Marketplace Equity Act May Level The Playing Field Between Local And Online Retailers
To avoid confusion, the Marketplace Equity Act that is currently sitting in Congress will help states collect sales taxes owed to them from online purchases. At this time, online businesses are not required to collect sales taxes on their sales. Many consumers are neglecting or forgetting to report and pay these taxes at the end of the year, and states are missing more than $20 billion each year due to uncollected Internet sales taxes. Even when they do taxes online, consumers tend to find that they do not have all of the receipts and information they need to report their online purchases properly, and they would rather not guess.
As the online consumer base continues to grow over the next years, the states’ deficit is predicted to grow. The Marketplace Equity Act will help not only the states but also the consumers who may find the process of reporting all of their online purchases too confusing and strenuous. After all, the states had good reason in placing the sales tax responsibilities in the hands of retailers, whose profits depend on those sales.
If the missing tax money is not alarming enough, then the effect of untaxed e-business on traditional local businesses is worthy of note. Not only is online shopping convenient for many consumers, but it also costs less than in-store shopping because businesses do not have to apply sales taxes at the checkout screen. With all things being equal, some consumers who currently shop online may prefer to shop in the store; many shoppers prefer to be able to touch and inspect the merchandise prior to purchasing it but have forgone doing so because of the seemingly reduced prices of online shopping.
The new act would correct this imbalance, allowing these consumers to shop the way they prefer to shop without being at a huge cost disadvantage. Having online retailers apply sales taxes would remove the deception that is luring these consumers online and causing a lot of confusion for them during tax season; many people who may assume that online purchases are not taxed at all inevitably receive an unpleasant surprise when they do taxes online and see the question involving online purchases. At that point, good people sometimes choose to do a not-so-good thing by deciding not to pay their taxes at all which could result in tremendous issues with the IRS. The best way for this country to ensure our businesses stay open is to ensure the same rules apply across the board.
Mercedes Potter is a part of an elite team of writers who have contributed to hundreds of blogs and news sites. Follow her @CedesPotter to see what else she’s been blogging about.