Internet Tax Ban Extended

GiorgioG sent in news that the ban on internet taxes will be extended for two years. Not that that will make the recession go away, but it's a start. Remember: every time you buy over the internet, an angel gets his wings.

Comments

State Taxes.

[SuperguyA1]

This doesn't affect the ability of States to tax internet sales does it? I know Michigan keeps telling me I am required to pay taxes no matter where I buy from. Is this correct?

Re:State Taxes.

[Trekologer]

This doesn't affect the ability of States to tax internet sales does it? I know Michigan keeps telling me I am required to pay taxes no matter where I buy from. Is this correct?

You're supposed to pay sales tax. In my state, the grand old New Jersey, the back of my state income tax return has a form for "Use Tax". I'm supposed to declare purchases I've made out of the state or though the mail where New Jersey sales tax was not collected* and pay the 6% on those purchases. I am not telling you to break the law, but... its very simple to avoid that tax... just don't pay it.

Sales tax is not a tax on the sale (or seller), its a tax on the purcahse (or purchaser). So, your state wants to collect tax on all purchases you've made, even if they were from out of the state.

It should be noted that this "tax ban" prevents the Federal government from taxing Internet purchases, not the state governments. It is highly unlikely that the Federal government would tax internet purchases since they do not tax cross-state mail order purchases anyway. This is more to make Internet purchasers "feel good" than anything else.

* If I purchased online or mail order from a merchant in N.J. they are required to collect the tax.

no shocker here, move on.....

[Anonymous Coward]

This is not really a big news story. Back a few weeks ago /. posted a story on the tax ban NOT being passed, only in the chaos from the events of Sept 11. Now the senate has gotten to business and passed the ban on internet taxes. Yay. Tax free for two more years. And the next. And probably the next.

Internet taxes should go for internet improvements

[Warp!]

The internet, in a way, is somewhat like a new nation. No existing government should be collecting taxes on the internet.

If taxes are collected for internet transactions, those taxes should be put to use to improve internet infrastructure, not existing government infrastructure.

Personally, I don't want to see any taxes on internet transactions, ever. But I would be much more willing to pay a small tax if I had a say in what the tax was used for.

What about Pr0n?

[laserjet]

"Sen. Ron Wyden, Democrat of Oregon, who favored the simple extension, said Americans don't want to be taxed when they log on the Internet for their news, weather and sports."

That may be, but I really think that most Americans don't want to be taxed when they "log on" the Internet for their pornography.

On a side note, does "Internet" really need to be capatilized anymore?

How?

[Exmet Paff Daxx]

Isn't this just their way of saying they still have no clue how to implement a tax on Internet sales and make it enforcable? The state of Maryland, for example, imposes a %10 use tax on any goods purchased via the Internet or mail order from out of state in order to "level the playing field" with local Maryland businesses. I know quite a few people in Maryland who owe thousands in "use tax", which requires you to police yourself and send it in at the end of the year, because they have never paid it and don't know it exists. The state picks a few hundred people each year to "audit" for use tax, and they usually get hit with so much back use tax fines that they collapse under the financial load and declare personal bankruptcy. Imagine owing 10% on anything you've ever ordered from out of state, for as far back as the state can get ahold of financial records, plus interest and fines. Ya.

If this is how the states are taxing the Internet, you can imagine how well the Feds would do. They're probably looking at the dismal failures of the states and waiting for a successful model to emerge.

How taxes really work.

[ers81239]

I was the programmer elected to serve on a tax compliance comittee for an online retailer. Here are some things most people don't realize about taxes and the internet.

• There are 2 kinds of tax that can apply to a sale. They are sales tax and excise tax. Both of these taxes are paid to the juristiction where the goods were sold (not where they were received).
• In a face to face transaction, the SELLER is responsible for collected the tax due to the jurisdiction where the sale is taking place. This is called a sales tax.
• In a non-face to face transaction, the BUYER is responsible for paying all applicable taxes to the proper jurisdiction (as well as any taxes that could be incurred from the transport of the goods). This is called an EXCISE tax.
• Sellers are required to collect SALES tax to facilitate commerce (imagine if you had to file paperwork for every purchase you ever made).
• The internet ban restricts states from requiring the companies in their jurisdiction to collect sales taxes on internet sales. There aren't any proposals in congress that deal with some kind of special 'internet' tax. They are talking about they ways that sales and excise taxes are handled.
• What does it all mean? When you buy $1000 worth of hardware online, you actually owe taxes on it. The deal is that states can't afford to come track you down to collect it.

Has anybody

[Anonymous Coward]

from the Congress or academia thought about adopting value-added tax like that in the Europe? VAT may solve the problem of interstate trade in the US. It basically works by taxing everytime, say a desktop, each of its components is assembled. So tax is also collected thru stages of production instead of just distribution like retail tax. A whole lot different but might be useful in this case.

Re:Is it really hurting traditional retailers?

[chris_7d0h]

True, and here I think you came upon something interesting (I choose to comment instead of modding it).

Why are the Internet prices so similar to the ones in the retail stores?

One might guess that not having large buildings in attractive and central areas along with a bundle of employees to fill the stores out would some how cost less money. One might also imagine that a new start-up Internet company does not have the financial leverage to get as good deals with their distributors as the large giants have.

So, what conclusions can be drawn from this (if any)?
As I see it, either one of the following might explain the situation.

* The price difference between a large and local retailer and an internet start-up is almost non-existing, since the distributors take a higher cut of the pie for the small firm than for the larger one. (The fat distributors get a higher fat/order ratio from a small firm than from a large one :)

* The small Internet company does indeed have high margins and earn a lot on each sale. If that money turns into profit is probably depending on a lot of other factors (such as the cost of the jet-set life of the employees in the internet start-up *grin*)

* The large companies are so financially strong that they can afford to do a Microsoft.
(That is sell at a loss and thus provide more value-add for each sale until the weaker competition has starved to death).

Regardless, I don't see why Internet based companies should have any special benefits. Especially as consumers are not seeing the benefits in the form of reduced prices.

If the companies can not turn a profit, then they have an invalid business model or a wrong company structure. This is a question of ordinary company management and is not unique to the Internet.