Online retailers were eagerly waiting for May 6th because the U.S. Senate was likely to pass a proposed bill that would require online retailers to charge sales tax outside their physical borders. On Monday, the Senate passed the bill, making the bill that much closer to becoming law. Currently, online retailers only collect sales tax from buyers in states where a physical store is located.
If the bill becomes law, they will charge sales tax from every customer. The states will collect sales taxes from online retailers even if the purchases made are from outside their borders.
According to an estimate, state governments lose as much as $23 billion in revenue annually because of the unclear online sales tax rules. State governments and major online retailers are pushing for the bill, but smaller stores are against it.
There are many who oppose the proposed bill, including anti-tax groups, small online retailers, and lawmakers in states that do not have sales tax. Only online retailers whose annual sales reach at least $1 million in states where they have no physical presence will be required to collect a sales tax.
Every online retailer, big or small, will be required to charge sales taxes from customers, which will then be collected by the states. This makes it easier for the government to enforce the law. Even though there currently are sales tax laws requiring customers to pay sales tax when they file a tax return, compliance is scanty.