Skip to comments.Online sales tax to be added to defense authorization bill [Goodbye Internet Sales]
Posted on 12/06/2012 11:10:02 AM PST by Red Badger
This may be the last Christmas of online shopping without paying sales tax.
A proposed online sales tax has been offered as an amendment to the National Defense Authorization Act, much to the ire of opponents.
The Computer and Communications Industry Association, a group that opposes this move, says that an online sales tax will burden small businesses, some of the most promising candidates for future economic growth.
This proposal, and other online sales tax collection proposals like it, would allow states to penalize the innovative e-commerce business model by targeting small online businesses as convenient sources (and collectors) of revenue, said CCIA President and CEO Ed Black.
The Marketplace Fairness Act, and its House counterpart the Marketplace Equity Act, seek to clarify, and arguably overturn, a 1992 Supreme Court ruling that requires retailers to have a physical presence in a state in order to collect sales tax on goods.
Severing the relationship between taxation and physical presence would be a fundamental transformation in how we consider taxes, Black continued. Such a significant step deserves more extensive consideration than attachment to the unrelated Defense Authorization bill.
Still, a recent poll indicates that the majority of Americans support the idea, describing an online sales tax as common sense. They also feel that a tax for online purchases would encourage people to buy local and keep tax dollars in their community.
Local retailers invest in their communities and play a significant role in the overall quality of life in the places we call home, said Betsy Laird, senior vice president of global public policy for the International Council of Shopping Centers.
Collecting the tax across state lines however poses as a challenge for small businesses that sell their goods in multiple states.
It is not the job of small businesses to collect taxes to provide tax revenue relief for state and local governments outside their jurisdiction, Black said, suggesting that an online tax would protect existing businesses at the expense of consumers and growth.
Some Republicans are on board, with Wyoming Sen. Mike Enzi as the most overlooked tax loophole.
We are optimistic that once the Marketplace Fairness Act is brought for a vote, it will have enough support to pass, said Illinois Democratic Sen. Richard Durbins spokeswoman, Christina Mulka.
Both Sens. Durbin and Enzi have offered the bill as an amendment to the National Defense Authorization Act.
Sen. Durbin is focused on working with his colleagues to try to get a vote on the bill before the end of this year, whether as a stand-alone bill or part of a larger piece of legislation, Mulka said. They are keeping all options on the table at this point.
Read more: http://dailycaller.com/2012/12/04/online-sales-tax-to-be-added-to-defense-authorization-bill/#ixzz2EIfvANTs
International Council of Shopping Centers wouldn't be too skewed now would it?
In your specific example, the tax would be collected based on California’s sales tax for where the product is delivered.
I would expect that they would use product shipping address to determine the locality for purpose of calculating the sales tax.
Your example is interesting because you are buying something for someone else. In a brick-and-mortar store, there is little ability to collect sales tax based on where you will use the item. So, if I buy something in DC and bring it home to Virginia, I’ve paid DC sales tax.
Virginia law requires that if I buy something in a state that has a lower sales tax than our sales tax, I am supposed to pay the tax on the difference — IF I am buying something to bring into the state. I think pretty much everywhere I’ve bought things has had higher sales tax than Virginia, so I’ve pretty much ignored that.
But obviously 0% is less than 5%, so I do pay the Virginia sales tax on all my online purchases if they weren’t already collected, unless the purchase was a gift for someone in another state.
I wish Amazon would make this easier; I have to pull up each invoice to see whether they collected sales tax or not. They could give me a page view that showed every invoice with the dollar amount and shipping and sales tax, all in one table. But I could also just fill out my spreadsheet during the year.
When this law is passed, I will no longer have to do all that work, nor will I have to fill out an extra tax form every year. So for me, this change is a good thing. But that is only because I already obey the law and pay the taxes due.
For those who do not, and who don’t buy from companies that already do business in their state, this will be a change. But on the upside, they will no longer be committing fraud each year when they sign their tax forms swearing under penalty of perjury that they have reported all taxes due (at least in Virginia, since the use tax is on the income tax form).
Slowly but surely we are being strangled.
