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US Senate Passes National Internet Sales Tax Mandate
SonicSpike writes with the news that the U.S. Senate yesterday "passed a nonbinding proposal to allow states to collect sales tax on Internet sellers that have no presence within their borders. The proposal was an amendment to a 2014 budget bill that the Senate debated Friday. It was pushed by Senators Mike Enzi, a Wyoming Republican, and Dick Durbin, an Illinois Democrat, and was designed to give backers a sense of whether they had enough votes to push forward with final legislation to impose an Internet sales tax. The vote showed they have plenty of backing to overcome any filibuster seeking to block a final sales tax bill."
Shouldn't change life in Delaware much. We don't have sales tax, period.
Until you get charged sales tax by the state in which the internet retailer exists.
More data, damnit!
Wrong. If they have a presence they already have to collect and remit sales tax as part of current State laws. This will just mean the States can collect tax on all sales. Right now most online sales go untaxed.
It is not a National tax. It will just allow the States, not the Feds, to collect existing sales taxes on online sales.
The knee jerk reactions around here are amazing sometimes.
They've been trying to pass legislation like this for the last seven Congressional terms, this makes it eight.
http://www.netchoice.org/library/sales-tax-collection-myth-vs-reality/ ...legislation has been proposed in each of the past seven Congresses that would reverse decades of history and legal precedent preventing out–of-state sales tax collection, and another bill is being circulated for cosponsors by Senator Mike Enzi (R-WY). It would impose on all states and all retailers the provisions of the now voluntary Streamlined Sales Tax Agreement (SSTA). SSTA proponents have touted this measure as a simplified, streamlined method for collecting sales tax. Unfortunately, the reality is far different – the SSTA promises to increase significantly the complexity and compliance burdens for interstate sellers.
but mostly because sales taxes are primarily regressive taxes (they impact poor and middle class much more than the rich because poor/mids spend a greater percentage of money surviving). At the same time I'm a lot more concerned about wealth inequity than I am about paying an extra 10% on crap I buy online.
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This will be struck down. You can't tax a person or business not in your jurisdiction. You could try to make your citizens pay the tax but you can't require an out of state business be a collection agency.
I love Jesus, except for his foreign policy.
I don't know if you're in the US or not, but if you are, buying from outside the country won't help you, because you'll still have to deal with US Customs fees/taxes/levies/whatever.
And why should they be taxed if they don't have a physical presence in the state?
Sigh. They proposal isn't to tax Amazon. It's to tax *you*. That's how consumption taxes work. So if you live in California and you order something from Amazon you'll pay CA sales tax, in the same way you would if you walked into Fry's.
As an Oregon online retailer, I can say that this will be big pain in the ass, because I'll go from collecting tax for zero states to collecting tax for 46 states, and having to calculate all the various kinds of taxes levied by cities and municipalities. It's going to be a fucking nightmare, which is why the supreme court stopped it in the first place.
At least Ron Wyden is doing his damn job by fighting it.
Where else should it be placed?
Up until this point, they've had a competitive advantage over stores with an in state presence that do have to charge the sales tax, people self reporting makes no sense as it's entirely unfair to expect people to keep track of that many small purchases. And the shops already have accountants and billing software that handles that sort of thing.
The point of use tax is that it makes it harder to evade sales tax by charging taxes on all your purchases. Just because a purchase comes from out of state, doesn't make the things one uses in the state any less expensive nor does it mean that one should be able to avoid paying taxes in that fashion. In the past it was less of an issue because it would take weeks to get things via mail order, but these days, people do so regularly.
At this point, I'm really looking for every edge on keeping my dollar that I can. I paid more in taxes for 2012 than my parents earned . . . combined . . . in 2011 and 2012. . . combined. And it's not like I'm wealthy. I live in in a sub $200k house in a blue-collar neighborhood, drive a seven year old car, and keep to a budget.
You're precisely the kind of person they're looking to soak. People on handouts don't have enough money to tax, and the really rich can afford accountants.
Not true, if you're an Oregonian that passes into Washington, you show your ID and they're not supposed to charge you any sales tax.
I have a hosting customer (who is also a friend) who is a very small manufacturing business - they hand make jewelry and sell it on their web site.
They are a mom-and-pop operation and have no hope of being able to track 50 states worth of sales tax obligations and file 50 states worth of forms... never-mind that others have mentioned elsewhere that there are some 10,000 distinct sales tax jurisdictions in the US.
