Many people are pleasantly surprised when Internet shopping is tax free. However, not all Internet shopping is tax free-it depends very much on where you live, and where the company from which you are ordering is located. In most cases, you are only assessed sales taxes on products you purchase from an Internet company that is located in your state. If you order outside your state, purchases are generally tax free.
There are a few states where all purchases are tax free. Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon do not have a sales tax. So even if one lives in one of these states, most Internet purchases from companies in the home state are not taxed.
If one visits and shops in another state that applies sales tax, one usually cannot make tax free purchases. However, if one is physically in that state at the time of purchase, one may be benefiting from some things the taxes pay for, like good roads.
Conversely, shopping on the Internet means one is not physically in the state where one is making the purchase. One cannot be said to be using any of the resources of that state, thus one does not benefit from any money paid in sales tax. Therefore tax free purchasing seems only fair.
However, tax free purchases on the Internet may not exactly be tax free. In fact, in some states, one is supposed to report all Internet purchases, and duly pay sales tax at the end of each tax season. This is especially the case when one orders things from an online site that exists in one’s state. Often online merchants charge sales taxes to no one, not even people who should be taxed under state law. So technically, one should police one’s self and pay appropriate taxes.
This type of self-monitoring is seldom done. Most people don’t report tax free purchases where a tax should have been paid. They may cite that assessing taxes should be the job of the merchant. If a merchant fails to charge appropriate taxes, then the merchant should pay the government appropriately. It wastes time for consumers, some argue, to research which sites are physically located in their own state.
Some politicians argue for taxing Internet use to make up for losses to local businesses. However, this idea has yet to become any type of law, and is opposed by many. At some point in the future, however, Internet purchases might not be tax free if Internet use is taxed.