Maybe just tax porno sites. Those are the sites most frequented by congress and staff.
Come on guys you know Boehner will never let this get through.
But this is for national defense....................
Nobody is for an “online sales tax”.
On the other hand, ask people if they support making all people in their state pay the same sales tax they do, it gets a lot of support.
And if you ask people if they support legislation that will help crack down on tax cheaters skipping out of the state sales tax they owe, even more people support it.
And since this legislation will not be a “new tax”, but rather a new collection capability for an existing tax, the 2nd way of describing it is more accurate.
Of course, it is possible the democrats could make it into a tax, and then have some bizarre remittance scheme to states, and then they would easily be able to implement a federal sales tax using an amendment to the law.
That couldn’t happen if conservatives worked hard to support a bill that did nothing more than provide a better way to ensure compliance with existing state sales tax laws. But since conservatives are mostly working hard to make it easy to cheat on their taxes, I fear that the democrats will screw this up.
You’ve already gotten your wish - Amazon agreed to collecting and remitting VA sales tax next year.
This forum is beginning to look like DU every day.
“They also feel that a tax for online purchases would encourage people to buy local and keep tax dollars in their community.”
One of the main reasons I shop online is because the $%&*@$ “local” stores don’t have what I want. Morons.
Even if I have to pay state sales tax I’ll still shop online for the convenience and the local brick-and-mortar shops can FOAD.
Note to self: when helping write the constitution for Freeplandia, be sure it contains a "no riders" provision under the section covering prohibited legislative powers.
Thanks Red Badger.
Loophole — just call them on the phone!
Very simple, if you are intelligent enough to write an order, then you should be smart enough to compute your sales tax. If for some reason this does not work out a paper trail of the transaction is available to the state and they will collect from you, one way or another. As for the poor little business man being punished by having to collect another states sales tax, if it’s so much trouble, just quit doing business in that state.
The “real world” is in trouble because this tax has not seen the light of day. If you can’t compete on a level playing field and collect sales tax like a local store than don’t do business in that state, have you never heard of aiding and abetting dishonesty?
My understanding is that Amazon is backing this. Of course they would, just like all large business support more regulation. They can afford a thousand accountants, the small business cannot. This keeps their competition from the small guy low.
This is how large business keep small business from succeeding, through regulation that only they can afford.
I know that whatever the bill is they pass, it will exempt businesses below a certain sales level, so the question is moot.
But I love answering moot questions, because the exercise is a useful one. It is fun to try to apply competing conservative principles in a practical way.
In my town, we have Walmart. We also have some tiny “city” stores. Those tiny stores have to understand the sales tax for our state (we don’t have local add-ons, except if they are a prepared food provider, many cities add a food tax). They have to collect the tax on their low-volume sales, just like Walmart, and send the checks in, just like Walmart.
So the sales tax requires this tiny business to incur a huge fixed cost, which to Walmart is a small small part of sales. Is that “fair” (I hate the word “fair”, but it describes the concept)?
But this small business has many areas of high fixed costs. Worse, the best thing they DO have, that small-store personal touch, well so does that internet store in Delaware. Only that store doesn’t have a building overhead, and it doesn’t have to collect 5% sales tax.
That means they save money on overhead, they save money on tax collection, AND they can charge 5% less since they don’t actually make the person PAY the 5% tax. Is that “fair”? Well, they did have to pay shipping, or they could add it to the purchase which negates some of the savings. If the order is big enough, it works out better for the consumer.
From the state’s point of view, they have decided to collect a portion of the money they use to provide legitimate government services like police protection by charging residents of the state a fixed amount of whatever money they spend. It would be great if everybody voluntarily paid their tax (I hate that word “voluntary”, because some people deliberately mis-interpret it as meaning you don’t have to pay the tax, rather than what it REALLY means which is that the government didn’t physically take the money from you, you have to send it to them).
Now, we live in an internet age, where I can in 10 minutes pen an entire opinion column on sales tax and “post” it and you can see it 10 seconds later. I can go online and find my workmate’s speeding citation, show her how much it will cost, find how many points she has, figure out how many points you get for the infraction.
