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Traditional Retailers Contend With Cyber Monday

Traditional stores say e-commerce has an unfair advantage as consumers are exempt from paying sales tax on purchases from out of state.

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Photo: University of Salford/Wikimedia

Amazon will begin charging Indiana sales tax in 2014.

Today is Cyber Monday, online retailers‘ equivalent of Black Friday. Traditional stores contend those merchants have an unfair advantage.

The US Supreme Court ruled in 1992 that states can‘t force companies to charge sales tax on out-of-state purchases. At the time, the so-called “use tax” primarily targeted mail-order catalogs.

But the ruling has loomed ever larger with the explosion of online shopping. Traditional stores complain not charging sales tax gives e-commerce sites an unfair price advantage.

Indiana cut a deal this year with the largest online retailer. Amazon will begin charging Indiana sales tax in 2014. The Indiana Retail Council has protested there‘s no reason Amazon should receive a two-year grace period, and is lobbying to move that date up six months.

Use tax still appears on Indiana tax returns, but the tax is almost universally ignored. The Indiana Department of Revenue says fewer than one percent of taxpayers pay it.

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