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State Coalition Approves Internet Sales Tax Plan
An anonymous reader submits this story about the U.S. states banding together to figure out a way to tax mail-order transactions.
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why do you think we buy stuff on the internet? Cheap prices, and no tax! Even though we have to pay shipping its still a good deal. If we have to pay shipping and tax I will never buy anything online ever again!
keanmarine.com
all they will do is chase E-commerce out of the country completely, or into the states that didn't sign up.
the only draw that has kept mail order and now the internet alive is the fact that you can offset the shipping costs by bypassing the sales tax (Illegal I know, you are supposed to pay it yourself in april..... prove I bought that armani sofa mister secretary of the state!)
most of the time if I find something online for cheap, I can find it within a 1 hour drive of my home for the same price. the lack of sales tax offsets the shipping (most items) and makes the buyer happy with waiting for delivery.
any state that adopts or joins this will kill the Ecommerce in their state.
Do not look at laser with remaining good eye.
I see no reason why online shopping should be taxed any differently than catalog shopping. IIRC, taxes are charged on in-state sales only. States that wish to tax differently than this should also look into taxing catalog sales.
This article skims over one very important fact, what is to become of the money earmarked from local option taxes?
I personally hate the fact that each city can have its own different tax, and would love to see a consistent sales tax everywhere I go.
However...the reason that most of these local option taxes exist is to fund a specialized project that otherwise would not happen. Several area towns have used this to direct money toward schools, rec centers, etc.
All in all, seems as though the government is trying to stuff their large, greedy paws in the cookie jar, and they may not even come away with anything except crumbs. The administration of the plan, and the sharing of profits with vendors that is mentioned in the article may in fact eat up most of the profits that the government thinks they would see.
My $.02
but why should the internet be diffent then mail order
Mail order doesn't have to pay sales tax. Ever notice that when you order something from a catalog it says something like "$STATE residents must pay $PERCENTAGE sales tax", where $STATE is the state where the busines is located?
Out of state residents pay nothing. In theory they're supposed to submit a report and pay taxes to their own state. In practice, no one ever does this.
Sales tax is levied at the state level. There is no need for any federal law on this. As it stands, if you buy something from an online store, and they have a business presence in your state, you pay sales tax to your state.
That's why I have to pay Texas sales tax on my crucial.com purchases even though they are not in Texas. If, on the other hand, I buy something from NewEgg.com, which is in California, I pay no sales tax because they do not have a business presence in Texas. California residents do pay sales tax.
Internet sales are just like mail-order catalogs, and the same tax rules apply. We have no need for new laws on this.
"It's better to keep your mouth shut and be thought a fool than to open it and remove all doubt."
The U.S. General Accounting Office has estimated states lose nearly $13 billion each year on untaxed Internet transactions.
Yeah, and I lose several grand a year by not skimming funds off a local company's treasury. "Lose" is too misleading. It's like buying a can of beans with a coupon and saving 49 whole cents.
Hey! I know... lets form another TASK FORCE to investigate this problem. Then they will take a 5 year period to basically tell us either what we all already know or simply say, "we need more time" but either way nothing will change. YAY! Self perpetuating machine that goes against EVERYTHING our country was founded on! YAY!
I did hear about this news story on Marketplace/NPR at work tonight. I already have to collect state sales taxes for stuff I ship within Texas, and it's complicated enough keeping track of and filing monthly for the little tax zone that I'm in. I understand that's the cost of doing business, but for someone who does an extremely small volume in a sole proprietorship this is quite frustrating. This just adds another (probably) half-inch thick stack of paperwork I have to deal with at tax time and year-round, more forms I have to fill out and more opportunities for me to get confused, screw something up, be audited and be fined or worse. I can't afford to hire an accountant or a tax attourney, so I have to learn all this myself.
Not to mention the fact that people are not going to want to pay sales tax for something after they're already paying $10-20 plus for shipping costs. Unless they plan on making sales tax an even amount for all counties, cities and metro areas across the country, I don't even see how this is possible -- nor can I see how it will serve any purpose except to hurt online sales that are already hurting to begin with. This just seems so unwise and poorly considered to me, both from the point of view of a small online business owner and as a person who orders many things online myself.
My Webcomic: Asylum on 5th Street
They have had a way to tax that for centuries. It's called a tariff.
Living in a state that spent money like a drunken sailor in a whorehouse when the booming economy artificially boosted tax receipts, and now has a 1.7 billion dollar hangover, I might suggest that they spend less money.
Mea navis aericumbens anguillis abundat
States can tax sales within their borders, but interstate commerce is up to the federal government. States have no right to do this.
