Freeman Evans, Pattiby Patti Freeman Evans

 

As we reported back in May, online retailers should prepare to charge sales tax in certain markets, even if they do not plan to do so across the country. Cash-strapped states are looking to tap any potential source of revenue (California, for example, has been working through an onerous $26 billion budget gap) and have in recent months been proposing legislation to require online retailers to submit tax in states in which they deliver.

Since the report’s publication, however, the governors of Hawaii and California have struck down the requirement for retailers to collect online sales tax with strokes of the veto pen. As a result, Overstock.com, which had dropped its online affiliates in California and Hawaii when the legislation still had a shot, reestablished its ties with its Californian and Hawaiian affiliates.

What all this boils down to is that the precedent that New York established by requiring the collection of use taxes on goods purchased by online shoppers within a state doesn’t appear to be gaining real traction —at least, not at present. Forrester will continue to monitor these debates, inarguably intensified by the current recession, and their potential impacts on eBusiness & Channel Strategy Professionals in the months to come.