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States Close in on Internet Tax Collection
Internet News ^ | July 8, 2005 | Roy Mark

Posted on 07/08/2005 11:49:57 PM PDT by nickcarraway

The Internet sales tax issue may have reached the tipping point when 18 state tax collectors agreed upon an interstate set of sales tax rules. The tipping point, however, is still a long way from reality.

Meeting in Chicago last week, the Streamlined Sales Tax Project (SSTP) took its most significant step to date to implement the collection of sales taxes on online purchases, a potential $20 billion-a-year bonanza for cash-strapped states.

To bring those funds closer to state and local coffers, the SSTP officially admitted 18 states as members of the Streamlined Sales and Use Tax Agreement's (SSUTA) governing board. The interstate alliance plans to offer retailers free software to voluntarily collect sales taxes by October.

Under the SSUTA compact, the simplified sales tax system cannot take effect until at least 10 states representing 20 percent of the total population are in compliance with the agreement. The 18 states admitted to the SSUTA board represent 25.3 percent of the population of states.

Despite the landmark agreement, though, no one is under any legal obligation to collect online sales taxes until Congress approves the deal.

States have struggled for years to force catalogue and online retailers to collect sales taxes on purchases. In 1992, the U.S. Supreme Court said states could only require sellers that have a physical presence or "nexus" in the same state as the consumer to collect the so-called use taxes.

The court also ruled that buyers owe the tax, but the current patchwork of more than 7,500 taxing jurisdictions across the country is too complex and burdensome for online retailers to charge and collect sales taxes. To collect the taxes, the court ruled, states would need to first simplify the existing system.

To overturn the Supreme Court's decision, Congress has to certify the states have streamlined their sales taxes.

Led by the National Governors Association (NGA), states and local governments began the process five years ago of simplifying their sales taxes through the SSTP.

Two years ago, Senators Michael Enzi (R-Wyo.) and Brian Dorgan (D-N.D.) introduced a bill to require out-of-state retailers, including Internet businesses, to charge and collect sales taxes on transactions. The legislation had the effect of sanctioning the SSTP efforts.

"E-commerce has caused a significant change in consumer buying trends. More and more people are making purchases through remote businesses, such as online, catalog and phone-order," Enzi said when he introduced the bill. "This change has reduced sales tax revenues to states, cities and towns that rely on this form of revenue to provide essential community services such as education, law enforcement, and fire fighting."

Last week's Chicago accord brings congressional action back into focus, although no legislation has been introduced.


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Extended News; Miscellaneous; News/Current Events; Politics/Elections; US: District of Columbia
KEYWORDS: cary; internet; internettaxes; nga; taxes
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1 posted on 07/08/2005 11:49:57 PM PDT by nickcarraway
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To: nickcarraway

No!


2 posted on 07/09/2005 12:05:19 AM PDT by John Filson
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To: nickcarraway
Two years ago, Senators Michael Enzi (R-Wyo.) and Brian Dorgan (D-N.D.) introduced a bill to require out-of-state retailers, including Internet businesses, to charge and collect sales taxes on transactions

Article 1, Section 9: ... No tax or duty shall be laid on Articles Exported from any state.

Section 10: No state shall without concent of congress lay any iposts od duties on imports or exports..

Not that anything in the constitution is safe to rely on these days

3 posted on 07/09/2005 12:06:52 AM PDT by konaice
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To: nickcarraway
I took a look and all I could find was S.1736 for the 108th Congress "A bill to promote simplification and fairness in the administration and collection of sales and use taxes" See S.1736. Its status is "10/15/2003 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance." I believe it died with the 108th Congress and would have needed to be re-introduced in the 109th, would it not?
4 posted on 07/09/2005 12:07:37 AM PDT by NonValueAdded ("Iraq is the bug light for terrorists" (Mike McConnell 7/2/05))
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Politicians look at all this e-commerce going on "untaxed" (ignoring the taxes the business pays, the taxes the ISP pays, sales tax on your computer, line fees if you're dialing up ...) and they see all that tax revenue that's being lost.

It's just a matter of time before they figure out how to tax internet transactions. So predictable ....

5 posted on 07/09/2005 12:11:15 AM PDT by jayhorn (when i hit the drum, you shake the booty.)
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Comment #6 Removed by Moderator

To: nickcarraway
Two years ago, Senators Michael Enzi (R-Wyo.) and Brian Dorgan (D-N.D.) introduced a bill to require out-of-state retailers, including Internet businesses, to charge and collect sales taxes on transactions

Senator Brian Dorgan.

