A study by the Direct Marketing Association (DMA) reports that conventional wisdom about the amount of taxes being lost to e-commerce has been incorrect, and implication being that states looking to plug their budget gaps on the back of a new online sales tax may be surprised by the results.
In 2001, for example, it as believed that $13.3 billion in sales taxes were lost to the online channel, but the DMA study says it was closer to $2.5 billion.
States are prohibited from collecting taxes on out-of-state retailers unless they have a physical presence in the state.
The DMA report estimates that states will miss out on $4.5 billion in tax revenue in 2011, while a different study by the University of Tennessee suggests that states will lose $54 billion.
In 2001, for example, it as believed that $13.3 billion in sales taxes were lost to the online channel, but the DMA study says it was closer to $2.5 billion.
States are prohibited from collecting taxes on out-of-state retailers unless they have a physical presence in the state.
The DMA report estimates that states will miss out on $4.5 billion in tax revenue in 2011, while a different study by the University of Tennessee suggests that states will lose $54 billion.
- KC's View:
- Somebody is going to end up very surprised if the DMA is right on this one. Hell, someone is going to be surprised if they’re only half right, and the actual number falls somewhere in the middle.
