Q. Is this a new tax?

Q. Then why don’t all online retailers and other remote vendors collect sales tax like their brick-and-mortar counterparts?

Q. Then why do some websites already collect sales tax from me?

Q. Well, if the retailer doesn’t collect the sales tax, that means I don’t have to pay it, right?

Q. Wait, are the states trying to tax access to the Internet?

Q. Does this current loophole really give the online-only sellers an unfair advantage over Main Street retailers?

Q. Will collecting sales tax from all online purchases really make a difference?

Q. What can be done to remedy this current situation?

Q. What could happen to jobs in my community if we don’t pass this legislation?

Q. Is this a new tax?
A. No. Make no mistake, when goods are purchased in a store or online, a sale has occurred, and the sales tax is due – a sale is a sale no matter where it takes place. Most states already have what is known as a “use tax,” which requires consumers to pay a tax when they make a remote or online purchase and sales tax isn’t collected by the retailer.  However few consumers are even aware of this tax liability.

Q. Then why don’t all online retailers and other remote vendors collect sales tax like their brick-and-mortar counterparts?
A. Because of a 1992 Supreme Court ruling, remote and online sellers currently escape the sales tax collection obligation that their Main Street competitors are subject to.   However, Congress has the authority to pass legislation, establish reasonable ground rules on this issue and empower states to require sales tax be collected from all sales  -including online purchases – but they have yet to act.

Q. Then why do some websites already collect sales tax from me?
A. To avoid the uncertainty that pending Congressional legislation could create for online businesses, more than 1,800 online businesses and remote sellers have voluntarily begun collecting sales tax to help level the playing field.  In addition, online businesses with physical locations in your state are already required to collect sales tax on purchases through their websites.

Q. Well, if the retailer doesn’t collect the sales tax, that means I don’t have to pay it, right?
A. No, you are still required to pay the sales tax! Most states with a sales tax also require residents to calculate and pay a use tax on any catalogue, mail-order or online purchases where sales tax was not collected.  Too often we hear this reported to the public as “voluntary,” but it’s no more voluntary than filing and paying your income tax every April 15.

Q. Wait, are the states trying to tax access to the Internet?
A. Absolutely not!  The Internet Tax Freedom Act created a moratorium on any new, multiple or discriminatory taxes on electronic commerce. The Main Street Fairness Initiative does NOT tax your access to the Internet.

Q. Does this current loophole really give the online-only sellers an unfair advantage over Main Street retailers?
A. Yes. Main Street retailers can compete on price, but when the law says one type of seller has to collect tax and the other doesn’t, it creates an unfair advantage.  Brick and mortar shops are running the traditional business model by collecting the tax for their customers, while online-only competitors are placing the burden on unsuspecting consumers to pay the use tax.  While the recession has hurt most of our Main Street retailers, online-only retailers have been able to weather the storm better by exploiting this unfair advantage.

Q. Will collecting sales tax from all online purchases really make a difference?
A. Yes! Important jobs and services are currently being cut, due to declining tax revenue in the states. This year alone more than $150 billion will be spent by online shoppers. A study by the University of Tennessee estimates that states are losing $20-60 billion a year in sales tax revenue from those online purchases where sales tax is not collected. Collecting these taxes WILL make a difference for services and jobs that are provided by our states and localities.

Q. What can be done to remedy this current situation?
A. The Main Street Fairness Initiative is an effort to enact the much-needed, fair federal legislation that will simplify the sales tax collection process and balance the interests of the states, Internet operations and Main Street businesses to keep our economy moving forward. Legislation is needed at the Congressional level to give states the power they need to collect this important source of revenue and take the burden off of consumers.

Q. What could happen to jobs in my community if we don’t pass this legislation?
A. Consumer spending and retail activity account for two-thirds of U.S. economic activity.  Since the recession began two years ago, more than eight million Americans have lost their jobs. Main Street Fairness legislation will help ensure that the number of job losses does not continue to increase. Without further assistance, states may be forced to cut additional public sector employees such as teachers and first responders.