On the Internet tax and whether Arizona should or should not repeal its law taxing online sales - Essay Example

Effects of imposing online sales taxes Internet online sales tax laws exist in many federal s that govern the state’s relationship with the online commercial businesses. Therefore, the firms and businesses indulging in sale of products online must be well versed with the regulation. Main controversy exists on whether the taxes should be collected by the online retailers from sellers who sell the products outside the state boundaries. Most federal state governments such as California and Mississippi are recently making considerations on the best way to impose the online sales taxes.

This is because they gain revenue from the taxes. On the contrary, if not well considered they can act as barriers on investors whose markets exist online.The U.S constitution has two provisions from Supreme Court jurisprudence that define the enacting of nexus, which include Due Process Clause of the Fourteenth Amendment and the Commercial clause. The court requires that a particular state cannot impose duties levying responsibilities on a seller who is not physically present in the state, under the Dormant Commerce law.

This law is subject to amendments by the congress as the congressional regulation has influence on most tax-related policies. Congress may therefore allow different regulations to govern commerce between states. The law of physical presence of the seller and buyer still holds until when the congress may change the contents of the law.Another tax that is levied together with the sales tax is the use tax., During the sale of services and commodities in the same state, sales tax is imposed, while the residents incur a use tax if they purchase goods or services outside the state boundaries.

Use tax play an important role in ensuring that the citizens of a particular state purchase goods within the boundaries and evade the sales tax. However, constitutionally enough bond or “nexus” must be put in place between businesses and state on the onset of a state imposing tax burden on a business that operates beyond its boundaries.Remarkably, there exist discriminatory taxes like the Commercial Clause that bars states that do not allow commerce between states. As a result, states that impose taxes on the remote out-of-state sellers and not on the sellers from within its boundaries are disciplined by a judicial scrutiny.

The subject state is exempted only when the tax burden is excessive as compared to the local benefits. Supreme Court under the Due Process Clause offered a distinction between the nexus analysis and the dormant clause for congress. The congress bestows the mandate to authorize action on a state that would impose an unconstitutional tax burden on interstate bossiness. This must be in consistency with the constitution provisions. Under the courts Fourteenth amendment due Process analysis, the buyer must be physically present as Commerce and Process Clauses need the amendment.

Online sellers have tried to lobby the states from imposing taxes on them as they lose market for their products. Amazon was forced to close its outlet in Dallas due to the high taxes. In relation to the existing laws and legislature governing the imposing of online taxes on internet commerce, the state of Arizona should retain its regulations. Work citedMaeda, Martha. The complete tax guide for E-commerce retailers including Amazon and eBay sellers.

Ocala, Fla.: Atlantic Pub. Group, 2012. Print.