Then I can come into this conversation, and no matter what state you live in, I can tell you in 10 minutes what your state sales and use tax laws are, provide you the form you need to fill out, and tell you the state and local tax rates. All while sitting around in my family room.
It simply is not that hard anymore for a company who already does business on the internet to also collect sales tax. It is a hardship, but every company doing internet sales would get the same hardship, and the costs would be passed along equally to every purchaser.
And of course, this would help local businesses to some degree, since now they wouldn’t be the only ones having to collect a sales tax. And it would help Barnes and Noble, who sell the same books at the same price as Amazon, but then have to collect sales tax based on your state and locality, because they made the mistake of building a real store and hiring people from your state.
But I don’t support extending this collection to small business. There is a band I like in California. This is a small band. They sell their own CDs and shirts and stuff, out of their living room, one of their girlfriends gets the orders off the internet, packages the stuff, writes nice little quips, and sends them off. It would be ridiculous to also make them try to collect taxes. It wouldn’t be cost effective. (Of course, most of their sales are to people in California, since that is where they are based, and they have to do taxes for those sales, and remit them).
If I were designing the law, I’d provide for compensation to companies outside a state who collect taxes in this way. And I’d require states to set up an easy internet application to provide billing and collection information. And I’d allow the tax to be paid on a yearly basis.
I’d probably require each state to set a single collection point for the money as well, and make the state then push the money to localities.
The hard part is determining how to exempt “small business”. The best way from a business side would be, at the end of the year, you only have to remit to a state if the sales for that state exceeded some dollar amount. Unfortunately, by the time you knew that, you’d have already collected the sales tax.
So instead, you’d have to base the decision on last year’s earnings, except for small business earnings vary wildly.
BTW, I think states would be happy to accept a large TOTAL SALES VOLUME cutoff, rather than worry about state-by-state numbers. If they could collect taxes from the top 25 internet companies, they’d be 80% of the way to getting all the money they are due. The small mom-and-pop stores would just be too little to matter.
And the reason they don’t collect much now is that it also is hard to justify the expense of going after individuals. I consider myself an average internet shopper, and I have to remit about $150 at most in taxes at the end of the year. If the state spent an hour of lawyers trying to get me to pay, they’d spend more than I’m worth.
But a connect fee would be a new tax. This is a collection of an existing tax, where it is hard to catch those who aren’t following the law.
You know, like how the feds have an FBI, which will come in and help a state catch criminals that committed crimes in their state, if that criminal then runs off to another state where your state doesn’t have jurisdiction?
If it takes a thousand accountants, someone has done something horribly wrong.
The store down the street from me doesn’t even HAVE an accountant, and they manage to collect sales tax for one state.
If the law is written correctly, and puts the correct burdens on the states who want to participate, it should be no harder to determine the remittance for all 50 states than for the single state.
I would expect that the feds would set up a clearing house, where all the states would register if they wanted to be part. Any business doing an internet sale that had enough sales to be required to participate would send the address through an internet app, and it would come back with the tax required, and the state online payment location to transfer the funds.
Amazon doesn’t have accountants doing this — their program is already written, and it already knows how to charge taxes for everybody, so if they get a purchase through one of their partner stores they can collect.
What makes you think that the states will see much in the way of tax revenue from this? The Fed will keep most, if not all of it, and say well we are paying for the welfare and what ever other program for your state, so tough.
A brick and mortar business receives return on investment for calculating, collecting and paying the local sales taxes. They receive a value for their time in the form of police, fire departments, schools producing customers & workers (in theory), maintained roads, etc...
How does the business in Podunk, Idaho benefit from doing Virginia’s job of collecting sales taxes? They get no benefit except for the sale, so why should they be forced to be a tax agent for Virginia?
You don’t have a problem with the taxes; even worse, you think that sellers in states miles away should be forced to do the job of the state Treasurer for no benefit.
In general, they would all get the benefit, since businesses in other states would be remitting the taxes to their state, while they were remitting taxes to the other states.
Of course, net export states would come out ahead.
But the law could provide remittance to the out-of-state companies for collecting the taxes. Of course, if that was too high, it would be another thing that would bias the free market toward the out-of-state internet company.
