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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).
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.
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.