Online Purchases to Become Costlier

Last updated on May 6, 2022

Up to this point, online users usually did not pay sales tax on purchases made online. That was because current U.S. tax laws do not require online retailers to charge sales tax from customers who were not located where they had a physical store. This will change if a bill regarding online tax sales passes the Senate and becomes law.

The bill will require all online retailers in the U.S. to charge sales tax from their customer irrespective of their location. Even though there presently is a law that requires an online buyer to report and pay sales tax on purchases made online when filing taxes, if no sales tax is charged by the retailer, rarely anybody complies with this law.

For the government, it is difficult to make every taxpayer comply with this law. Instead, a new law will be brought in that requires all online retailers to charge sales tax on all online purchases, no matter the location of the customer or physical store. Smaller retail businesses believe the new tax law will make it difficult for them to survive.

Big retailers, such as Walmart, Amazon, and eBay are able to absorb the new tax. After the bill becomes law, small retailers will need to shoulder this new burden whether they like it or not.