How the Internet Sales Tax Bill Will Affect Startups


Before you read this headline, did you know the Senate is planning to vote on a bill that could give individual states the authority to collect sales tax on all Internet purchases? It's been estimated the bill, if passed, could net local governments as much as $11 billion per year in added revenue.

Not million. Billion.

Oh, and that's revenue they've never been able to collect on. So, it's probably a safe bet this bill will pass. But what does that mean for startups?

The bill is called the Marketplace Fairness Act, and it's meant to fill in the gap of this situation that small-biz blog Free Enterprise describes: "If you live in a state that charges sales tax and buy something online tax-free, you're supposed to calculate the tax yourself and add it to your state tax bill."

Yeah, nobody does that. That's why this bill is going be around, most likely.

FindLaw points out that the down side to this will be tax confusion due to the varying tax rules from state to state. It's a lot for small businesses who sell online to figure out and calculate, but considerably less so for big boxes and massive online retailers because they have the manpower in place already to counter this.

But, on the plus side, as FindLaw also points out, there will be more exemptions passed if the bill carries. Small businesses that earn less than $1 million (not billion) will reportedly be exempt from collecting interstate sales tax.

If you're intrigued, or worried, you can read the full bill here .

David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a comedy-writing instructor for Second City and an adjunct professor in DePaul’s College of Computing and Digital Media. (He also co-runs a blog behind the DePaul class, DIY Game Dev.) He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. His first career aspirations were to be a game-show host.

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