Online shoppers who are residents of the state of Washington will now have to start paying sales tax on purchases made on the Internet.
Starting today Washington joins 18 other states that require some online retailers to collect sales tax. About 1,100 ecommerce retailers have agreed to collect taxes in exchange for the state not going after them for back taxes.
Last year Washington passed the law to require online retailers to collect sales tax. The new law changes the state's tax system from origin-based to destination-based. Taxes will be collected based on the location of the buyer, not the location of the seller.
"This is a very important step,"Mark Johnson, vice president of government affairs for the Washington Retail Association, told the Seattle Post-Intelligencer. "It's a major changing of our tax structure." Brick-and-mortar stores support the online sales tax saying that it allows for fairer competition with ecommerce businesses.
Most smaller businesses do not support the new tax law. They will have to implant new software in order to identify Washington's 350 taxing districts. They are also concerned about the law becoming national, as they would then be required to sift through thousands of tax codes and file returns throughout the year for each code.
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