Internet merchants will likely be required by law to collect sales taxes, said Gilbert Fiorentino, chief executive of Systemax Technology Worldwide, on Tuesday during a session at eTail East in Baltimore. And this will be a reality in the not so distant future.
“States are under pressure to raise their revenues, and with e-commerce sales rising, they are seeing these revenues go out of state,” Fiorentino said. “I don’t see the states ignoring it for a long time. Sales tax has become an issue for everyone, and in the near future we’ll all be collecting.”
According to a statement released last month by U.S. Rep. Bill Delahunt (D-MA) when he introduced H.R. 5660, the Main Street Fairness Act, sales tax revenues comprise up to a third of most state budgets.
Delahunt estimates $18.6 billion will go uncollected in 2010, and by 2012, based on conservative estimates, the states will be losing at least $23 billion annually. That amounts to a loss of about $55 billion between 2009 and 2012.
The goal of the proposed Main Street Fairness Act is to allow approval for the 24 states that have joined the Streamlined Sales and Use Tax Agreement to revise their sales tax laws to make it easier for all retailers to collect.
Fiorentino noted that pure-play Internet retailers have been able to avoid collecting state sales taxes, but Web marketers that also have bricks-and-mortar locations already are collecting.
Systemax, which owns TigerDirect.com, CircuitCity.com and CompUSA, runs 11 CompUSA stores in the U.S. The company ranks #14 on the 2010 MCM 100.
States including New York and Colorado have recently passed their own laws requiring Internet merchants that do business in those states to collect sales taxes or provide a list of customers who spend more than $500 with them. The Direct Marketing Association is suing the State of Colorado, saying its law violates privacy and free speech laws.