New Law Would Force Online Retailers to Charge Local Sales Tax

A major shakeup for online retailers and digital content providers could present quite a taxing situation for consumers.

US Senator Dick Durbin (D-IL) wants the likes of iTunes and Amazon to begin collecting local sales tax on all online transactions.

Durbin, the second longest serving Democrat in the US Senate, is expected to announce the measure next week.

The prominent lawmaker has been a longtime vocal advocate of mandating online retailers to charge local sales tax, often pointing directly to Amazon as a company that has skirted this responsibility for far too long.

“Why should out-of-state companies that sell their products online have an unfair advantage over Main Street bricks-and-mortar businesses?” Durbin said in February. “Out-of-state companies that aren’t paying their fair share of taxes are sticking Illinois residents and businesses with the tab.”

Although the impetus for change in the way online retailers do business is clearly present in the US Congress, with roughly 7,500 different taxing jurisdictions in the United States today, it isn’t transparent in the least as to how Congress will implement or mandate such a sweeping overhaul to online business as usual.

According to CNET, The Direct Marketing Association, which – as some will recall – sued the state of Colorado in 2010 to prevent a new state tax law from taking effect, is already hankering for a fight over Durbin’s yet-to-be proposed but already controversial legislation.

“You’re just giving the states a blank check to make changes without any congressional oversight,” says Jerry Cerasale, the DMA’s senior vice president for government affairs. “We oppose that…We think that’s abrogating the authority of Congress.”