'Cyber Monday' skipping sales tax in most cases

Tuesday, November 30, 2010 - 11:55am

Today is "Cyber Monday" - a day when customers hit the Internet for online deals.

But many may not realize, most online sales are without sales tax.

One market research firm says online holiday spending could increase 11% this year - up to $32.4 Billion.

Many states say they need their cut of the pie.

Monty Jones with Performance Audio in Tyler believes many customers appreciate that local small business feel as opposed to online sales.

"I want to buy from my friends and meet my friends and get to know the person who's selling to me and ask them questions, and I know that I can pick up the phone and ask them questions," Jones said.

A past supreme court ruling says online retailers don't collect sales tax unless they have a physical presence in the customer's state.

"So if you're paying sales tax on an online transaction, that means that business has property or employees in the state, and if you're not paying sales tax on an online transaction, it's because they're not," Joe Henchman with The Tax Foundation said.

Naturally, many states are upset over this.

One possible solution for online retailers is one the Tax Foundation is cautious of for fear of disrupting the economy.

"By forcing them to collect thousands of sales taxes based on where the customer is located - as opposed to brick and mortar, which just has to collect one sales tax based on where the company is located," Henchman said.

Jones believes paying sales tax is important.

"You know, it's no different for me to sell it to you right here over the counter versus ship it someplace else. Either way, I need to pay the tax," Jones said.

This year, total holiday shopping is estimated to reach over $400 Billion.

Online shopping accounts for about 7% of that.

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