(SIOUX CITY, IA) - Buying online may soon cost you just as much as buying in the store. The U.S. Senate is green-lighting a bill that would require online retailers to collect state sales tax.
Right now, states can only require online retailers to collect sales tax if it has a physical presence in the state. But with this bill, online businesses like Amazon and eBay would have to collect state sales tax no matter what. It could level the playing field for brick-and-mortar stores.
Dakota PC Warehouse in Sioux City sells every electronic product you can think of from computers to TVs to cameras. You can find those same products online without paying state sales tax now, but that could change. "We had kind of a mixed reaction honestly because we actually do have an online presence as well. So as an online retailer it's kind of like oh this is a huge burden for us," said co-owner of Dakota PC Warehouse Bob Burnett. The sales taxes would be sent to the state where the shopper lives. That could create more competition between smaller shops and online retail giants like Amazon. "We have to be five-seven percent cheaper in order to match the same prices as the Internet and that just doesn't seem right," said Burnett. "So we may see some decrement in that business. And we'd think we'd see a nice lift in our local business in our retail stores." Right now, businesses pay a 'use tax' on all items and charging sales tax online could help cover that cost. "So if you went out and bought an item for $100 and you lived in Sioux City, Iowa you're still supposed to pay your seven percent to the city and the state. But as a practical matter individuals don't but businesses do," said Burnett.
But imagine keeping track of all 50 states' sales taxes. "That is very daunting. And I'm not quite sure as a small company how we're going to do that. Bookkeeping might be a great career right now for some people," said Burnett with a laugh.
The bill moves to the House now, but faces criticism from some conservatives who see it as a tax increase. Meanwhile, President Obama has shown support for the measure.