Understanding Internet Taxation :: E-Commerce Web Sales Tax Essays

Understanding Internet Taxation Internet taxation means that there are taxes that are applied to things purchased on the internet and fees that are linked to Internet access. They call sales that are made over the internet â€Å"E-commerce†. This topic is very important because as the internet grows so does the taxes and the overall cost of doing business via the internet. If this issue goes out of control and things get too expensive the world isn’t going to want to pay the heavy fees to buy merchandise. The internet taxation problem came about in 1998 when the internet was just starting to warm up. Eventually, this topic of internet taxation is going to affect everybody either directly or through business or simply by trying to obtain internet access within their home.† In 1998, the federal government passed the Internet Tax Freedom Act as a part of the 1998 budget bill.† (House Research, 1998) Well, this was decided on in 1998 to have it be a tax free issue but that was only for three y ears. President Bill Clinton passes this bill right when the internet and e-commerce was taking off. (csg.org) all this bill did was make it so there wasn’t any tax for three years. It couldn’t have lasted forever. Now taxation on the internet has become an issue that is decided on from state to state. Only ten states in the country tax internet access in 1998. They are North Dakota, South Dakota, New Mexico, Texas, Iowa, Wisconsin, Tennessee, Vermont, West Virginia, and Delaware. (House Research 1998) The other remaining states either don’t have state tax in general or they do not tax internet access. In 1999, the committee of the National Conference of State Legislatures (NCSL) had a meeting and decided to go ahead and have local taxation of telecommunications and e-commerce. They said that this was due to the need for it for it locally and because there was so many rapid changes with technology and the competitiveness of e-commerce that was developing. Now let’s fast forward to 2004. â€Å"On June 28th, Michigan became the 21st state to enact legislation to comply with the Streamlined Sales and Use Tax Agreement.† (See Figure 1)What the Streamlined Sales and Use Tax Agreement does is it â€Å"provides the states with a blueprint to create a simplified sal es and use tax collection system that removes the burden and cost from sellers and thus allows justification for Congress to overturn other decisions.