United States

What’s the deal with sales and use tax on remote purchases?

Five primary approaches, one big discussion for remote sellers

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The internet has transformed the consumer products space over the past ten years and accelerated the trend toward remote purchasing. According to the U.S. Department of Commerce, e-commerce sales accounted for over $105 billion of adjusted sales in the first quarter of 2017, an increase of 14.7 percent from the first quarter of 2016. And, in fact, e-commerce sales calculated on an adjusted basis have increased every quarter since the beginning of 2009. There is no slowing the engine of internet-based sales as consumers are increasingly making a larger portion of their yearly household expenditures online, including purchases that were never expected to become part of the e-commerce realm like grocery shopping and medical services (e.g., physician examinations through internet video). Businesses are adapting, and the once very expensive brick and mortar retail storefronts are becoming a necessity of the past.

This ongoing transformation in the retail space has sparked rigorous debate around the administration and collection of sales tax on remote purchases between retail-backed policy groups to state and local legislative bodies and the United States Congress.

  • Are remote sellers required to collect and remit sales tax on purchases made by buyers in other states?
  • What is the responsibility of the government to create a level playing field for remote sellers?
  • Who is responsible for the accuracy of use tax compliance?
  • Will remote sales tax collection effectively turn all remote sellers into multistate entities?
  • Will the cost of administration eliminate small businesses from selling over state lines?

In this white paper, our state and local tax professionals discuss the statutory, regulatory, and administrative strategies states are using to capture remote sales tax collection as a funding source to boost state coffers.


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