E-Commerce and Taxation
E-COMMERCE AND TAXATION
Thousands of businesses are selling goods and services through electronic commerce, including the Web and private electronic networks. Selling through electronic commerce is a rapidly growing channel for sales to both retail consumers and businesses.
Since about one-quarter of all state and local revenue comes from sales, use, and gross receipts taxes, the state and local governments are eager to avoid losing any tax revenue to electronic commerce. Traditional stores, however, now face heightened competition from electronic commerce sellers who are not collecting sales tax.
The major forms of e-commerce are:
- Business-to-business commerce: Many businesses are aggressively moving into business-to-business e-commerce because they want to cut costs, reduce order processing time, and improve information flow. For most firms, the rise in trade over the internet also coincides with a marked decrease in phone and fax use, allowing salespeople to concentrate on managing customer accounts rather than simple giving information or taking orders.
- Business-to-consumer e-commerce or online-retail sales: it operates on a substantially different model than does business-to-business e-commerce. Prior to e-commerce, there were two business-to-consumer models : retail stores and mail or phone order (including television shopping). The advent of internet and web technologies gave retailers the opportunity to take catalog businesses online, thereby reducing the costs of presenting products, increasing the frequency of sales by permitting around-the-clock shopping, and displaying accurate descriptions of merchandise that can be changed almost instantaneously.
- Online advertising revenue: According to the new eMail Marketing Report, total e-mail marketing expenditures in the U.S., which reached $898 million in 1999, will increase 417% to $4.6 billion by year-end 2003. It also noted that U.S. firms will increase their
Thousands of businesses are selling goods and services through electronic commerce, including the Web and private electronic networks. Selling through electronic commerce is a rapidly growing channel for sales to both retail consumers and businesses.
Since about one-quarter of all state and local revenue comes from sales, use, and gross receipts taxes, the state and local governments are eager to avoid losing any tax revenue to electronic commerce. Traditional stores, however, now face heightened competition from electronic commerce sellers who are not collecting sales tax.
The major forms of e-commerce are:
- Business-to-business commerce: Many businesses are aggressively moving into business-to-business e-commerce because they want to cut costs, reduce order processing time, and improve information flow. For most firms, the rise in trade over the internet also coincides with a marked decrease in phone and fax use, allowing salespeople to concentrate on managing customer accounts rather than simple giving information or taking orders.
- Business-to-consumer e-commerce or online-retail sales: it operates on a substantially different model than does business-to-business e-commerce. Prior to e-commerce, there were two business-to-consumer models : retail stores and mail or phone order (including television shopping). The advent of internet and web technologies gave retailers the opportunity to take catalog businesses online, thereby reducing the costs of presenting products, increasing the frequency of sales by permitting around-the-clock shopping, and displaying accurate descriptions of merchandise that can be changed almost instantaneously.
- Online advertising revenue: According to the new eMail Marketing Report, total e-mail marketing expenditures in the U.S., which reached $898 million in 1999, will increase 417% to $4.6 billion by year-end 2003. It also noted that U.S. firms will increase their