United States E-Commerce Taxation System Augments Unfair Competition Is an Origin-Based Tax System a Solution?

E-commerce has created various challenges to the present United States (U.S.) tax system. Hence, after many years of e-commerce evolution and lots of discussions and positions on how to tax e-commerce transactions, the controversy over Internet taxes has centered on use taxes rather than sale taxes. Somehow, U.S. states have adopted their own policies on sale taxes for online transactions and the community is getting educated on what jurisdictions tax online sales. Use taxes are owed by customers to the states where they reside on purchases from out-of-state sellers. States are free to levy use taxes on their own citizens. The question is whether they may impose the obligation to calculate, collect, and remit those taxes on remote sellers.

The following questions have been addressed in this article:

How are e-commerce transactions taxed in the United States?
What problems result from the tax system?
What possible solutions are being suggested and what is their viability?


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