Internet Tax: A Fair Move or a Nightmare? - KTVN Channel 2 - Reno Tahoe Sparks News, Weather, Video

Internet Tax: A Fair Move or a Nightmare?

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As Congress considers a federal internet tax, locals are considering how it will impact the state of Nevada.

"It'll be a nightmare for us," says Martin Smith of the Flag Store, Sign and Banner in Sparks. "Not only will it mean trying to figure out a ridiculous number of sales taxes for different counties and different parts of the country, but it will mean additional software to help and more paperwork."

"But it's the fair thing to do," argues UNR Economist Elliott Parker. "When the internet first started up it seemed right to give internet sales that advantage. But now it's going strong and the no taxes charged gives the internet businesses a very big advantage over bricks and mortar stores. It's just not fair. There should be a level playing field."

Both are good points. But here are a few facts. All states are legally required to collect sales taxes even on the internet but it's been nearly impossible to police. Enforcing it is almost impossible. So having the federal government step in and offer to help enforce it will force change. Here's another fact, no one likes change.

"Small businesses that make under a $1 million in annual revenue won't have to comply to this, even if it passes," says Parker. "But the big companies will and that will translate into money for every state. Here in Nevada...a very rough estimate would be as much as $100-million for the state coffers. Every state will benefit, but Nevada even more because we are one of the few that don't have a state income tax. So we need this. And it's only fair."

"If it passes a lot of the internet businesses for the Made in Nevada products and even for our internet business at the Flag Store will be impacted. We don't think it's fair to change the rules but we will abide by them," says Smith.

And the real winner in all this just may be the one who figures out an affordable software program to allow internet businesses to calculate all the different tax rates.

The White House says President Barack Obama supports a bill to give states more authority to collect sales tax from internet retailers.

White House spokesman Jay Carney says the Senate bill would level the playing field for small businesses and brick-and-mortar retailers that are undercut by online companies.

Carney says that governors and mayors have overwhelmingly told the White House the bill is needed. He says states are losing out on revenue that could go to education, law enforcement, infrastructure investments and health care.

Under current law, states collect sales tax from companies that have a physical presence in their state. The Senate bill would expand that to include sales to people in other states.

The Senate is expected to hold a procedural vote on the bill on Monday.

Written by Erin Breen 

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