Internet Taxation and the Expansion of E-Commerce

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Internet Taxation and the Expansion of E-Commerce

Internet taxation is an issue concerning different aspects of the Internet and its taxing. The taxes include: (1) taxes imposed upon Internet access fees, (2) sales taxes charged to online businesses selling to other businesses, and (3) sales taxes charged to consumers buying from a business. This is a very important issue as Internet sales continue to increase and as more business is conducted over the Internet. Because of this, revenue is not being pumped into state and local economies as much for lack of purchasing at local stores, and economies’ revenues are suffering as a result. Taxes could be imposed on Internet purchases, but this would in turn affect those businesses who conduct their business online, either business-to-business or business-to-consumer, and those consumers who shop online.

Internet Taxation: What it is and Why it is Important

As already stated, Internet taxation is the imposition of taxes on Internet access fees and taxes that could be added to goods, services, properties, and information purchased over the Internet.

In 1998, Congress passed the Internet Tax Freedom Act which established an Advisory Commission on Electronic Commerce. This Commission was set up to study federal, state and local, and international taxation and tariff issues concerning purchases over the Internet, and everything else along with electronic commerce. Electronic commerce, or e-commerce, is “any transaction conducted over the Internet or through Internet access, comprising the sale, lease, license, offer, or delivery of property, goods, services, or information, whether or not for consideration, and includes the provision of Internet access.” (The Internet Tax...

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