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Does Online Cross-border Shopping Affect State Use Tax Liabilities?


  • James Alm

    () (Department of Economics, Tulane University)

  • Mikhail I. Melnik

    () (Department of Business Administration, School of Engineering Technology and Management, Southern Polytechnic State University)


How does online cross-border shopping affect state use tax liabilities? We collect our own data on actual online cross-border shopping transactions from, focusing upon a "representative" commodity classification and a "typical" day. These data allow us to examine the extent of actual online cross-border shopping by buyers, and the subsequent potential impact on state use tax liabilities of buyers. Our results indicate that online cross-border shopping is highly prevalent on eBay, with out-of-state purchases accounting for on average 94 percent of the volume of a state's online purchase transactions. Even so, given the limited volume of eBay- based transactions relative to total sales transactions, the likely impact of cross-border transactions on state use tax revenue streams is negligible, even if we assume full buyer compliance with state use taxes.

Suggested Citation

  • James Alm & Mikhail I. Melnik, 2012. "Does Online Cross-border Shopping Affect State Use Tax Liabilities?," Working Papers 1206, Tulane University, Department of Economics.
  • Handle: RePEc:tul:wpaper:1206

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    References listed on IDEAS

    1. James Alm & Mikhail I. Melnik, 2012. "Cross-border Shopping and State Use Tax Liabilities: Evidence from eBay Transactions," Working Papers 1205, Tulane University, Department of Economics.
    2. Alm, James & Melnik, Mikhail I., 2010. "Do Ebay Sellers Comply With State Sales Taxes?," National Tax Journal, National Tax Association, vol. 63(2), pages 215-236, June.
    3. David Merriman, 2010. "The Micro-geography of Tax Avoidance: Evidence from Littered Cigarette Packs in Chicago," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 61-84, May.
    4. Ballard, Charles L. & Lee, Jaimin, 2007. "Internet Purchases, Cross-Border Shopping, and Sales Taxes," National Tax Journal, National Tax Association, vol. 60(4), pages 711-725, December.
    5. Tosun Mehmet S & Skidmore Mark L, 2007. "Cross-Border Shopping and the Sales Tax: An Examination of Food Purchases in West Virginia," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-20, December.
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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Online purchases and state use taxes
      by Economic Logician in Economic Logic on 2012-08-31 18:55:00

    More about this item


    online commerce; sales taxes; nexus; tax evasion;

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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