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cch logo newMore online retailers are collecting sales and use taxes as efforts growth at the federal and state level to impose the levies, according to CCH. The company's review of online nexus rules also noted that another factor is online retailers seeing such taxation as inevitable.

"While it may not have significant implications for this holiday tax season, consumers should be prepared to start seeing sales tax collected on more and more of their online purchases in the years ahead as cash-strapped states look for more revenue sources," says Daniel Schibley, JD, CCH senior state tax analyst.

Forty-five states have a sales tax and 16 have enacted or have legislation proposed requiring online retailers to collect sales and use taxes.

The CCH study notes that the proposed Main Street Fairness Act would give states following the Democratic-sponsored Streamlined Sales Tax Agreement rules the authority to require retailers, with limited exceptions, to collect sales tax on online purchases, regardless of nexus. Twenty-four states are part of SST.

The Marketplace Equity Act, which  has also the support of the Retail Industry Leaders Association, was introduced with the hopes of gaining support among Republicans. States would not have to join the SST agreement or make the changes it requires. However, states could collect taxes

Companies with less than $1 million in gross annual receipts nationally or $100,000 in a particular state would be exempt. The act would also require a single tax return for use by remote sellers and a single tax authority in the states in which returns must be filed. There would also need to be an identical tax base and exemptions.

Schibley said it is unlikely that MEA would pass this year.

What is gaining traffic is state efforts. Eight states have passed click-through-nexus rules that require sales tax collection if companies sale through an in-state business's website and pays website operators a commission. Those states are Arkansas, California, Connecticut, Illinois, New York, North Carolina, Rhode Island, and Vermont. Such bills have been introduced in Massachusetts, Michigan, Pennsylvania and Tennessee.

Six states have enacted laws under which a company has nexus if it has an affiliate doing business in a state. These are Arkansas, California, Colorado, Illinois, South Dakota and Texas. The proposed Michigan and Tennessee laws would also establish affiliate nexus.

Last modified on Sunday, 02 June 2013
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