Legal Research

Sales Tax on Goods and Services Bought Online

By John Gregory

Hawaiian legislators are working on a bill to ensure collection of state sales tax on goods and services bought online from out of state, while Idaho legislators have declined to do any such thing:

Hawaii Proposes To Collect Taxes On Internet Sales
Buying tax-free music, books and electronics over the Internet would be a thing of the past under legislation pending before Hawaii lawmakers. The measure being pushed by Senate Democrats is meant to force online shoppers of Amazon.com Inc. and eBay Inc. to pay the state’s 4 percent general excise tax, just like customers who buy the same items in brick-and-mortar stores.
Business Week

Push To Tax Internet Purchases Dead Again In Idaho
House lawmakers for a third year dumped a plan for Idaho to deepen ties to a nationwide push aimed at forcing Internet or catalog businesses to collect sales taxes. The House Revenue and Taxation Committee voted 10-6 to kill the plan that foresaw Idaho eventually joining 22 other states that have already simplified their state tax system as part of the Streamlined Sales Tax Project.
Forbes

What about Canada?

• Is the non-payment of provincial retail sales tax a problem on people?s purchases of goods or services from out of the province (except for Alberta, of course)?
• Is there a similar problem for the Goods and Services Tax for the federal government (or for places where it is harmonized with the provincial tax)?
• The US multi-state arrangement referred to in one story seems to involve states ganging up on catalog sellers to charge the tax at the seller?s end then distribute it to the states of destination. Presumably that could be difficult for goods or services delivered online, where the vendor might not have a state associated with the purchaser. Can they be required to ask? Can the buyer be required to tell ? accurately?
• Would doing something similar in Canada be problematic for provinces (and territories) because of their inability to impose indirect taxes? Or would that be a direct tax, just collected by someone in another jurisdiction?
• Is this the problem, or one of the problems, that the Canada Revenue Agency was trying to resolve by going after eBay Canada?s records of power vendors (as mentioned by Howard Knopf on the ECOMM list a month or so ago)? Or was that solely about potential unpaid income tax by those vendors?

What should be done (if anything)?

Full post as published by Slaw.ca on March 07, 2009 (boomark / email).