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California Assembly Approves Internet Tax
ClientNine writes "California could collect more than $1 billion a year by taxing Amazon and other online retailers if a bill approved by the Assembly becomes law. Assemblyman Charles Calderon, a Democrat from Whittier, says his legislation doesn't impose a new sales tax, but extends one that California should already have been enforcing. AB155 passed, 47-16, with the support of one GOP lawmaker Tuesday. It now heads to the Senate. Other Republicans rejected the bill because they said it would invite lawsuits, drive business out of California, and get the state entangled in the messy task of regulating the Internet."
"We're Broke, what should we do?!"
"Hmm, how about we 'extend' taxes online and piss off silicone valley?"
"OK, we'll extend the taxes, but you are not urinating on my tits!"
Except they're now forcing businesses in other states to collect and remit taxes for items sold to Californians. This should be interesting because they're creating an interstate commerce tax which should normally be the jurisdiction of the Feds. Given the Feds got bent out of shape about Arizona doing the same with immigration, they either have to push a double-standard, or correct California's overstepping of authority.
I've fallen off your lawn, and I can't get up.
The universal answer is the only thing that counts is where the item is being shipped. Taxes have to be paid for that locality.
Unfortunately, it isn't just at a state level.
Once you figure out which state gets the money, it would help to have some sort of file or server that sites can check to figure out how much tax to charge- sites shouldn't have to expend resources to stay on top of tax rates in all 50 states.
If it was just 50 states it would be simple. It isn't. There is a separate tax rate for every state, county, township, city, and village. This means you have to have an exact address - zip code doesn't really cut it I don't believe. There are several services that are available today that will compute tax for you, but they are expensive services that you have to pay for. Or, you can just turn all your sales processing over to Amazon who can obviously do it all now. Once you get to a certain size it makes more sense to just have your own files and staff to maintain them rather than paying someone else to do it at a higher cost.
But there is no mistaking that it is a huge problem. I know there are city/county overlaps where within a single city there are two different tax rates depending on which county you are in. Buffalo Grove, IL (used to live there) is split in two different counties (Lake and Cook) which have different tax rates. I seem to recall there being even worse problems in Ohio with townships, villages and counties all having their own tax rates and the final answer was the sum of the three for a particular address. No, there is no central authority for this - everyone that is doing nationwide sales tax collection today is either paying for a very expensive service or is doing it themselves. And it changes constantly.
My guess is that this will be a huge windfall for Amazon and a few other very large retailers that are able to offer shopping cart/purchasing services to other retailers that can't afford the services to compute the tax.