Update on State and Local Revenue Loss From Internet Sales

GAO examined the Bureau of the Census' estimates of e-commerce in 1999 to determine whether GAO should revise the results of its 2000 report on sales tax issues from e-commerce (GAO/GGD/OCE-00-165). This report uses private-sector forecasts of Internet and total remote sales as the basis for several scenarios illustrating the impact of such sales on state and local sales and use tax revenues. The scenarios show that considerable uncertainty exists about the size of the impacts and how various assumptions about sales, compliance, and other factors contribute to that uncertainty. Census' new e-commerce estimates do not provide a basis for revising the results GAO found in its 2000 report. Census' definition of e-commerce is broader than Internet sales. Because of the way firms provide information on their e-commerce sales to Census, Internet sales cannot be separated from the broader e-commerce sales at a level of detail that allows GAO to compare Census' results with the Internet sales estimates used in its 2000 report.