U.S. Senate Internet sales tax proposal may help community newspapers

By William E. (Bill) Garber

The US Senate passed a nonbinding proposal to test where there is support in Congress to implement sales tax collections across state lines. Its overwhelming support may very well be good for community newspapers. Here is why.

The proposal exempts businesses with sales of under $1 million through the Internet. It is rare that a community newspaper sells $1 million of anything through the Internet that would otherwise be subject to sales tax. This means the vast majority and possibly all community newspapers would be exempt. Otherwise, a community newspaper could be required to pay sales tax on a subscription sold three states over if that state required sales tax on newspaper subscriptions, and a number now do.

If this standard became law, it is possible that community newspapers now required to report sales tax on subscriptions sold to distant destinations within their state could become exempt, ending this annoyance. To become exempt, of course, the state would have to adopt the national policy for in-state sales, exempting transactions of companies doing less than $1 million of Internet sales even in state. This is not likely across the board, but some states may just try to keep everything really simple and have a single policy, particularly if their revenue goes up noticeably overall, which is highly likely.

Finally, if states now demanding community newspapers collect sales tax based on the delivery address were to continue to demand this, collection could be made much simpler and therefore less costly. To qualify for receiving sales tax, each state would have to adopt the national system. This would greatly reduce the cost of implementing sales tax management for every business, as a single system would meet the requirements of all 40-some states collecting sales taxes.

Here is a report directed to the technical community that would be required to implement this proposal.  Click here for link to article.