Wal-Mart vs Amazon in the Battle for Sales Tax

Twenty one different cash-strapped states have begun to look at the billions of dollars they are not collecting from out-of-state e-commerce companies selling to their residents.  They are beginning to have the fever dreams over that potential revenue source that being stranded on a desert island can produce in the minds of starving castaways – even your best friend can appear to you as a juicy frankfurter when you haven’t eaten in days.

The Economist frames the coming war over the “universal sales tax.”  The main front will likely be in California, where Wal-Mart ($WMT) is spending big and its rival Amazon ($AMZN) is already collecting signatures…

A TAX dispute as old as mail-order catalogues turned into warfare this month. Leading one army is America’s largest consumer market, California. Leading the other is the largest online retailer, Amazon. At issue is whether states can force out-of-state merchants to collect sales tax on purchases by in-state residents. This fight is national. But California, where such matters inevitably go to the ballot box, is likely to be its most spectacular front. Amazon and its lieutenants are already collecting signatures to call a referendum, probably next June, on the state’s new tax law, which went into effect on July 1st.

Are you selling or conducting commerce with out-of-state residents online?  Are you the vendor or supplier of a company that is based in another state?  The fallout from this struggle has the potential to mean major cchanges in the way America does business, this article is a good place to begin understanding the issues.

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