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Tax-free internet shopping may be in trouble

Tax-free internet shopping may be in trouble
Tuesday, April 23, 2013 - 5:42pm

Your tax-free internet shopping may soon be going away.

A bill is making its way through the Senate right now that would require states to tax online purchases.

The bill gained heavy momentum in the Senate Monday, winning President Obama's approval.

If it passes, it would give each state the power to require online retailers to collect state sales taxes for online purchases.

"Where it bothers me is, the customer having to pay more money where they haven't paid before," said Ty Yarbrough, owner of High Cotton Clothing in Tyler, which also sells merchandise online.

The taxes would be sent to the states where each shopper lives.

As the law stands now, states can only require stores to collect sales taxes of the retailer has a physical store in that state.

Because of that, many online sales are tax free.

Major retailers argue the legislation would close an unfair loophole that benefits online stores over brick-and-mortars.

"It'd be good for my business because right now, it's getting to where people can go online and buy products cheaper than I can buy them for my supplier," said John Jackson, an East Texas business owner.

Some say though it would be too complicated and difficult for small businesses to comply with tax rules across multiple states .

"I'm sure that could be a disaster down the road, but we don't know how bad it will be until it actually happens," Yarbrough said.

Businesses with less than $1 million a year in online sales would reportedly be exempt from this bill.

The Senate could pass the bill as early as this week, but its fate in the House is unknown.


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