Sales Tax: When ‘Animal Farm’ Meets the Metaphysical World of the Internet

With this in mind, let's return to the questions posed at the outset of this review: Should the internet receive special treatment? Should it be a duty-free zone? Should we subject it to different rules, laws or tax regulations?

While Amazon might have seen a temporary downward tick in its sales, the company has the ability to adapt to this change. Presumably, Amazon will be able to change its pricing models and terms of sale to recoup the lost sales. Overall, e-commerce wan't hurt by Amazon taxes.

As long as online retailers are managing their business in the real, physical world, benefiting from all those features that are funded by taxes (e.g., roads, governments, even telephone wires and cables necessary to transmit the bits of information which constitutes the internet), there's no reason why they should be relieved from their tax obligation.

In Quill Corp. v. North Dakota, the Supreme Court concluded that it would be too much of a burden and too expensive to require small businesses to track the rates and rules of 10,000 taxing jurisdictions. However, that ruling was made in 1992. Since then, technological innovation has produced easy-to-use, inexpensive, highly credible solutions to address this burden. Those who are quoting the undue burden rationale as a basis for their opposition to imposing sales taxes are either still living in 1992 or they're trying to benefit unfairly from confusion surrounding the rapid growth of the internet. Online merchants can comply with sales tax just as easily as brick-and-mortar businesses.

It's time that online and physical retailers be treated as equals. It's time that we stop pampering the internet like a toddler. The internet is a mature business environment; let's give it the respect it's due.

Jonathan Barsade is the CEO of Exactor, a provider of automated systems to calculate sales and use taxes for online retailers.