A study released in April by researchers at the University of Missouri disclosed the shocking fact that the state was missing out on an average of $468 million each year due to uncollected taxes on Internet sales.
Where does Missouri Stand with e-Commerce Taxes?
Missouri does not currently have any regulations in place to collect e-commerce taxes from businesses that operate out-of-state, but several lawmakers are pushing for the Marketplace Fairness Act to become a law. There are also many local officials and residents who believe that the state should join the Streamlined Sales Tax project in order to collect at least some taxes from e-Commerce sales that take place with out-of-state businesses.
What is the Streamlined Sales Tax Project?
The Streamlined Sales Tax Project (SSTP) is a cooperative effort between 24 states. Although there is no federal regulation that requires a e-commerce business to collect sales tax in a state that they are not located in, the SSTP encourages large online businesses such as Amazon.com to collect state sales tax. Some companies, including Amazon, have honored this request, but other companies have been resistant to the idea of handling sales tax for other states.
What about Local Online Businesses?
If you operate an online store and your home base is Missouri, then you are required to collect sales tax from Missouri residents. Technically you are required to collect taxes for anything that you sell online, regardless of whether it is a traditional item that you would buy in a store or an original piece of art that you created. It is difficult for regulators to deal with online sales, though, especially for individuals who are selling items like art or something that has been used. At the current time, these individuals are basically on the honor system. This is also the case for almost every state in the U.S., but new legislation will most likely be passed eventually that will make it harder for people to sell anything online without collecting local sales taxes.
The Amazon.com Factor
Amazon is one of the largest e-Commerce sites in the world, and they have actually been pushing for regulations that would require them to collect sales taxes in every state. These regulations would present a tactical advantage to Amazon as they are planning to open warehouses in almost every state anyway, and they will therefore be required to collect sales tax in each state that they have a physical location. If other online stores are not forced to do the same thing, Amazon might lose some of its customers. Therefore, the e-Retailer is certain to continue leading the movement to make all e-Commerce sites collect sales tax in every state.
It is difficult to say for certain what Missouri’s legislators will do, but it is certain that continuing to do nothing at all is a very costly proposition. The future will most likely contain joining the SSTP, continuing to push for the passage of the Marketplace Fairness Act and placing a larger emphasis on collecting sales tax from local e-Commerce sales, including new items, used items and services of all types. Until Missouri takes definitive action, though, the state will continue to lose an average of $468 million in tax revenue each year.
This article was written on behalf of The Diamond Lining, a great source of information for Selling a Diamond Online. If you’re interested in learning how to properly Sell Diamond online, you should check out their website!
© 2012, Jen Carrigan. All rights reserved.