Slashdot Mirror
Ban On Internet Sales Tax Ends Saturday
donnyspi writes "As reported in the Rocky Mountain News, among other places, the 5 year ban on collecting sales tax on purchases over the internet is scheduled to end Saturday. 'The original moratorium was established in 1998, renewed in 2001 and is set to expire Saturday. The U.S. House of Representatives passed a bill in September that would expand the ban and make it permanent. Similar legislation hasn't yet been voted on in the Senate.'
The ban that is about to expire is the one on taxing online services (such as ISP access). The "ban" on collecting sales tax over the internet is because of a law, but is the result of a court decision (which originally concerned catalog sales).
You probably live in a state where Dell has a physical presence. If you didn't, that's where the question of Internet taxation would apply.
If Congress wants to allow taxing of internet access by the states, they will now have the ability, though they probably won't. If they want to allow taxing of internet sales, they'll have to get around Supreme Court decisions that say states can't collect taxes on residents in other states. But the issues are NOT related, despite the frequency with which people screw this up.
-Looking for a job as a materials chemist or multivariat
Because it isn't really a sales tax ban. If you have a physical presence in the state, you are still required to collect sales tax. Only interstate purchases are exempt, because of the difficulty in complying with all of the different sales taxes laws.
"No Tax or Duty shall be laid on Articles exported from any State."
From The electronic commerce associationThe Supreme Court blocked the states in Quill Corp. v. North Dakota, 504 U.S. 298 (1992). In Quill, the Supreme Court held that, because state sales and use taxes are so complicated, a state cannot require a remote seller to collect sales or use taxes unless the seller has a physical presence, or "nexus," in the state.
It bans "use tax". It prevents states from taxing ISPs based on people simply connecting to the internet, like they do now for phone lines.
State sales taxes on internet purchases have been, and are still legal, and congress is doing nothing to stop them.
In fact, right now it is only possible for a state to successfully collect sales taxes if the e-commerce provider has a presence in their state, but the states are banding together to try to rectify this "problem", by creating a uniform sales taxation scheme that will force an e-comerce dealer in, say, New Hampshire, to collect and forward California state sales taxes from anyone residing in California.
I had the [mis]fortune of working for Dell's consumer sales phonebank this summer. This was a constant source of annoyance for customers who wanted to buy at advertised prices. They understood shipping, but did not quite understand why we had to charge sales tax in states where we had a business presence. Unfortunately, Dell has sites in some big states like Texas and Florida, too. Anyway, the states where Dell has to charge the full sales tax are Texas, Tennessee, Florida, Ohio, Pennsylvania, Kentucky, Nevada, North Carolina, and Oregon. If the machine has an on-site service contract, like desktop and some notebook systems, Dell charges tax on the value of the service contract in all states with sales tax. The contracts are handled by a third-party contractor, Banctec, so Dell isn't the company with the business presence in that case.
Somebody please, tell this machine I'm not a machine.
If only there was a "WRONG" moderation and it applied to the blurbs!
The fact that Internet and catalog retailers don't have to collect sales tax for states they don't have a business presence in is a result of a Supreme Court decision and the Interstate Commerce Clause of the US Constitution (which reserves regulation of interstate commerce to the federal government). That doesn't expire. The states have been trying, since before the Internet was a big thing, to get Congress to change that. So far they've failed, but they are still trying.
What does expire is a moratorium on a tax on Internet services themselves -- e.g. a tax on your ISP's services.
Other than some kinds of clothes there is very little I haven't bought on the internet. Parts for my computer, photo gear, clothes, scuba gear, stuff for my dogs, presents, and yes even toilet paper. Other than perishable food items I buy every thing online that I can.
Mostly because of convience and savings, but at the same time it's on principle since I live in the People's Republic of California, the third largest communist country after China and the EU, where the politicians have a nasty way of pissing away our tax money like there is no tomorrow.
A good example is the fuel tax, at $.18 a gallon, they collect over $16 billion a year with this tax. You know how much of it they actually spend on roads? Less than 1/4 of it, California by the way has some of the worse roads in the country.
I make it a point not to buy from any company that charges CA sales tax, even if it mean it will take an extra few days to get it shipped in from New Jersey. Funny though, even with the extra shipping charge the prices still usually manage to come in under those based in CA.
Having worked for the State of Alabama Department of Revenue, Sales and Use Tax Division, I might know a thing or two about this. The issue is NEXUS (Connection) and an issue of where the sale occurred.
Generally the Law has held that the location of purchase is the point of Delivery of Title to the object. This might seem to be that when you get something in the mail or by freight currier that it was sold to you when you picked it up. This is not so. The issue is where did it become yours. If you paid freight, the the item became yours when and where it was handed to the freight currier. (Free on Board[FOB]) If the freight is paid for by the Supplier then it becomes yours at your door unless you accept it as FOB at their dock. This is sometimes confusing to people.
The issue of collection of sales tax at the FOB point is generally one of the State in Question will not charge Sales Taxes on items shipped out of State because the item is for "Export." Please note that the definition of "State" is Nation just like Germany or France. We are 50 NATIONS not one. We are Federated. (Allies with a common control of foreign policy externally) The state where the goods come from generally likes to see lots more business and knows that if it taxes sales to outside, then it will lose business. The state receiving the goods is offended as it undercuts the taxed business base. This problem within the USA is a private low key war among the States.
The real solution is contained in the US Constitution where the Federation is empowered to resolve such matters under the power to regulate Interstate Commerce. This being one of the powers that Congress is doing its best to forget that it has, we suffer the problem of not having our tax bases of our various States protected by the Feds. I know that people don't like paying taxes, but we have to do so to support our government. This is undermining our Federation. It threatens our security.
Prior to the Internet Catalogue Sales did the same thing. Generally the cost of freight and such made the effect minor until the late 1960's. With the advent of large efficient Freight and communication services (including but no limited to the internet) we began to see serous problems. With the Advent of "Free Trade" (allowing non-federation States into the trade mix) this has become a serious threat to the existence of our States. 44 of the 50 US States are in serious financial problems due in no small part to this problem. The loss of the "Internet Ban" does little here. The real issue here is if the Federation will come in and do its job assuring that if one state drops its sales tax on mail order or internet order sales as "Export" goods, that the other state will get to pick up the "Inport" Status. The State of Alabama has a "Use" Tax. The "Use" tax taxes the use of an item if it did not pay sales tax. As such nobody in Alabama legally did not pay these taxes already.
Frankly the various US States need to stop this Low Key War on each other's tax base and start cooperation. The proper forum for the peace settlement is CONGRESS.
The problem of stopping the DOMESTIC US tax war will not alter the problem of the Extra-Federation tax war against the USA generally. That too needs to be addressed by the US Congress and most specifically by not writing Trade Deals which give the WTO or similar bodies power to stop us from dealing with this and by repealing NAFTA and GATT and USSFTA and USCFTA.
So long as one party is held to trade handicapped with a massive tax burden and his competition is free to do so without taxation, this constitutes de facto illegal status on the taxed party. His trade is fined and thus essentially illegal. This was recognized in the US Supreme Court Rulings of 1820 that prohibited taxation of Federal Institutions by States and of Churches by States. It was ruled that "The power to tax was the power to destroy."
The general demand of States for an end of this both domestically and externally, has been bra
Never Politically Correct ~ I prefer the facts If you don't like what I say, get a life, or comment yourself.