Should You Pay Sales Tax on Internet Purchases? South Dakota Law Could Be The Test (pcworld.com)

An anonymous reader shares a PCWorld report: A new South Dakota law may end up determining whether most U.S. residents are required to pay sales taxes on their Internet purchases. The South Dakota law, passed by the Legislature there in March, requires many out-of-state online and catalog retailers to collect the state's sales tax from customers. The law is shaping up to be a legal test case challenging a 25-year-old U.S. Supreme Court ruling that prohibits states from levying sales taxes on remote purchases. Unless courts overturn the South Dakota law, it will embolden other states to pass similar Internet sales tax rules, critics said. The law could "set the course for enormous tax and administrative burdens on businesses across the country," Steve DelBianco, executive director of e-commerce trade group NetChoice, said in a statement. If dozens of states adopt Internet sales taxes, online sellers could face audits and changing tax rules in thousands of taxing jurisdictions nationwide. Even with software that could make tax calculations easier, that would be a burden, NetChoice says. And online shoppers could end up paying up to 10 percent more for many products.

Comments

an easier way to make up revenue.

[nimbius]

instead of enforcing tax law to reap a trivial amount of tax from middle and lower class americans, how about eliminating tax holidays for major multinational corporations and reforming tax law for conglomerates that often pay no tax in the state through creative chicanery? I mean granted it means your political class is going to suffer underfunded elections, but it would be a refreshing change of pace to have a legislative body that didnt operate to serve the allmighty dollar.

Re: an easier way to make up revenue.

[sjames]

As if the people who benefit from capital gains actually make anything.

Enormous tax and administrative burdens

[cardpuncher]

If only we had some kind of calculating device that could reference a table of tax rates updated on a regular basis...

It is, in any case, a considerably easier problem than calculating shipping costs and noone seems to have a problem with that.

And if you look at the amount of money multinational businesses spend to avoid corporate taxes, the cost of handling sales tax is trivial.

You can't have public services without taxation. The internet doesn't change that. In the end, people need schools more than they need the internet and the internet is just going to have to grow up and start contributing rather than constantly expecting pocket money from mummy & daddy citizen.

Re:Enormous tax and administrative burdens

[plover]

If only we had some kind of calculating device that could reference a table of tax rates updated on a regular basis...

If that's all it took...

Let's say you are shipping a fluorescent yellow vest from California to Minnesota. In Minnesota, clothing is not taxable, but safety equipment is. Do you collect tax on it? Does their state consider it clothing or safety equipment? Add a pair of reading glasses to their order. Minnesota taxes general merchandise at one rate, while medical devices are taxed at a much lower rate. Which rate do you choose? Or are glasses considered clothing, because you wear them? What about a boxed set of grill accessories that includes a fork, a spatula, an apron, and an oven mitt?

Now ship a swimsuit to Pennsylvania. Clothing is taxable there, but sporting goods are not. Is swimwear taxable there? How does your cart service even know if it's a swimsuit when your online site only knows the product as Item#123456?

Next, ship a bicycle fender to a Houston, Texas, address. The law says you pay a higher tax rate if there is a public bus stop on your block. What tax rate do you charge?

Ship another fender to a Colorado address. They not only have sales taxes, but they have fees on some items, because some politician vowed not to raise taxes, but made no such promises about fees. Do you collect those fees on a fender? Do you charge sales taxes on those fees?

Do you charge tax on the shipping? That depends on whether you are shipping as a service to the customer (services are taxable in some states), or if you're shipping it because you don't stock the product in their state (a business expense.). Do you charge shipping taxes at the rate of the point of origin, or at the rate of the destination? To which state do you send the money?

In all these states, anyone doing business in their borders has to answer these questions because it's their law. Do I have to know every law in every town in America?

The states are a mess of thousands of such stupid and incompatible laws, each passed on behalf of some corrupt politician's crony. Never think it's easy just because it seems like simple math.

Re:And China?

[Anonymous Coward]

Don't worry, they'll soon try to extract a tax for that too. This is the US government we're talking about, they want their greedy little hands in everything.

I haven't even lived in the US for more than a decade and the IRS still thinks I should pay them income tax. My answer every time is "go fuck yourselves".