Nationwide web sales tax now a real possibility

Never mind Amazon's squabble with New York over collecting sales tax on purchases completed over the web. The possibility of a national Internet sales tax is now more real than ever.

The New York Post, of all places, broke the story of a bill set to be introduced in Congress this week that would pave the way for the controversial collection of sales taxes for purchases made online. Since 1998, Congress has expressly prohibited the establishment of web-specific sales taxes as the government has sought to encourage development and innovation in the high-tech world. But now, with state sales tax collections reportedly hitting a 50-year low, the time for special treatment of online entities -- seen as freeloading their way to those funds by many -- may be coming to an end.

The new bill seems to skirt the existing law because it applies on a national scale and hits both Internet and traditional mail-order companies, thus it doesn't enact a special tax on web sales alone.

Regardless of the way it gets through the loophole, enacting a broad national sales tax is clearly seen as low-hanging fruit, an easy way to collect money from the populace on purchases that will likely be made one way or another. States and municipalities would receive the cash directly from the retailers, based on the location of the consumer completing the purchase.

Retailers are practically in tears over the possibility of such a bill becoming law, as it would require a massive headache in the tracking and management of several thousand local sales tax laws: Each purchase would be subject to potential sales taxes levied by a state, county, and/or city, thus making for a hugely complicated process, not to mention the actual payment of those taxes on a regular basis. The bill, however, is said to include language to attempt to simplify this process to some extent; how it would do so remains to be seen.

The prospects for such a bill reaching Obama's desk are as yet unknown, but it is being crafted by a bipartisan duo and, since it essentially amounts to free money for the government, it's hard to imagine it won't be seriously considered by legislators.

Previously: Internet sales taxes creeping closer to reality