eBay has announced that beginning in November there will be changes in how Ebay collects taxes on sales, as a majority of states now require Internet sales tax to be charged on online purchases. (See below for list of states requiring Internet sales tax.) In a letter to eBay sellers, eBay claims that they and sister company PayPal are “making changes that will make Internet Sales Tax collection less complex for buyers and for you.”
With today’s Supreme Court decision in the Wayfair v. South Dakota case, the Supremes have cleared the way for states to collect sales tax from Internet-based merchants who do not have a physical presence within the state; however the ruling is quite narrow in its scope and so does not open the floodgates for states to tax anybody and everybody who arguably does business online within a given state. Read on for a plain English explanation of this Internet sales tax decision, as well as a link to the full South Dakota v. Wayfair decision and the dissenting opinions.
The Marketplace Fairness Act (“MFA”) has been in the news quite a bit lately, and no wonder. The proposed Federal law, which if passed will result in sales tax on Internet sales across state lines, cleared its first Senate barrier on Monday, and is expected to be passed by the Senate this week.
With ever more states either passing or contemplating passing an Internet affiliate program sales tax, the two edges of that particular sword are being felt from coast-to-coast, as associates are being slashed from the lucrative affiliate programs of some of the largest Internet companies.