Virginia Residents, Businesses Split over Internet Sales Tax

Jul 14, 2014

Another national debate is taking center stage in Virginia—this time over a potential Internet sales tax. One group that’s opposed to out-of-state e-commerce taxation and the federal Marketplace Fairness Act says they have overwhelming proof that Virginians don't want it.

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Both sides of the issue want to sway Virginia Congressman Bob Goodlatte, who chairs the House Judiciary Committee, to their side. The R Street Institute’s Andrew Moylan says a new poll reveals that most Virginians don't want their goods purchased through sites such as eBay to be taxed. He also says the process is burdensome because on-line businesses would be required to pay varying taxes based on each state and purchase point. He says there's another option.

“The sort of technical term for it is origin sourcing, but in practice what that means is allowing online retailers to utilize the same collection scheme that brick and mortar retailers use, which is based on where they are physically present – where they are physically located. Then they only have to know one sales tax code – they only have to be accountable to one revenue agency.”

But brick and mortar retailers like James Hatcher, President of Pleasants Hardware, say Virginia stores lose lots of money when customers use their sales representatives and resources to inquire about goods and services—but then take their business to Internet retailers where they pay no taxes if the company is based in another state.

Virginia law does require consumers to pay a sales and use tax with their state income taxes if an online merchant does not collect the tax, but many Virginians do not realize that, so the state loses potential revenue.