From Volume 83, Number 2 (January 2010)
Over the past decade, the Internet has become an integral part of our society, and its expansion has led to a surge in e-commerce. E-commerce, defined as “any business transaction completed over a computer network, including . . . the sale of goods or services,” has similarly become integral to our society. The popularity of e-commerce is reflected in the observation that most consumers consider online retail to be “a primary benefit of the Internet.” The Internet has dramatically enhanced the ease and convenience of engaging in e-commerce in the United States and worldwide. Purchasing items ranging from textbooks to antique lamps to luxury handbags is now only a mouse click away. Items can be purchased remotely from “click and mortar businesses”—retail businesses with both a physical and Internet presence—and small online businesses alike.
Online selling platforms, such as eBay, Amazon, and Google Checkout, have facilitated the growth of sales by small businesses, sole proprietors, and casual sellers. For instance, eBay, “the world’s largest online marketplace,” has contributed to the evolution of e-commerce by bringing sellers and buyers together in a virtual marketplace, offering a variety of both new and used items. With more than 724,000 Americans reporting that they derived their primary or secondary source of income from eBay sales in 2005, tax law must be modernized to facilitate effective taxation of Internet commerce. In particular, income tax law must be updated to incorporate income generated by e-commerce and ensure that this income is properly reflected on the tax returns of online sellers and appropriately taxed.