Internet Tax

Paper Summary:

This paper discusses how the issue of an Internet sales tax has been at the topic of much debate over the past few years and how the budget crises facing many states have made it a crucial one. It explores the current status of Texas legislation regarding Internet taxation and investigates the federal law regarding Internet taxation. It looks at the National Governors Association's model legislation to streamline and simplify state taxation and also examines the the jurisdiction requirements that allow states to impose sales taxes and the case law that affects a state's ability to tax Internet sales.

From the Paper:

"In 1999 Texas legislation proposed that the state would join the streamlined sales tax project. In recent years the legislation has adopted the practices of the streamlined sales tax project. Texas has currently has one the most stringent Internet tax systems of any state in the union. The state was concerned that it was loosing valuable tax revenue for sales made over the Internet. The Houston Business Journal explains that a merchant in Rhode Island can sell a product over the Internet to an individual residing in Texas but the state will not have the benefit of charging a sales tax because it is unaware of the purchase. This scenario has made lawmakers in Texas and other states criticizing the current federal legislation governing Internet sales tax."

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