Get Ready to Pay Taxes on Online Purchases

More states, and Amazon, are collecting from online shoppers.

This could be the last holiday season that online shoppers skip paying state sales taxes. Efforts have been under way since 1999 to collect from more online shoppers. (Taxpayers in states that impose sales taxes are supposed to pay what’s known as a use tax when they’re not charged for online purchases, but few consumers pony up.) The stumbling block has been a lack of consensus on how to streamline and simplify the collection process, and lessen the burden on retailers that would have to remit taxes on behalf of customers to nearly 10,000 jurisdictions with a hodgepodge of rates and rules.

But momentum is building at state and federal levels. And with online retail giant Amazon.com reversing its opposition and taking the lead in support of collections, the days of tax-free shopping are numbered.

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Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.