If they're actually required to track even just 50 states worth and file those forms, they're not going to be able to comply. Their business is close enough on margins that this could quite seriously push them over the edge and make them close up shop should it be too onerous.
If the fed wanted to jsut say "5% sales tax on all Internet sales apportioned to the states by share of gdp" that would be one thing, but keepint track of that many moving targets would be too much for mom and pop shops.... big retailers have accounting firms or departments to handle it - one more way the little guy is getting destroyed.
The Digital Sorceress
Dealing with all the localities is a paperwork and regulatory nightmare. They should not be making the states be able to do remote sales. If they want the money they should simply have a federal sales tax and then the government can divvy the money up to the states just like they do with so many other funding things. Instead they are creating more of a burden for small businesses. Once again, Big Corp has the advantage since they have the systems in place for this and can spread the overhead over many products. Big Gov loves Big Corp.
I mean, what resource is being consumed by your external purchase?
Entirely irrelevant question. The question is, what resources are being consumed by the residents of the state? Take a look at your state's entire budget for the answer. The next question is, how do you pay for all of that? Only a few of those items are directly and entirely supported by specific use taxes, the rest must be paid for out of general funds, using whatever variety of taxation methods they have decided to use in that state, in whatever proportions they've agreed upon using their representative democracy. If they've decided X percent of that funding is to come from sales tax, then that's where it comes from. Why should anyone be exempted from paying the same share as everyone else (most people would call that "their fair share" but you seem to be allergic to the word "fair" for some reason)?
"Convictions are more dangerous enemies of truth than lies."
You're not considering the other issues such as having to go through multiple state audits when they want to challenge if you're sending them enough of the revenue that you're collecting for them. Finding out that oops, this country in this state raised their tax rate and you didn't know but now they're taking you to court for not paying the right fees is not how you want to run a business.
In the end, the big chains that can afford it (Amazon) will have distribution centers in each state and completely dodge the issue, while all the added burden will go to their smaller competitors.
In Washington, the seller is under no obligation to exempt any nonresident buyer from sales tax. If the seller chooses to not collect tax on a sale, the buyer must meet the exemption rules, such as being from a state with no sales tax.
Before you can even collect sales tax you will have to register with each state and pay for a sales tax id ($100 for CT alone). I don't believe for a second that states are going to give sales and use tax ids away for free either. I don't see how this is going to work for anything but the largest online retailers and I'm still not convinced that this doesn't violate interstate commerce.
Instead of requiring retailers to PAY the sales tax, they should only be required to remit sales logs and let the state collect the use tax from whoever purchased the goods. But, that makes too much sense and would again put the responsibility on the state to collect the money when all they really want is a ride on the internet sales gravy train.
Do what thou wilt shall be the whole of the Law - Aleister Crowley
Yeah, one part of the article talks about collecting existing State sales taxes, but then another part mentions establishing an "Internet Sales tax". So we're gonna get "double-dipped", paying both state and local taxes AND a federal Internet Sales Tax if all this crap passes?
As a non-USAian, can someone explain to me how this compares with mail order? Surely any issues concerning out-of-state sales taxes must have been resolved decades ago for mail-order companies? Does using a web site instead of a printed catalogue raise any new issues of law?
These are not new issues, they just were not pressing issues when the vast majority of commerce was still being done at your local stores and very little was actually purchased by mail order from catalogs, so the issues were not really resolved, just left hanging. The difference now is not due to the technology but due to the scale. When you could mail orders books from anywhere, but everyone still went to the local bookstore anyway, it didn't matter. Now that the local bookstores have all gone out of business and everyone is ordering from Amazon.com, it's an issue...
"Convictions are more dangerous enemies of truth than lies."
That's a fair point, but there's more to it than that. A lot of these mail order and online places are located in places where rent and labor is cheap or receive subsidies for being located there. What's more, by only having a couple of warehouses, they save a ton of money.
Which is why the total cost is often times the same or less. And some businesses like BestBuy will charge the same amount of money whether you buy in store or they ship it to you, part of that is because shelf space is quite expensive compared with warehouse space.
As far as in state infrastructure goes, that's infrastructure that the buyer uses, not the retailer, it's called a use tax for a reason, it's use that the buyer gets out of the infrastructure. And no, it's perfectly fair, the buyer uses it regardless of where he or she buys from.
That's great, except that zip code does NOT determine what sales tax rate applies to where you live. You are also overlooking all of the sales tax forms that a business is going to have to fill out every quarter, and for good measure, not every state has their fiscal quarters run the same months as everybody else. There is one state on the east coast (I think it is NY) that runs its quarters: December-February, March-May, June-August, September-November, while the neighboring states all run it with the calendar year.
