MuniLand –Internet Sales Tax

There is a strong chance that internet sales will no longer be exempt from state sales taxes, regardless of whether an online retailer has a physical presence in a given home jurisdiction.  The Senate recently passed a bill (the Marketplace Fairness Act) that will allow internet sales to be taxed, and the House is taking up a similar bill.  It is estimated that states and local entities forego $23 billion in sales tax revenue annually.  Governing Magazine reports that now is as good a time as any for Congress to take action because of several factors, including double digit sales growth in e-commerce, states missing this tax revenue and to level the business landscape between online retailers and small businesses. Furthermore, 2016 is a presidential election year and many politicians want the issued settled before the voting season.  Some states are getting ahead of the issue due to their desire to limit the perception of government growth.  For example, Wisconsin and Ohio passed measures to cut other state taxes if the e-fairness bill passes, and the Idaho legislature has a similar bill pending.  Much of the headline news about municipal finances has been pretty bleak over the last few years, but if the bill passes, it would be a credit positive for states that currently forego online sales tax revenue.