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

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.

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.