In an effort to increase tax revenues, Washington State has joined 18 other states that require some e-commerce businesses to collect sales tax. The State has come to an agreement with approximately 1,100 online retailers that have volunteered to begin making tax collections. In return, the State has promised not to sue them for back taxes they might have owed.

According to a spokesperson for the Washington Revenue Department, the new law will have two major effects. The first is that Washington is fully joining the national online sales-tax effort. Second, under the new law, Washington will convert its tax system from orgin-based to destination-based for shipped goods. This means that tax will be collected based on the location of the buyer, not the location of the seller.

As Washington joins the ever-growing national sales-tax push, the rift between small and large business owners is also growing. Large businesses are generally in favor of such changes, as these laws are working toward reducing the confusion and differences between the thousands of tax jurisdictions across the country. Small businesses, however, are finding that investments in order to be compliant with the new law will be a major drag on their bottom line. 

This is an issue that will continue to be in the headlines. Unfortunately, I believe that the creation of a nationwide system for collecting sales tax for online purchases will happen in the near future. As more shoppers look online to buy items, states will fight harder and harder to get paid on these sales. This is an issue that all internet retailers and marketers should continue to follow.