Cash-hungry states eye online retail for tax revenue

(From the latimes.com) Web-savvy shoppers can often save big buying online instead of at the local mall. But a chunk of the savings comes at the expense of state and local governments, in the form of sales taxes that are never paid on many Web purchases. The losses add up for cash-starved state and local governments across the country: California alone loses out on more than $1 billion a year.

Now states are starting to get serious about collecting that money. Options under consideration include rewriting the rules on which dot-coms have to charge sales tax — or even requiring online retailers to send their customer lists to the government.

And in an ironic twist, states are getting support from tax-wary business groups, which complain that online retailers such as Amazon and Overstock are exploiting a legal loophole to undercut the competition on pricing.

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