Recommendations Of Collecting Taxes On Out-of-state SalesIn order to meet the requirement that a customer pays the same tax for an item purchased through electronic commerce as an item that was purchased in a local store, the tax for both depend on the location of the buyer, not the location of the vendor. Although, it is unclear whether the amount collected under a sales tax would be worth the probable discouragement of using the Internet as a shopping medium and the corresponding depressant effect on the U.S. Economy. However, it has been recommended strongly that, the tax must actually be collected on electronic commerce. This means that an out-of-state vendor may be required to collect this tax, even if this vendor has no physical presence in the buyer's state. Certainly, the objectives of fairness and economic efficiency would be achieved whether the collected tax goes to the state where the vendor is located, the state where the buyer is located, or the federal government. This approach would be similar to the European Union (“EU”) approach. In the EU, even non-EU merchants are required to collect and remit taxes to the EU state where the buyer is located for goods or services bought by or to be used by EU residents; no matter where the vendor is located.
The following questions have been addressed in this article:Is there any proposal that would remove the financial, logistical, and administrative compliance burdens of sales and use tax collections from seller? Also, is there any proposal that would include any special provisions with respect to small, medium-sized, or start-up businesses?
What is a Streamlined Sales Tax System (SSTS)?
Is there a proposal for technologically feasible utilizing available software to enable tax collection? If so, what about the costs that are generally associated with such software?