2014 may be the year when the sales tax exemption that most philatelists enjoy when they add stamps to their collections ends. The current sales tax code in most states does not formally exempt postage stamps from sales tax but rather exempts sales of products that travel across state lines when the merchant lacks a physical presence in the state that he is selling (which is how most stamps are sold). This exemption has fueled the growth of mail order selling, and now Internet selling and has been actively opposed by most states who are desperate for revenue. The reason for current mail order sales tax exemption is that under our Constitution only the Federal government has the right to regulate interstate commerce, and so mail order sales from one state to the next fall under the bailiwick of Congress to regulate and tax. But under pressure from the states, Congress may well act this year.
The bill that is currently the front runner will allow states to levy sales taxes on interstate sales if they agree to streamline their sales tax codes. Currently there are thousands of different exemptions and tax rates by state, county, and often even smaller municipalities. The difficulty of a business, say in Jenkintown, PA calculating, collecting, and remitting thousands of different taxes has long been a critical argument against modifying the status quo. In exchange for the streamlining, companies with out of state sales of over half a million dollars will be required to charge and collect sales tax and remit it to each state. If this bill passes, it will add to your cost of your stamps if you are a collector. If you are a dealer, it will add to costs of doing business. Collecting the tax demands a high level of computerization and the use of an outside service, like a payroll service, to administer your sales taxes. It will be very troublesome to small businesses. I write about this now as 2014 is an election year, and one that is set to be unusually contentious. In election cycles like this one, candidates are unusually receptive to constituent concerns. If this change is something that you don’t want, it would be wise to follow the issue as the year progresses and contact your senator and representatives.