Sales Tax Implementing States project is a three-year-old effort backed by state legislators, tax administrators and other market participants to simplify the collection and administration of sales and use taxes for businesses.
"We are overwhelmed by the states` commitment to making life easier for retailers of all kinds," Tennessee Representative Matt Kisber, co-chair of the Streamlined Sales Tax Implementing States, said in a statement. "As we move forward, we expect additional states to join the effort. In the end, we should have a system that provides much needed bureaucratic relief to retailers and states will preserve a revenue stream that is vital to maintaining the basic level of government services."
The NCSL says state and local governments are experiencing lower than expected revenues from sales and use taxes even as Internet and catalog purchases grow. In 2001, a report estimated that states lost a collective $16.4 billion from electronic commerce alone, while by 2006 that loss was projected to climb to $44.6 billion.
Retailers that do not have a physical presence in a state have been exempt from collecting sales and use taxes since 1992, when the U.S. Supreme Court ruled that the 7,500 taxing jurisdictions in the U.S. created an overwhelming burden on out-of-state retailers. State and local governments hope to gain revenue from online and catalog sales once the tax system is simplified.
The Streamlined Sales Tax Implementing States is the first process in formulating an interstate agreement that would create a simplified sales and use collection system that could be used by retailers regardless of their location. The system would establish uniform definitions of taxable goods, set rules for sourcing transactions and centralize the registration and administration process for retailers to participate in the new system.