Taxes

Online Tax Tangles

May 23, 2013

Revenue that Virginia officials were anticipating from online sales tax legislation in Congress is now in doubt. 

Recently the U-S Senate overwhelmingly approved a measure to make it easier for states to collect sales taxes from online purchases. Since then lobbyists for big online retailers and small business owners alike have stormed House office buildings trying to sway your local representatives.

The reason for the intense lobbying effort is that billions of dollars are at stake. Virginia officials expect to reap more than $250-million from online sales tax revenue.

State revenues improved a little last month following a dismal drop of 6.1%  in March.  The news reassured members of the House Appropriations Committee, who worry that federal sequestration cuts could have a negative impact on both Virginia’s economy and the state's coffers. 

  Many Virginians are heaving a sigh of relief after getting tax returns done and in the mail, but for some the challenge of paying taxes as just begun. 

They’re the ones who get notices from the IRS.  At the very least, that’s an annoyance, and for some it’s a nightmare, but free help could be a phone call away.

Every state has at least one federally-funded office to help people having trouble with the Internal Revenue Service.  In Virginia there are two: the Community Tax Law Project in Richmond and the Tax Clinic at Washington and Lee’s School of Law. 

While Virginians wait for the dust to settle and lawmakers breathe a sigh of relief that the transportation funding battle is over, the nonprofit Commonwealth Institute for Fiscal Analysis has combed through the rubble to examine its effects. 

In the last 20 years, Virginia’s manufacturing sector has declined by 46%. 

Given the fierce competition worldwide to attract businesses, state lawmakers are examining whether it makes sense to restructure the Commonwealth’s state and local tax system to remove financial hurdles to doing business here.  

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