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Internet shopping is not always tax-free, as it depends on where you live and where the company is located. Some states have no sales tax, while others require reporting and payment of taxes. Taxing internet use is a debated topic, but currently, most online merchants do not charge sales tax.
Many people are pleasantly surprised when Internet shopping is tax free. However, not all internet purchases are tax free, it really depends on where you live and where the company you’re ordering from is located. In most cases, you’ll only be charged sales tax on products purchased from an Internet company located in your state. If you are ordering from outside your state, purchases are usually tax free.
There are some states where all purchases are tax free. Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon do not have a sales tax. So even if you live in one of these states, most Internet purchases from businesses in your home state aren’t taxed.
If you visit and shop in another state that has sales tax, you usually cannot shop tax-free. However, if one is physically in that state at the time of purchase, they may benefit from some things that taxes pay for, such as good roads.
Conversely, shopping on the Internet means not being physically in the state in which you are making the purchase. You can’t be said to use any of that state’s resources, so you don’t benefit from the money you pay in sales tax. Thus the tax-free purchase seems fair.
However, tax-free purchases on the Internet may not exactly be tax-free. In fact, in some states, you should report all Internet purchases and duly pay sales tax at the end of each tax season. This is especially true when ordering things from an online site that exists in your state. Online merchants often don’t charge sales taxes to anyone, not even people who should be taxed under state law. So technically, one would have to check himself and pay the appropriate taxes.
This type of self-monitoring is rarely done. Most people don’t report tax-free purchases where a tax should have been paid. They may mention that assessing the fees should be the merchant’s job. If a merchant fails to charge the appropriate taxes, the merchant should pay the government appropriately. For consumers, some argue, wasting time researching which sites are physically located in their state.
Some politicians advocate taxing Internet use to offset losses to local businesses. However, this idea has yet to become any kind of law and is opposed by many. At some point in the future, however, Internet purchases may not be tax-free if Internet use is taxed.
