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Taxation of Internet Sales

In: Business and Management

Submitted By drewc21
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Online sales taxation has been a controversial issue in the U.S. especially with regard to interstate commerce. In most cases, most U.S. states are looking for any means to raise revenues to fund their operations; as such, taxes on internet sales is not excepted as a source of income for the government. Nevertheless, in the past few years, the U.S. Supreme court has dealt with several cases challenging the legality and the constitutionality of attempts by several U.S. states to demand taxes on goods purchased online and shipped to residence from various states. For instance, in Bellas Hess v. Illinois and Quill Corp. v. North Dakota where the court withheld that the state could not demand an online sales firm to collect sales tax on its behalf if the latter does not have any physical representation in the former (FindLaw, 2013 & CBO, 2013). On 16 April 2013, S. 743, Marketplace Fairness Act of 2013 was introduced in the senate and passed on to 7 May 2013. Apparently, Marketplace Fairness Act of 2013 was meant to restore U.S. states’ integrity to demand online sales firms to remit sales taxes on more than $1million of revenues made by selling goods to people residing in their territories (www.gpo.gov). Even though some of these laws (both common and legislative) are meant to reduce hurdles on states’ attempts to impose taxes on internet sales that occur within their territories, there are still other legal and practical challenges that will keep on cropping up, hence necessitating legal and regulatory mechanisms to address issues related to the taxation of internet sales.
One of the problems that online sales firms are facing is a reduction in customer base for larger online retailers. This is because the Marketplace Fairness Act of 2013 set $1milion as the minimum amount of sales that is taxable for those online retailers who do not have a physical representation…...

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