The truth is that all men having power ought to be mistrusted. James Madison
The government can and will do whatever it wants, including directly violating the law of the Constitution, without consequence.
Domestic wiretaps and killing Americans without trial are proceeding full steam ahead. It's so normal it isn't even a talking point any more.
If they do demand this, they should provide some online framework. Buyers address and total gets sent in a standardized format to respective state ran sales tax servers, and the server spits out the correct amount. If the state gets the tax wrong, the seller should never be responsible for the mistake.
XML is like violence. If it doesn't solve the problem, use more.
Why should it be any different legally if I order an item from a retailer across the state line and if I were to drive to the retailer and purchase it in person?
My state shouldn't be owed taxes in either scenario. It is only sane if the retailer's home state is the one collecting taxes for the sale.
If a law is written such that the purchaser's state/county/city gets the taxes, you can kiss most smaller online retailers goodbye, because the tax codes across every town in the US are far more complex than people realize.
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."
Use a tax service. They tell you what the tax rates are, and some of them deal with the liability issue. If you didn't collect taxes correctly because of their data, they'll cover it. It's insane, actually. Taxes change on an almost daily basis somewhere in the U.S. Between legitimate tax rate changes at any level from city, county, to state, to tax holidays, etc. nobody can keep track of this shit unless they're in the business of keeping track of it... which is why tax services are so helpful. My customers all use them. When your core business is selling widgets, you can't keep track of thousands of tax jurisdictions.
24 beers in a case, 24 hours in a day. Coincidence? I think not!
Aren't there import fees for imported goods?
People don't want to do this because they get an advantage over bricks and motar places.
And they lose their advantage with shipping fees.
If brick and mortar stores were capable of offering the immense selections that online warehouses do, it wouldn't be such a big deal. But there's simply no comparison between a poorly stocked drawer at Radio Shack and the millions of parts at Digikey or Mouser, for just one example.
It's just more and more taxes, while inflation continues to outpace median incomes.
I do not see use taxes as legitimate. They are an end run around the Interstate Commerce Clause.
You know your government has gone too far when it requires you purchase a service just to pay your taxes (income taxes suffer from this unreasonable burden as well, by the way). That's not a viable solution.
To me, the solution is very simple, change whatever laws necessary to make online purchases the same as physical purchases. Tax the sale, not the purchaser, and make irrelevant where the purchaser happens to live. Either that or abolish the sales tax altogether in favor of the corporate or income tax. Whatever the solution, it should be efficient and cheap to both businesses and the consumer, as the consumer will ultimately pay any additional costs anyway.
"As an Oregon online retailer, I can say that this will be big pain in the ass, because I'll go from collecting tax for zero states to collecting tax for 46 states, and having to calculate all the various kinds of taxes levied by cities and municipalities. It's going to be a fucking nightmare, which is why the supreme court stopped it in the first place."
I would go further, and ask where the Constitution gives Congress any authority to allow one state to tax a transaction that takes place in another state.
Please don't cite me the Supreme Court... I know about their prior decision. But that doesn't make it Constitutional. Hell, SCOTUS had done A LOT that's unconstitutional.
Even the widest interpretation of "regulating interstate trade" does not cover taxation. It simply isn't legal for one state to tax a transaction in another state this way. And a sale that takes place over the internet -- just like mail-order, for way over 100 years now -- is deemed to have taken place at the company's location, not the customer's.
The Supreme Court ruled against this more times than just this last one. This exact same issue went through the courts over mail-order businesses. The same arguments were used on all sides. And the laws were the way they were because one state simply can't tax a sale in another state.
(I know about the physical presence rule, too. I'm saying when there isn't a physical presence in the customer's state.)
"Makes sense, but you can only tax someone in your jurisdiction so this would be a receipts/excise tax on the seller rather than a sales tax on the buyer."
That's the whole problem here. No, it wouldn't be a receipts/excise tax, it would be a sales tax. And the Supreme Court, in their BS prior decision on this, failed to explain how a state can charge a tax on a transaction that happens in another state.
It's been against the law for over 200 years. The Constitution gives the Federal government no power to collect State taxes, nor does it give any state the power to tax something going on in another state.
I don't know how the hell they think they will do this, but personally I think their heads are so far up their asses that they can't even see that nice copy of the Constitution they have under glass.