All online retailers could soon be charging sales tax

7:14 PM, Apr 25, 2013   |    comments
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CLEVELAND -- The U. S. Senate could vote any day now on the "internet sales tax bill."

The bill would force online retailers to collect both state and local sales taxes. Local small businesses say the added costs could affect their growth.

Deby Cowdin started "From the Blue Bag" seven years ago after a friend dared her to create something functional from a wine bottle. She collects alcohol bottles from bars and restaurants across Northeast Ohio and makes them into serving platters.

"I started at farmers markets at Crocker Park and now we're in over 300 stores and do art shows all over the U.S.," says Cowdin.

But the biggest growth she's seen is not from a market stand. It's from internet sales, where customers across the country can order a one of a kind piece with no sales tax.

At least for now.

A bipartisan group in the Senate wants to change the law so that any company making over $1 million in revenue would charge sales tax online. They say the advantage given to online shops undercuts brick and mortar stores.

"Online retailers -- who do not collect sales taxes -- can sometimes undercut the price a brick-and-mortar retailer can charge by 10 or more percent, just because of this situation," says David French, Government Relations for the National Retail Federation.

One study estimates the government is missing out on about $23 billion in sales tax revenue from last year alone.

But business owners like Cowdin say this type of law could stunt the growth of a small business, trying to make it on a national scale.

"They're already paying for shipping. So, it's almost like a punishment for them. So, it's not going to give my customer any incentive. And it may also deter them because $10 can make a big difference," says Cowdin.

The argument lawmakers are also making is that this is not a new tax. Typically, the consumer is responsible for reporting any online purchases without sales tax when they file their taxes. In most cases that doesn't always happen.


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