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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."
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.
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.
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.
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
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.
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.
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!
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.