Congress, Sales Tax | featured news

The days of tax-free online shopping could finally be numbered. The Senate is planning to vote on a bill as soon as Monday that would give states the authority to collect sales taxes on all Internet purchases, handing local governments as much as $11 billion per year in added revenue that they are legally owed — but that hasn’t been paid to them for years.

Online sales are soaring. State budget deficits are growing. And tax-free Internet sales are once again in the spotlight. Congress is considering bills that would “level the playing field” by allowing states to require all online merchants doing business in that state to collect sales tax. Web retailers have largely had a free ride since a 1992 Supreme Court ruling that only merchants with a physical presence in a state are responsible for collecting sales tax.

Finally, good news from the gridlock in Congress. Or maybe not. The federal government Saturday stopped collecting taxes on airline tickets, so flying suddenly got cheaper, right? Wrong. Many airlines just increased their airfares to match the tax drop.