Issue: Many rural communities find themselves losing their retail base. Local retailers are competing with Internet retailers who do not have to collect sales tax if they do not have a physical presence in that state. This deprives local and state government of tax revenue needed to provide essential services.
Background: The development of new technologies and digital processes has had a profound effect on the U.S. economy. According to the most recent U.S. Census, e-commerce sales have grown from $995 billion in 1999 to $2,385 billion in 2006. Since Internet retailers do not have to collect sales tax if they do not have a physical presence in that state, many rural communities are finding themselves losing tax revenues and their retail base. Currently, Farm Bureau opposes requiring out-of-state sales tax collection.