The Grinch That Taxed Christmas

    November 30, 2006

If you are an avid online holiday shopper, enjoy making some purchases tax-free while you still can.

Currently online shopping sites do not add state sales tax in the final cost of a purchase, unless you happen to live in a state where a warehouse or store is physically located. However, Congress could be changing the tax-free online shopping laws in the very near future.

Shopping online, for most, is advantageous because of avoiding state sales tax, which averages 7.5%.

Purchasing a pricey piece of electronics online, such as an LCD television, is much more cost effective when there is not a hefty sales tax imposed.

The Supreme Court made the ruling on the issue of online sales tax stating that an individual state cannot require an online merchant to impose a sales tax, unless the merchant’s place of business is located in the same state as is the buyer.

The majority of large online retailers, such as Target and Best Buy, have physical locations in most states and already charge the state sales tax.

However, there is no current sales tax collected if the merchant is out of state.

The Supreme Court says that there is nothing stopping Congress, from a legal standpoint, from mandating that out of state online merchants collect sales tax from customers.

Forbes reports that members of Congress have already proposed a law that would require catalog and online merchants to collect a sales tax. The tax collected would be determined by standard set by the Streamlined Sales and Use Tax Agreement (SSUTA).

The proposed bill has yet to be passed, so continue to shop online merchants and catalogs free of state sales tax when you can.

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Autmn Davis is a staff writer for WebProNews covering ebusiness and technology.