My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Technology

Are Internet Taxes Coming Soon?

Tacking taxes onto internet sales could soon become mandatory.
2 min read

This story appears in the February 2006 issue of Entrepreneur. Subscribe »

While e-tailers can now voluntarily collect and remit sales taxes on sales originating in the 19 states that have signed on to the Streamlined Sales and Use Tax Agreement, it's hard to say if they actually will.

Created in 2002 by the Streamlined Sales Tax Project, the SSUTA aims to make it easier for retailers doing business in multiple states to calculate, collect and remit existing use taxes. The SSUTA took effect on October 1, 2005.

While it's currently a voluntary program, if mandated by law, the SSUTA would require businesses to collect and remit sales taxes for the 7,600 different sales-tax jurisdictions in the U.S. Under current law, only businesses with a physical presence, or "nexus," within a tax jurisdiction are required to collect that jurisdiction's sales tax. Mark Micali, vice president of government affairs at the Direct Marketing Association in Washington, DC, sees little reason for small e-tailers to participate in the voluntary program: "[SSUTA] creates a barrier to entry for small entrepreneurs who rely on the internet to help them create markets."

What's more, despite promises from SSUTA's organizers that free software would be available to help make tax collection and remittance simple for participating retailers, many still would not be able to afford the cost of collecting and remitting sales taxes for each of the thousands of jurisdictions, "much less the cost of a possible audit at any time by 46 different state revenue departments," says Micali.

It's hard to say if the SSUTA could become mandatory. For several years, bills to make sales-tax collection mandatory have been introduced in Congress, but none have ever been signed into law. The fact that 19 states have signed on to allow voluntary collection means the movement is gaining traction, though.

To learn more about internet sales tax, check out www.davidhardesty.com, www.salestaxinstitute.comand www.streamlinedsalestax.org

More from Entrepreneur

Learn to be a better leader and develop successful marketing and branding strategies with Dr. Patti Fletcher's help.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.
Start My Plan

Latest on Entrepreneur