02 July 2010

Will the States Get Greedy And Use New Legislation to Tax Ancillary Services?

Just as a new standards group called OpenAxis emerges from the group aligned with Farelogix - there are a few clouds on the horizon.

The first was the hissy fit that Mike Premo of ARC had earlier this week on the slow adoption of EMD.

The other is the looming issue of taxation.

A new bill has just been introduced into the US Congress. The “Main Street Fairness Act” was formally introduced in the U.S. House of Representatives on July 1st 2010. If passed into law, it would require e-commerce companies to collect sales taxes, and thereby undoing judicial rulings and previous Administrations promises that exempted Internet and catalog retailers from collecting sales taxes in states where they do not have a physical presence. Sponsored by Massachusetts Congressman William Delahunt, the legislation ostensibly is in response to increasing pressure from state and local governments to increase tax revenues. As Ancillary Revenues are clearly subject to such taxation regimes it would cement the how a local jurisdictions could indeed demand tax.
If it is enacted, i expect a ripple out effect. The vast majority of e-commerce sites will begin collecting sales taxes, thereby reducing the perceived price advantage of shopping online.
Legislation would require sales tax collections on B2C Internet sales that are not exempt or otherwise accounted for.. The proposed legislation would require almost all online retailers to collect sales taxes in the states that adopt the Streamlined Sales Tax Project, an effort to simplify disparate tax laws and ease compliance. However it is safe to assume that there will be a period of time for adoption and their eminences (the judiciary ) will want to exert some form of stamp on this.

Interesting twist… stay tuned

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