States battle FCC Internet phone ruling

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sales tax to on-line purchases

There were two main reasons behind the no tax on internet purchases: 1) The infancy of the net at the time was the primary reason. No taxes were permitted because the gov. wanted to provide unrestricted trade. Since then, they have confirmed that it would be a bad idea to put a "federal" tax on internet commerce. 2) Trade on the internet is by definition, Interstate Commerce (unless both the seller and buyer are physically located in the same state), and therefore cannont fall under state jurisdiction.

The law hasn't changed on a "federal" level. Some states do enforce sales tax on internet transactions; however, it is only on sales within their state, not on sales to other states. For example, if a company is located in California, they must charge sales tax to California shipping addresses, but not other states.

This is the only "fair" way to tax internet trade. To put a blanket tax on the trade would require enormous amounts of money and create a new tax authority in the federal government, something I think we would all like to avoid.

In the same manner, because VOIP is essentially a purchase over the net, the FCC is indicating that is a federal program rather than the State's jurisdiction. Imagine the states trying to trace a VOIP call that could bounce off routers in Canada. Can they tax that?

The cost of enforcing something like that would certainly be more than the revenue could compensate for.

Posted by: htotten   Posted on: 01/05/05 You are currently: a Guest | Members login | Terms of Use

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