Nexus tax brings in cyber revenue for Alabama

Nexus tax brings in cyber revenue for Alabama

MONTGOMERY, AL (WSFA) - Cyber Monday meant big deals, but this year the sales could also mean big revenue for the state all because of the "nexus" tax for online companies.

The tax focuses on online companies that have a nexus in Alabama, like an office or distribution center.

Taxing online sales creates its own challenges, especially since the companies are often not in Alabama.

"It's extremely important to tax online services because that's the future," said AUM Economics Professor Keivan Deravi.

Some online companies, like Amazon and locally owned Cushion Source, are paying the nexus tax, but some online companies are not paying taxes at all.

"Part of it is tapped [and] part of it is untapped, that again erodes the very base of the sales tax," Deravi said.

Alabama cannot afford the eroding of any tax, as generating revenue has been a problem.

However, if online companies were to follow tax laws throughout the country, they would have to deal with a multitude of tax laws from the different states.

To solve the problem, Gerry Monroe, CEO OF Cushion Source, wants to bring people together.

"Make sure everyone's concerns are heard; not just one side, but all sides of the subject," Monroe said.

In terms of taxes, online sales are relatively new. The issue for lawmakers is keeping the taxes up to date, with an industry that constantly changes.

"I think that's the challenge. I think, ultimately, it will catch up," Monroe said.

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