Internet Sales

I have been contacted by my local city government to say that my business is scheduled to be audited to determine if I owe any sales tax from items purchased on the Internet. Can they really make me pay this tax? I thought you could buy things online tax free? -- Katie R.

I hate to burst your internet bubble, Katie, but they are within their rights to audit your
business and demand payment of sales tax on items purchased on the Web.

Navigating The Internet Sales Tax Laws

Internet sales taxation has been a topic of contention even before Amazon sold its first book
and Priceline booked its first flight.

One of the more controversial points is that no one, including our own government, seems to
have a clue how to implement a fair and logical Internet taxation process.

With over 7,500 different local, county and state taxation systems in the United States, you
can understand the controversy.

In 1998, Congress did what it usually does when faced with a potentially explosive issue like
Internet tax collection -- it decided to put off making a decision. Congress enacted a three-year
moratorium on the collection of taxes to give an appointed advisory board time to come up with
an acceptable solution.

That moratorium ended last year and opened the door for municipalities to begin collecting
sales tax on their own.

Here in Alabama the sales tax collection department is airing radio spots asking Alabamians
to step up to - and toss dollars into - the proverbial collection plate. The commercial kindly
suggests that if I have purchased anything from an online retailer, I am honor-bound to proclaim
such purchases and submit the appropriate sales tax to the collection department right away.
They thank me in advance for my cooperation.

So, Katie, when the auditor shows up at your door the best thing you can do is smile politely
and be totally forthcoming.

The sales tax that you pay is a small price for the convenience of shopping online.

Now where did I put all those Amazon.com receipts…