The Internet has revolutionized civilization. It’s medium has provided a new way in which to communicate and conduct business with our fellow man. E-commerce has ramped up heavily since the early 2000s and poses an interesting challenge to state governments in collecting sales taxes on purchases made online.
Right now, you’re supposed to file the sales tax due from online purchases on your Georgia income tax, but I’d say that few people actually know they’re supposed to do that and much less actually do. HB 386, passed this most recent session, changed the law for online retailers that have a physical presence in the state to include affiliates. You probably notice that some online shops that have a physical location in Georgia charge you sales tax if you’re a Georgia resident.
The arguement is that many people shop online retailers to avoid state sales tax and, in turn, hurt small brick-and-mortar businesses in Georgia. I’d say that’s partially true (not so much after you pay 5 or 6 bucks for shipping…depending on where you shop), but not true in every case. I generally shop Amazon to find better prices on products, or just to find products that I can’t find in my area.
Comes now, a ruling from a federal court out west that strikes down a similar law in Colorado:
The law had already been temporarily blocked in federal court last year, but U.S. District Judge Robert Blackburn’s ruling Friday permanently handcuffs it.
“I conclude that the veil provided by the words of the act and the regulations is too thin to support the conclusion that the act and the regulations regulate in-state and out-of-state retailers even-handedly,” Blackburn wrote in his opinion.
The law and the rules to carry it out “impose an undue burden on interstate commerce” and are unconstitutional, the judge wrote.
From reading the Colorado law, it sounds like the burden is placed upon the business who does not collect sales taxes to send the Colorado customer a tax document each year with the amount of goods purchased and the amount of tax due to the state. Failure to comply results in a $5 fine per infraction. It doesn’t appear that Georgia’s law will be as burdensome towards businesses in that respect, but it does make you wonder if the Amazons and other online retailers of the Interweb world will try to use the federal court ruling as precedent to strike down this portion of HB 386.
The AJC has an article on the tax bill here.