Declining tax revenues have state governments searching for new funding sources. Retail Internet sales are an obvious target. Hawaii is considering legislation to make its tax code consistent with the Streamlined Sales Tax Project, in exchange for which some participating retailers would collect and remit Hawaii’s 4 percent tax on sales in the state, even if the retailer does not have the minimum contacts and substantial nexux with the state required by Quill v North Dakota for a state to impose sales tax liability on out-of-state retailers. The state estimates it could raise $166 million a year from such taxes. The linked article notes that 1,100 retailers have agreed to cooperate with the Streamlined Sales Tax Project, which 22 states have adopted. Idaho, meanwhile, is headed in the opposite direction. Its House Revenue and Taxation Committee just voted against joining the SSTP. Congress holds the ultimate card in this game; I won’t be surprised if Congress repeals the Internet Tax Moratorium and allows states to impose new taxes on Internet sales transactions.
How long till email chains warning of the U.S. Postal Service’s “email tax” crawl out of the Urban Myth dungeon and get back in circulation? (See Snopes article)