The best solution is for internet companies to collect sales tax at point of sale, as brick-and-mortar stores do. The only reason they don't right now is that in 1967 & 1992 the issue of Remote Sellers came before the US Supreme Court (in the context of mail order catalog merchants). In both opinions, the court agreed that remote sellers should collect and remit local sales taxes, but they also conceded that requiring remote sellers to keep track of 4,000+ local tax jurisdictions would be too difficult.
No one questions that contemporary companies like Amazon.com have the technical ability to keep track of many millions of transactions per quarter. With the successes of the internet over the last 25 years, it is time to revisit how difficult it is for remote sellers to manage a mere 10,000+ local jurisdictions.
These are not new taxes. Even if an internet merchant doesn't charge you sales tax, you still likely owe the equivalent use tax in your state - which you are supposed to report to your state on your annual tax returns (and remit payment - although most people regularly do neither).
Colorado's new law allows companies to voluntarily collect sales tax in place of the notification procedure. The state's next step is to set up a system for the companies to do so.
We are working on a product that will provide merchants with the tools to collect these complicated sales taxes at no cost at all to the merchants.
R. David L. Campbell
Chief Executive
The Federal Tax Authority
fed-tax.net
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