PC World reports:
"The U.S. House of Representatives has approved a seven-year extension to an Internet tax ban, the final step before the legislation heads to President George Bush to be signed into law.

The House on Tuesday approved the Senate version of the Internet tax moratorium, which would ban Internet-only taxes such as access taxes for seven years. The current ban has been in effect since 1998, except for a lapse during most of 2004."

Personally I think that this is very good thing.  We are truly engaged in a global economy, and the thought of trying to tax pure Internet transactions just does not make sense, yet...  Where you have a brick and morter location, such as we have here in Minnesota, then you have established the fact that your company is doing business in Minnesota and your corporation exists as a corporate body at the pleasure of the State.  For this, I fully support the need to pay corporate taxes.

In the case of Internet only transactions that are outside of Minnesota, or your state, then you are not obligated to pay taxes, the recipient of the goods is responsible for reporting this transaction and for paying any taxes, if applicable.  We know a little bit about this here at Evolve.  In 2007 we were audited by the State of Minnesota for Sales and Use tax.  Our auditor did a fine job of going through all our books and did discover 1 transaction where we shipped a taxable item to a particular zip code that did not have our normal 6.5% tax.  This location had a 7.45% tax due to some very local entertainment taxes.  The fine was $1.74.  Yes, that is correct.  The State of Minnesota audited us, spent all that time, all that effort, as did Evolve, and for their efforts recovered a total of $1.74.  Not bad for a few days work.

The reason that I mention the above is to illustrate that we are very familiar around here with how the Sales and Use tax system works, at least how it works in Minnesota.  So, to look at a National Tax, which is what an Internet tax would have to be, would only compound the issues from the standpoint of taxation.

And then think about items from Canada or Mexico or Belize being shipped to Minnesota, or the other way.  Who would be responsible and how would the taxes be collected?  I assume that the government would figure out some way to totally mess things up.  Which is why I think that they decided to wait for another 7 years to figure it out.

I for one am happy that they decided to do so.  But that does not mean that for the next 7 years they won't be scheming on how to best implement a "Fair Internet Tax Act" (FITA)  Watch for it.

Cheers.