Internet Commerce and State Sales and Use Taxes

Description

State governments rely on sales and use taxes for approximately one-third (32.3%) of their total tax revenue – or approximately $174 billion in FY2000. Local governments derived 16.4% of their tax revenue or $51.6 billion from local sales and use taxes in FY1999. Both state and local sales taxes are collected by vendors at the time of transaction and are levied at a percentage of a product’s retail price. Alternatively, use taxes are not collected by vendors if they do not have nexus (loosely defined as a physical presence) in the consumer’s state. Consumers are required to remit use taxes ... continued below

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16 Pages.

Creation Information

Maguire, Steven January 18, 2002.

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This report is part of the collection entitled: Congressional Research Service Reports and was provided by UNT Libraries Government Documents Department to Digital Library, a digital repository hosted by the UNT Libraries. It has been viewed 27 times . More information about this report can be viewed below.

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Description

State governments rely on sales and use taxes for approximately one-third (32.3%) of their total tax revenue – or approximately $174 billion in FY2000. Local governments derived 16.4% of their tax revenue or $51.6 billion from local sales and use taxes in FY1999. Both state and local sales taxes are collected by vendors at the time of transaction and are levied at a percentage of a product’s retail price. Alternatively, use taxes are not collected by vendors if they do not have nexus (loosely defined as a physical presence) in the consumer’s state. Consumers are required to remit use taxes to their taxing jurisdiction. However, compliance with this requirement is quite low. Because of the low compliance, many observers suggest that the expansion of the internet as a means of transacting business across state lines, both from business to consumer (B to C) and from business to business (B to B), threatens to diminish the ability of state and local governments to collect sales and use taxes. Congress has a role in this issue because commerce between parties in different states conducted over the Internet falls under the Commerce Clause of the Constitution. Congress can either take an active or passive role in the “Internet tax” debate. This report intends to clarify important issues in the Internet tax debate.

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16 Pages.

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Congressional Research Service Reports

The Congressional Research Service (CRS) is the public policy research arm of Congress. This legislative branch agency works exclusively for Members of Congress, their committees and their staff. This collection includes CRS reports from the mid-1970's through the present--covering a variety of topics from agriculture to foreign policy to welfare.

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  • January 18, 2002

Added to The UNT Digital Library

  • Dec. 5, 2006, 9:03 a.m.

Description Last Updated

  • Nov. 17, 2015, 1:26 p.m.

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Maguire, Steven. Internet Commerce and State Sales and Use Taxes, report, January 18, 2002; Washington D.C.. (digital.library.unt.edu/ark:/67531/metacrs9285/: accessed October 22, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.