Internet, iTunes Taxes Coming
By Mark Fleischmann May 19, 2008 — Frequent internet shoppers know the feeling. You've searched out the best deal, added it to your shopping cart, and you're ready to type in your credit card number. But what's this? The total isn't what you expected. How are you getting nickel-and-dimed to death? Oh, taxes.

Many internet retailers still don't charge or collect sales tax when shipping to a customer in a different state. But the happy tax-free days of internet shopping may finally be winding down with the introduction in Congress of the Sales Tax Fairness and Simplification Act. Yes, they're really calling it that.

Sens. Michael Enzi (R-WY) and Daniel Inouye (D-HI) are cosponsoring the Senate version, while Reps. Bill Delahunt (D-MA) and John Conyers (D-MI) offer the House version.

Legal downloaders—you know, those persons of rare character who are willing to pay for music—are also increasingly getting hit thanks to what some are calling the iTunes tax. States already taxing digital downloads include Alabama, Arizona, Colorado, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Maine, New Jersey, New Mexico, South Dakota, Texas, Utah, Washington, West Virginia, and the District of Columbia. According to News.com, California may be next.

Some internet retailers are still fighting local tax authorities. Amazon has gone to court to prevent New York State from taxing the Seattle-based retailer's transactions. And Overstock has dumped its New York-based affiliates in an attempt to avoid state taxes.