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Closing In On An Internet Sales Tax

State legislatures are putting up less resistance than expected to streamlining sales taxes. So far, 20 states have passed laws aimed at harmonizing their sales tax laws with each other, a key step toward taxing e-commerce. Several more are expected to take up sales tax bills later this year.

State legislatures are putting up less resistance than expected to streamlining sales taxes. So far, 20 states have passed laws aimed at harmonizing their sales tax laws with each other, a key step toward taxing e-commerce. Several more are expected to take up sales tax bills later this year.

All in all, about twice as many states tackled the issue than backers--members of the Streamlined Sales Tax Project--expected. One reason is the state of state budgets. "States were looking for revenue sources and here's a tax that's already there," says Neal Osten with the National Conference of State Legislatures, which has been coordinating SSTP efforts. "It's a way to get revenues from taxes that are already levied but not collected."

The next step is to show the U.S. Congress the progress that has been made toward simplification and ask it to give states the go-ahead to collect sales taxes on Internet-based or catalog sales.

Some states clearly aren't done with their efforts yet. Texas, for example, passed a simplification law but left an important debate on "sourcing" for later. The states collectively decided to charge taxes according to where the buyer lives--not where the retailer is located, as Texas law says. One small city protested the change: Round Rock, home of Dell Computer Corp. That's because Round Rock depends on taxes from sales of Dell computers to fund one-third of its budget.

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