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You may soon be paying sales tax on your Amazon purchases

The Amazon homepage appears on a screen in Washington on September 3, 2010.

Amazon.com and other online-only stores are not required to pay sales tax in most states. That's thanks to a 1992 Supreme Court ruling that says stores must only collect the taxes in states where they have a physical presence. So in Amazon's case, Washington residents pay up because Amazon is based there, Kansas residents pay because Amazon has a distribution center in that state, but if you're in, say, Wyoming, you pay nothing.

Works out pretty well for Amazon, which gains a pricing advantage over rivals like Barnes & Noble or Wal-Mart or Best Buy, who have stores all over. Doesn't work out so great for many states who are strapped for cash and would like to recoup some of the billions of dollars in would-be tax dollars.

We talk to David Gamage, a professor of law at UC Berkeley's law school. He says Amazon's brick-and-mortar rivals are pushing hard to take away Amazon's advantage and "sponsoring and trying to campaign for legislation to make sure Amazon and other online retailers will be taxed."

Gamage says Amazon is also claiming that if it has to live up to every tax code across the nation, it's going to be incredibly difficult to navigate it all. Thousands of jurisdictions are out there, each with its own version of tax law to obey.

Michelle Quinn joins us from the online political magazine Politico. She says many states have tried to establish a streamline sales tax initiative, and just use the same policy from state to state. But getting all the states on the same page can be tricky. Twenty-four states have agreed to it, but 26 have not.

The other option is a federal law governing the establishment of a uniform online sales tax. Amazon has gone on the record as not opposing such a measure since it would at least be only one uniform law to follow. States would get their revenues so they support it, as do the stores with physical locations. This is the kind of initiative that Sen. Durbin is said to be introducing soon. It's also the kind of bill that's been floating around for years and never passed, due in part to the heavy weight that goes with any possibility of being seen as increasing taxes, especially heading into an election year.

Also in this program, Microsoft will soon prevent you from creating a Hotmail account with an easily guessed password like "password" or "123456" or the always clever "qwerty."

About the author

John Moe is the host of Marketplace Tech Report, where he provides an insightful overview of the latest tech news.

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