Hey, chief, the Internet isn't different from mail order. There's a little thing called the US Constitution which specifically prohibits states taxing interstate commerce. The idea was to avoid having each state do exactly what the US as a whole does, i.e., use tarifs to implement protectionist policy.
No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another: nor shall vessels bound to, or from, one state, be obliged to enter, clear or pay duties in another
XML causes global warming.
It's called a lookup table.
Zipcodes are five digits long right? That's a lookup table of 100,000 tax rates. The tax rate for each cell in this lookup tables comes from one of approximately 50 entities, or about 2,000 zip codes per state.
100,000 tax rates and say 4 bytes per tax rate. That's a 400K table. Pretty small table overall.
Each state probably has at most 100 different state tax rates. That I am sure is a gross overestimate. I bet it's more like 10.
This seems like a pretty easy job of data asembling to do.
You can have each state make their own particular lookup table made available from their secretary of state, or available with their digital signature available from the state website.
Then start with one zipcode to state lookup table published by the USPS and available online, signed, at some well known URL.
The rest is a smop for the sophomore programmer.
If you're a legacy (*nix, windows) publisher, you assign an intern to call up each 50 states and get their tax rates tables and stick that into your legacy app.
OR, if you're an ASP/VSP, you can make one website surf the state urls for updates and make that available as one interface (SOAP, XML-RPC)
Pretty easy. I never understood the arguments that this was too hard to implement.
My little website is just one of thousands of tiny little businesses that are run part-time, or just barely pay the bills for one person to run it.
It's absolutely unbelievable what a lot of companies charge for "e-commerce" software. How likely is this to be a $49.95 turbo-tax package? Nope, it'll be targeted at businesses and a few blood-sucking companies will see this as a big opportunity to rake in the dollars from every on-line merchant. We've seen lots of this mega-expensive software, and we manage to get by and make customers happy without any of it. It's unheard of to be _required_ by law to purchase some particular (extreemly expensive) software. And with some special gov't appoval/certification process, you can be sure it'll be plenty expensive...
But for the little guys (like me), that money just isn't there. We can't spend thousands on software, or just about anything else for that matter. It looks like the company these states are working with is Taxware. Go visit their site and take a wild guess at what they're going to charge for this sort of software. It ain't gonna be cheap.
The fact is that there are many thousands of very small on-line merchants. VERY small. Filing 45 tax returns is going to suck. Paying for expensive software, or consulting fees to some "approved" company will only add injury to the insult. Our accounting software budget includes a new version of Quickbooks for next year. That's about all we can afford software-wise.
And it goes against all other tax paying practice to require specific approved software. You don't need special software from a specific "approved" vendor to file taxes. You do need to know how to do it, of course. My partner is a CPA and she knows ordinary sales tax very well (even though we live in Oregon where there is no sales tax). Why should we be held hostage to purchasing special software? Why does it need to be from specially approved vendors?
If the tax can't be paid by a company with an ordinary CPA, and some special software is required, and that software is so special that vendors need to be certified by some special approval process, they certain't haven't made great strides towards making this a simple enough process. Special software isn't required for paying normal taxes, and requiring a special certification process for tax calculation software is totally unheard of. It reaks of a back-room deal between GovOne (the makers taxware) and these states... if some complicated certification process is required for anyone else trying to enter the market for this new software that every on-line merchant is compelled to buy, guess what the prices will be in the first year when Taxware is the only product available and everyone is REQUIRED to buy it?
Well, enough ranting for one day. Maybe it won't be so bad. I'm just in a bad mood because a customer refused to pay the tax/duty on a package we shipped to the UK (and now we need to do something about it, and all the options suck....)
PJRC: Electronic Projects, 8051 Microcontroller Tools
Any idea what states were particapents to this meeting? I'd like to know if I should start writting my congressperson now or not.
"Not knowing when the dawn will come, I open every door." - Emily Dickinson
Small lookup table? Almost. You can purchase them right now. It's a problem that has been solved, but it's not quite as simple as you think. I once worked on an automated system that calculated sales tax for customers in several states where the company had a physical presence. First off there may be state tax. Then there may be city tax. Then there may be an Independant School District (I don't know about other states but in Texas they are independant taxing authorities.) In almost every case ZIP code is enough to uniquely identify the 3 or 4 different tax rates. Occasionally there was a ZIP code that was split by different taxing districts. In that case the full ZIP + 4 was needed, introducing a few more lookup values.
Once you've done that lookup, you have the tax rates. Add them all together and you know how much tax to charge.
Of course then you have to file the paperwork with each of those different taxing authorities and cut them their checks, usually on different schedules...
