Internet Tax
The issue of an Internet sales tax has been at the topic of much debate over the past few years. The issue is a complicated one and the budget crises' facing many states has made it a crucial one. The purpose of this discussion is to examine Internet tax legislation. We will begin by exploring the current status of Texas legislation regarding internet Taxation. We will also investigate the Federal Law regarding Internet taxation. Our research will also discuss the National Governors Association's model legislation to streamline and simplify state taxation. Additionally, we will explore the jurisdiction requirements that allow states to impose sales taxes and the case law that affects states' ability to tax Internet sales.
Texas Legislation
In 1999 Texas legislation proposed that the state would join the streamlined sales tax project. In recent years the legislation has adopted the practices of the streamlined sales tax project.
Texas has currently has one the most stringent Internet tax systems of any state in the union. The state was concerned that it was loosing valuable tax revenue for sales made over the Internet. The Houston Business Journal explains that a merchant in Rhode Island can sell a product over the Internet to an individual residing in Texas but the state will not have the benefit of charging a sales tax because it is unaware of the purchase. This scenario has made lawmakers in Texas and other states criticizing the current federal legislation governing Internet sales tax.
Federal Law
The federal legislation that governs Internet sales tax is known as the Internet tax freedom act. The act, created in 1998, "placed a moratorium on new Internet taxes and on multiple and discriminatory taxes on e-commerce." (Kuster and Untermeyer 2001) The law is extremely controversial and many states complain that the laws that govern the act are too complicated. The Houston Business Journal explains some of these rules, saying,
Online transactions are not exempted from a state's sales tax by the moratorium. If a state chooses to levy a sales tax, that tax is applicable regardless of whether the...
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