Why Congress banned Internet gambling in the US in 2006 is a great mystery particularly since one major result of the ban was Internet gambling went offshore as did the possible tax revenues to the US. By lifting the ban Congress will have a new source of revenue. The Congress is considering legislation would direct the Treasury Department to license and regulate Internet gambling operations and allow the Internal Revenue Service to tax Internet gambling. Since my home state Texas cannot figure what to do about gambling the neighboring states (New Mexico, Oklahoma, and Louisiana) have all created havens for gambling, and a result gambling revenues from Texas are sent offshore to web-based gambling and our neighbors. Surely the Internet gambling tax revenue could help the economy, and I hope our elected representatives get this message.
Is an Internet Sales Tax coming?
Where a taxable transaction takes place on the Internet has always been a challenge. In 1992 the US Supreme Court ruled that retailers only had to collect sales tax in states where they have a physical presence. Congress is now considering Internet sales taxes as local government have lost significant tax revenues from Internet transactions. However, if I buy a book from Amazon which is in Washington state, the book may ship from Kansas, and the server on which I purchased the book could be in California. How can anyone figure out where the taxable event took place?