Intended or not, Cyber Monday is a big tax evasion day

Black Friday has passed, as has the social outcry from many who accuse retailers of stripping Thanksgiving of its real meaning by starting the holiday shopping season early. Today, the limelight is on Cyber Monday.

According to Forbes magazine, surveys of consumers indicate that some 86 percent of working folks are planning to spend some of their work time today buying online. Indeed, Cyber Monday has come to be the biggest online shopping day of the year.

It also happens to be, from a statistical standpoint, a day when millions of U.S. shoppers allegedly commit tax evasion. It might not be intentional, and it's unlikely to be prosecuted. But it is a reality due to unresolved issues over sales taxes.

As shoppers in the region around the District of Columbia know well, sales taxes are part and parcel of the consumer experience. Go to Tyson's Corner or Montgomery Mall and you know you're going to pay sales tax. That tax often doesn't show up on the receipt for an online purchase, however.

It's not that the tax isn't owed, it's just that retailers who don't have a "significant physical presence" (perhaps in the form of an actual store) in a given jurisdiction typically argue they aren't required to collect the tax. That means that the onus is on the buyer to pay up. But, truth be told, it rarely happens.  

Forty-five states, D.C., and Puerto Rico all have sales tax laws on the books, and every state that has such a tax also has an equivalent use tax that is supposed to cover "use, storage, or consumption" of goods and services when no sales tax has been paid.

There have been attempts made at both the federal and state levels to close the gaps in such tax collections, but no resolution has been achieved.

For now, the honor system rules. You follow it, right?

Source:, "Cyber Monday: It's The Most Wonderful Tax Evasion Day Of The Year!," Kelly Phillips Erb, Dec. 2, 2013

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