Online retailers call Internet sales tax a ‘nightmare’

By Jose Pagliery

NEW YORK (CNNMoney) — The nation is one step closer to an Internet sales tax that some online retailers think would be compliance hell.

Online retailers with more than $1 million a year in annual sales outside their home state would have to start collecting sales tax upfront. They’d also be forced to send payments to local governments across the country. The “Marketplace Fairness Act” passed the Senate but faces a higher hurdle in the House of Representatives before becoming law.

Justin Krauss is worried about the paperwork burden it would place on his tiny company, Garage Flooring.

His business has annual revenues just above the million dollar threshold and racks up as many as 36,000 transactions a year. The vast majority are outside his home base in Grand Junction, Colo.

There are only four states that have no sales tax. Krauss would have to cut quarterly…

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