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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.'
Can we ban charging for shipping too?
Quid festinatio swallonis est aetherfuga inonusti?
Africus aut Europaeus?
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
State sales tax laws are a bit weird.. IANAL, but from what I've researched on it, if a company has ANY physics presence in the state where you are purchasing an item, you must pay sales tax on that item, regardless of how you order it, or where you placed the order. What matters is your physical location.
So it's quite possible that Dell has a physical location in the state where you live, and therefore you have to pay sales tax. If they do not have physical presence in your state, then you were inappropriately charged sales tax and you may be able to get it back.
When mail order business was getting started, the traditional businesses and the government moaned and groaned about the lack of tax return... However, today nobody is looking to tax mail order. Why not?
Mail order is been around far longer than the internet.
The internet is a wonderful business model and vector. Let us not soil it with taxes just yet.
Davak
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.
I see no reason why Internet sales should be treated any differently than catalog or telephone sales.
If I buy a widget from Company X via a catalog when I live in a different state than Company X, I'm not charged Company X's state's sales tax. But when this moratorium expires, I could be charged state sales tax if the purchase were over the Internet. And then, which state's sales tax would I have to pay?
Why should the medium of the purchase dictate the taxation rules? I, for one, would like to see sales tax laws universally applied for interstate commerce.
Just a few ideas rolling - I'm sure /.'ers will come up with more, and comment on this specific case. Not being an american, I lack the general "feeling" on the workings of the american economy.
0) Both empirical data and theoretical elaboration seem to concurr on that an Added Value tax would be the most efficient kind of taxation. Sales taxes don't quite distribute tax burden efficiently along the production chain. But how complex is really the production chain in a high added value internet reseller?
1) In countries with a high unemployed capacity, sales taxes will be very hurtful, as they will reduce consumption. But in a mature economy like the US, a carefully planned combination of consumption taxes and investment exemptions could encourage savings - and americans save four to five times less than their european counterparts.
2) The deadweight burden (the loss in welfare that doesn't become govt revenue) of a tax depends (among other supply-related factors) on demand elasticity - how much will demand react to a change in prices. If internet buyers are more price-sensitive than, say, buyers at the Walmart station in Dullsboro/OH, this could be hurtful to profitability perspectives as a whole.
3) How will this affect e-commerce with other countries? Foreigners are never happy to pay US taxes.
4) From a general equilibrium viewpoint, how large is the internet retail market in comparison to the large scheme of things? If not large enough, could it be the proverbial butterfly in south america causing a month-long storm in India?
5) I don't know if product-factor (Leontieff) matrixes are done by US bureaus of statistics regularly, but it would be interesting to take a peek if they did. Leontieff matrixes attempt to capture the interdependence of sectors in the economy - and while not being theoretically strict from a general equilibrium viewpoint, they're a very practical statistical tool. Anyone knows something about this?
6) Are they just trying to alleviate the govt. deficit? It doesn't seem to me the administration really cares about govt deficit.
7) Are they trying to impose stricter regulations on the internet on the grounds of tax evasions?
8) etc. etc.
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.