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20 States Collecting Internet Tax
Patik writes "According to this AP article, twenty states, including New York and California, are "requiring taxpayers to declare any tax they owe on out-of-state purchases," targetting Internet sales. New York expects this to bring them $2.5 million this year while California expects $13 million. Many are cynical about the new push, saying taxpayers will simply leave the line on the tax form blank, though the IRS says they will audit any offenders."
It's only being made an issue due to the increased use of out of state mail order. That's what buying stuff over the net is. States have always required people to declare out of state purchases if the person declared at the time it was for delivery out of state.
My father's TV shop was 3 miles from a state line. He regularly had people come to buy TV and such to be delivered 'out of state' and so didn't have to pay him sales tax. They were supposed to declare it on their state tax form. Sure, few did. Sure, far more are doing this now. But it's nothing something new specifically aimed at the net.
"I may be synthetic, but I'm not stupid." -- Bishop 341-B
So the IRS is enfrocing state taxes now?
Someone needs to be bit more careful attributing quotes.
So if I live in Massachusetts, order something from Amazon, but have it delivered to my in-laws in New Jersey, who deliver it to my Uncle in Long Island for his birthday, which state is supposed to get the tax?
most all of us (er, not me) violate the "use tax" rules in our state with out-of-state purchases, except those in states without sales/use tax (lucky). but before you had to fill out a separate form and anyone would feel like a chump volunteering to pay a tax the state would have a heck of a time enforcing and none of their neighbors is paying.
... fanciful.
putting it on the main form will at least get money from more people, not such bad thing, and if you're dishonest you should still appreeciate it because it will lower your taxes otherwise due. heck if it's in on the main form maybe i'll pay it just as, er, i've been paying it all along of the separate one.
if you have a problem with the collection of the tax, bear in mind your problem is with ALL sales taxes, not the "internet" flavor of some of those purchases. (hey i don't like them, i think they may inhibit commerce.) one way to ease the recordkeeping burden is to provide, say, a $1000 exemption so many people don'thave to think about it. and from a recordkeeping standpoint, it may actually be a favor for out-of-state merchants to collect the tax for you. i think asking consumers to keep the records is nutty, we have better things to do. (btw, sales tax could be made deductible for federal purposes, it once was, as state income tax is now.)
personally i'd nationalize sales tax if we're going to have one at all, the present system only works because it is unenforced. way too inefficient, both for recordkeeping and enforcement. of course getting all 50 states to agree on tax policy is
the IRS says they will audit any offenders.
I don't think the IRS will be involved. The IRS is for federal taxes. The state tax auditors (if there are any) will do the investigating. If you do get audited by the IRS. only show them your federal forms. Unless they have a need to know, your state forms are none of their business.
IRS: You left this line blank. Are you trying to tell us that you have not made any out of state Purchases?
.. what?? I said I didn't make any out of state purchases.. !
Consumer: Yes.
IRS: Can you show us your out of state reciepts to prove your claim.
Consumer: Uhh
IRS: Damn that usually works.
Unless the tax is collected at the point of sale, I don't see this working.
I mean, obviously hardly anyone keeps track of all that stuff. It's a huge pain in the ass. If it was collected at purchase time then it would be a whole lot more normal (you know, like when you buy stuff in-state).
If they want to really collect tax they need to find a way to make the seller responsible for collecting the taxes not they buyer to report them. So now what, all companies in CA who buy things from CDW or tigerdirect are suppose to report how much they bough on the internet and then report that to the IRS? That will create a tax nightmare. Good luck to them at auditing!
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It's no secret that most states are hurting when it comes to their most recent budgets. Taxing the internet sounds good on paper for most of these politicians, and in a lot of ways it's just another form of locaization.
When most people purchase, they do so with the expectation of delivery charges. Catalogs are similiar. Whatever you don't pay in state tax, you will normally pay for in shipping fees.
The "Use Tax" is absurd. If the states which wish to impose sales tax on internet purchases, it should only to ONLY the stae in which the company resides. This would make states compete for the business of such companies. States would soon learn it's far better to not charge end users, but directly tax these companies earnings their the income of their employees.
Yet another form of short term legislation, which can't see beyond the next hill.
My reading is that the Supreme Court allows use taxes as long as they do not penalize interstate commerce. Your use tax rate may not be higher than your sales tax rate.
Mea navis aericumbens anguillis abundat
Auditing the offenders wouldn't be so bad. There are only, what, 16 million people in the whole state? Probably half of those purchase online. 8 million audits wouldn't put too much of a strain on the system.
"I'll say it again for the logic-impaired." -- Larry Wall.
Why would the IRS audit my STATE tax returns?
Kinda like civil forfeiture where some small town rouge cop
Rouge cop? Is that like the fashion police?
--- You shall know the truth, and the truth shall make you mad- Neal (not Cowboy) Boortz