In short, it's a nightmare. But actually doing it for all 50 states wouldn't be much more complicated than for one. At least it wouldn't be too bad from a programmer's point of view. The biggest burden would be on the accountants and lawyers.
To email, do the obvious.
In my opinion, states are already making money off catalog and Internet sales. These items have to be delivered, typically by a national shipping company. States tax the delivery company's profits, tax the fuel for their vehicles, and tax the wages of the employees. That's got to be more than a few $. I'm also willing to be you'll find a tax-paying e-commerce company in every state in the country, and probably catalog companies as well.
So what it comes down to, the greedy state governments want more...big surprise.
It's interesting to see that Utah's governor is spearheading this effort somewhat. Whenever a governor starts talking about something like this, everyone should stop listening. He has no business talking about internet tax. Only congress has the power to regulate interstate commerce (Gibbons v. Ogden 1824). People need to realize their place in the hierarchy and stop trying to step out of their bounds.
"Nature doesn't care how smart you are. You can still be wrong." - Richard Feynman
That's just an example. I know there are other taxes besides sales tax and income tax. But, in the end, the government will get money from you one way or another. They skim it from everywhere.
Nothing is certain but death and taxes.
Taxation without Representation is what this breaks down to. What is to prevent your local legislature from heavily taxing all out of state transactions? Their constituents shouldn't care, the people affected are not in their districts! Then we get a war of continually raised levies on interstate goods. Then we revert back to colonial times. We might as well just print our own local currencies...
If you have a chance, contact your local and state representatives and let them know that this is the worst thing you've heard of. Otherwise, we'll all be screwed.
The only way a consumerist economy will work is by putting discretionary income in the hands of the consumer. The government actually needs to tax us LESS, so we have more money to spend. If there's more money actually working in the economic system (and not lining some politician's pockets) then consumers will buy more goods. More goods will be produced because people can afford them and demand is high. And *gasp* Then you have MORE JOBS because more of this wonderful stuff that consumers consume is affordable to them, and they want it now!
Taxing people just reduces how much money they can spend in our economic system...It keeps them from going out to McDonalds and instead keeps them inside cooking $1.50 TV Dinners.
Do you know what happens when you over-tax people? You piss them off. Do you know what happens when those you're taxing realise that they're pissed and they don't like your taxes? They throw all your fucking tea into the harbor and do a happy dance because your regime is about to crumble.
Reinvent the wheel only at either a lower cost, greater effectiveness, or your own personal enrichment and satisfaction.
Yeah, lets have another sales tax! Alright! Party time!
... and more! Oh the joy!
... and so on ...
So lets enumerate a typical pay check on a typical day...
Federal Income Tax (unconstitutional BTW)
Unemployment Tax
Soc Sec. tax
medicaid tax
State Income Tax (likewise)
Gas Tax
Cigarette Tax
Excise Taxes
Sales Taxes
Personal Property Tax
Prepared meals tax
highway tolls
FCC charges
The thing I find troubling, almost ironic with almost every tax, especially sales taxes, is that I'm paying these taxes with income that has already been taxed. WTF.
And what do I get for the 50% of my income that goes to the government??
I get to wait in a long line at the supermarket while DaSheeki sorts her grocieries in 3 separate piles... one for WIC, one for Food Stamps, and one for cigarettes (which she purchases with a $100 bill). What a pleasure that can be.
I get to have my annual IRS harassment.
I get to have my annual BMV harassment.
Can anybody name one thing besides internet (mail order) sales that IS NOT taxed? Bueller?
How many of you gainfully employed lemmings actually study your pay stub every time you get paid, and identify the amount of money the government stole from you that week?
What are you going to do about it?
Skiers and Riders -- http://www.snowjournal.com
My wife runs a small internet business selling hot sauce and other scary things. She currently pays local inventory tax, business property tax, building tax, self-employment tax, state and federal income tax and use/sales tax on equipment used to run the business and now another tax to be applied to customer on sales. It is enough to make me start thinking of a having a tea party.
Do you honestly want to be writing out all those checks?
My partner and I are incorporated, and I can tell you that the administrative workload increases very quickly when you start doing things in other states, and writing checks is the very least of the load. Have a half-day-a-week employee in the neighboring state? Great...don't forget to open a tax account in that state, deposit witholding taxes there every month, pay unemployment taxes every quarter, and file a tax return every quarter. Client wants you to visit sites in five different states? Super....each of those states expects you to pay income tax on the 12 hours of work you did there. They may have a "neighboring state" agreement with your state, or they may allow you to declare those twelve hours in your home state, but it's totally up to them.
Collecting taxes for every jurisdiction in which you make a sale would be a nightmare for small operators.
Evil is the money of root.