Internet sales in the U.S totaled $226 billion in 2012.
Under the current law, states can only require companies to collect sales tax if the store has a physical presence in the state, which means many online sales are essential tax free, giving internet retailers an advantage over brick and mortar stores.
With a new bill, online sales tax would be sent to states where the shopper lives. The legislation passed a test vote in the senate yesterday 74 to 23.
At the Prepared Pantry in Rigby up to 70 percent of its sales are online. The store ships its famous mixes to all 50 states, Canada, and even overseas.
“One of the beauties of the Internet is that you can establish a business in a small community and sell nationwide,” said owner Dennis Weaver.
The Prepared Pantry started as an online retailer, then expanded to the store in Rigby five years ago.
Weaver said taxing online sales will hurt his business and create compliance issues.
“If there’s a bakery in Chicago that’s buying white chocolate chips from us, we shouldn’t have to collect sales tax and they shouldn’t have to pay sales tax. Trying to keep up on paperwork for something like that, that would just be a nightmare,” said Weaver.
Supporters of the bill include online giant Amazon.com which says taxing Internet sales would create a more fair marketplace, but Weaver doesn’t agree.
“It’s apples and oranges. They’re different cost structures. We do business very differently online than we do in the store,” said Weaver.
Online shopping, especially for the younger cyber savvy demographic convenience always wins.
“It don’t matter. It’s just easier online so you don’t have to leave your house. It don’t bother me,” said 17-year old Taylen Nelson.
“It’s convenient to just shop from home and not have to drive into town,” said online shopper Terri Nelson.
Small businesses who thrive on the success of online sales could be hurt the most.
“It puts small internet business out of business because they don’t have another market. It’s going to hurt places like Rigby and Shelley and the smaller towns.
It is important to note, businesses with less than $1 million a year in online sales would be exempt from the new tax.
Senate majority leader Harry Reid wants the bill passed by the end of the week.