If you own or are considering any Internet retail stocks, you should be aware of the possibility that, sometime in the future, all commerce on the Web may be taxed. Yes, anyone ordering books or videos from Amazon.com
This is an important issue because many of these businesses compete on price alone, and their margins are already razor-thin. An Internet sales tax could put a significant dent in their market caps.
Most of the pressure for Web tariffs is coming from traditional brick-and-mortar retailers, which feel they're at a competitive disadvantage because they have to charge a sales tax. A group of these companies, including Wal-Mart
Why aren't Web-only companies forced collect sales taxes? A couple of reasons, actually. For one, many lawmakers have been hesitant to put a drag on a developing new industry. But the biggest reason is the absolute nightmare businesses would face trying to comply. Even a single zip code can have widely varying tax rates, and the cost of implementing a system that could accurately charge consumers would be beyond many companies.
Tax proponents aren't giving up, however, and are trying to come up with a simplified system that would eliminate the complexities. And while Internet tax bills have had no luck in Congress thus far, expect the states -- which lose an estimated $13 billion on untaxed Web commerce each year -- to keep the pressure on.