Online Sales Taxes in the Age of Amazon

Congress currently is debating a law — HR 3179 — that has much interest for holiday shoppers. Seeking to change tax policy, this law enables but does not require cash-strapped states such as California to force online retailers to collect sales tax for online purchases. Current law allows Web-only retailers, such as Amazon.com, to avoid sales tax for most purchases. This policy brief reviews the impact of technology on retailing, the online sales tax exemption, and why HR 3179 is a reasonable solution that balances competing interests.