7 posted on 07/09/2005 12:16:08 AM PDT by Lancey Howard
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To: nickcarraway
Thieving bastards.
8 posted on 07/09/2005 12:29:21 AM PDT by TheOtherOne (The scales of Justice are unbalanced.™)
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To: nickcarraway

Seems to me that States are getting tired of competing to attract such businesses to operate in their own borders, and are resorting to a classic "old boys" solution that will probably be less than effective and will trample the Constitution in the process - in spirit or in fact, or both.


9 posted on 07/09/2005 12:33:16 AM PDT by coconutt2000 (NO MORE PEACE FOR OIL!!! DOWN WITH TYRANTS, TERRORISTS, AND TIMIDCRATS!!!! (3-T's For World Peace))
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To: nickcarraway
Sending letters to my Senators, Governor and Representative!
10 posted on 07/09/2005 12:33:46 AM PDT by ncountylee (Dead terrorists smell like victory)
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To: nickcarraway

Well .. except for necessities .. we could stage a protest - and not buy anything over the internet - when their taxes don't materialize - they might change their minds .. LOL!


11 posted on 07/09/2005 12:37:26 AM PDT by CyberAnt (President Bush: "America is the greatest nation on the face of the earth")
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To: konaice
I can see states requiring a retailer to report the monetary value of goods and the name/address of the recipient. They might even be required to collect a social security number on an online sale to identify tax evaders.

Taxing my internet sales probably would not change my buying habits much. My local bookstores just don't maintain an adequate stock of computer books. They don't have much of a market here. Most of that business goes to Amazon, Barnes & Noble and Books-a-Million.

The primary issue here is that my state isn't "losing" sales tax revenue when I buy a book online. That book sale happened online because the bricks & mortar stores didn't stock the book. Absent the online retailer, the money would never have been spent at all.

The employees of an online retailer are spending their income in the state where their employer (online retailer) is located. There are probably quite a few online retailers in any given state whose employees are spending money derived from buyers in another state. Laying taxes on these online retailers may actually cause a net reduction in economic activity. An unintended consequence of political greed. The politicians should welcome the influx of money that gets spent in their own local economy.

12 posted on 07/09/2005 12:40:16 AM PDT by Myrddin
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To: jayhorn

...It's just a matter of time before they figure out how to tax internet transactions. So predictable ....

It isn't hard to predict rain when you are already up to your ass in water, see clouds and lightening, hear thunder, and can smell it in the air.

You are so right. It's just a matter of time.


13 posted on 07/09/2005 12:48:59 AM PDT by planekT (The Supreme Can of Worms.)
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To: nickcarraway

Hell, damn, and blast!


14 posted on 07/09/2005 12:55:02 AM PDT by nopardons
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To: nickcarraway
a potential $20 billion-a-year bonanza for cash-strapped states.

Ah yes, we must promote this bonanza to help maintain a government "for the people", "by the people".

15 posted on 07/09/2005 12:55:22 AM PDT by EGPWS
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To: Myrddin
Laying taxes on these online retailers may actually cause a net reduction in economic activity.

What a mindful concept.....

16 posted on 07/09/2005 12:58:28 AM PDT by EGPWS
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To: planekT
...It's just a matter of time before they figure out how to tax internet transactions.

I can only speculate that the costs incurred with the figgerin' will be a moot subject, only to be determined as part of the overall cost of government service provided to us all as a well deserved service.

17 posted on 07/09/2005 1:04:31 AM PDT by EGPWS
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To: nickcarraway

Politicians have a better nose for taxes than sharks have for blood in the water.


18 posted on 07/09/2005 1:20:25 AM PDT by snarks_when_bored
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To: EGPWS
I worked for an early internet startup called First Virtual Holdings, Inc from 1996 to 1998. It was the first serious attempt to do secure purchases in the online environment. The technology turned out to be too difficult for the average small business person to comprehend. Web pages using SSL overtook the market because it was dirt simple for the end user and retailer.

Trying to police the taxation of internet transactions is a nightmare. Even if every transaction was labeled with a social security number, there would be a need to account for all the purchases made over a wide variety of online sellers to be certain that the tax was actually paid in every case. Every retailer would have to maintain a tax account with every state and report the sales on an ongoing basis. The states would be saddled with collecting a detailed account of sales tax paid by every taxpayer in the jurisdication. A truly gross thought. Not to mention the "big brother" aspect of recording every damn thing you actually purchase on the net.

19 posted on 07/09/2005 1:25:18 AM PDT by Myrddin
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To: Myrddin
Trying to police the taxation of internet transactions is a nightmare.

Trying to show politicians what has been shown to be effective, time and time and time again, which is tax cuts, (forget government spending) generates a "super power" via financial freedom, but come lately, who wants to be free to give up their land and hard earned livelihood to the highest bidder in a free society as dictated by force via what's best for the "common good" via government protection.

20 posted on 07/09/2005 1:42:47 AM PDT by EGPWS
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