There is a lot of hype right now regarding online sales tax, with a lot of people adamantly for the Marketplace Fairness Act and a lot of people against it. As a consumer, it is hard to follow the debate about it due to a lot of untrue statements, says Rob Wood, tax attorney with Wood, LLP in San Francisco, California.
Currently, the Marketplace Fairness Act is being considered in the senate and Wood believes the bill will pass the senate. "The days of tax-free clicks on the internet are fast-closing," he says with Amazon already collecting tax in some states, with even small retailers starting to collect.
Wood says there are lawsuits with more to come and so far, New York state beat Amazon and Overstock in an appellate court. California recently sent out a letter saying that whether or not you're collecting tax at the time you buying something, as a California resident, you are liable for use tax - a law that exists in 45 states, according to Wood.
Most of the debate is about collection mechanisms and not being liable for the tax, notes Wood. He adds that many state income tax forms will ask towards the end of the form if you owe use tax and how much was brought into your state.
"There is no question that state and local governments are hurting and they are hoping this internet purchase phenomenon will help their revenue," says Wood.