This issue isn’t about the taxes. It is about collecting the taxes. The taxes are a state issue. If i don’t like my state sales tax, I can ask my representatives to change it or repeal it.
We are talking about aiding the state in tax enforcement.
It isn’t that different than federal and state collection of income tax withholding.
move it to mexico..
I am told by my parents, who live in Cook county, that if you go outside the county to purchase some big ticket items, like a car, they TAX you for doing so. So they are now making people pay a special “punishment” tax simply because they did not make their purchase where they live. I’ve told them to get the hell out but they have been there for 24 years and are retired.
“...and borough to borough.”
I made this point on a thread a few days ago. In my suburban town it is even worse - my half pays a Rapid Transit Tax as it has lots of bus stops and a large central bus “station” type area. The other half (more rural) had only a few bus stops, and doesn’t pay the tax. (Same zip code).
“The GOP should vote it down.”
What!!?? You want the GOP to deprive our brave men and women protecting our nation from having the necessary equipment to do their jobs properly and safely!!?? /s
Honestly, it would.
The internet tax loophole was going to be closed one of these days.
The real pain will be in those places with a local option sales tax (cities and such). I live in a small town in Iowa, and the larger town near by wants us to start collecting sales tax on things sold in our town, and send it to them. Because so many people are buying gas here.
A state flat sales tax would be better.
Let each state enforce its own sales and use laws within its own borders. We don’t need another layer or government. Sales tax is a state and local issue. That states refuse to enforce the law against their own citizens tells you all you need to know.
Milton Friedman’s biggest regret was automatic witholding. The state doesn’t need more revenue, but less state. Keep in mind the major sponsor of this bill is Dick Durbin.
Think - where will this lead? Our goal is federalism and state’s rights. This is just nationalization of tax policy and will lead to Internet control by the IRS, shut downs of internet businesses, audits, and eventually a VAT on everything at the national level on top of a state sales tax.
You mean an organization that thrives off of local retailers might create a poll to manipulate the public?
We’d better be calling our Reps and Senators now. Boehner’s already itching to raise taxes.
It’s just the ‘first step’ towards the Mark of the Beast........
Just a few points.
I don’t think it is unreasonable for a state to allow out-of-state stores to keep a percentage of collection as the cost of doing business. But that would be written into the federal law. If the state didn’t like it, the state should be able to NOT PARTICIPATE in the federal law. The state can continue to try to collect use tax directly.
I happen to think states would pay, because it would be like hiring a collection agency, they’d at least get some money where now they get no money.
I don’t think if this type of law as “forcing” a store in one state to abide by the laws of another state — although this actually happens now, as a store in one state that wants to sell certain products into another state have to abide by the laws of that state for sales. But I don’t think that is what we are talking about here.
There would be a federal law, not state law. The federal law would proscribe what any store in any state was required to do when shipping a product across state lines. I have no doubt the feds can write this law badly. But if they wrote the law correctly, there would be a single location where any store could get the correct sales tax info, much like federal instant background check for gun sales.
Each state which wants to participate would have to set up online methods for supporting the tax, which would feed through the single service. So when processing an online sale, the store would take the shipping address, send it through this service, and would get back the tax rate and state collection address, which should include electronic means of collection.
As to the more general question of whether they should be subject to laws, if the didn’t want to be subject to the sales tax of texas, why couldnt’ they simply refuse to ship items to texas? They still have the control — just like they could choose not to set up a shop in a state, they could refuse to ship to a state.
Or, they can choose to ship to the state, and collect the tax due in the state.
There is an alternative, which lessens the burden on the stores, but which I imagine people wouldn’t like as much.
Instead of requiring companies to collect sales tax, require them to provide the purchase information to the state government where the product was shipped to. This would be like the tax forms companies currently have to submit.
Then, it would fall on the state to decide what to do with the information. The state could use it to cross-check their residents tax submittals, to make sure they are properly reporting their purchases, as required by state law.
But that is a horrible intrusion into your privacy, having your state know of each purchase (btw, there was some federal law that required all purchases of something over $600 to be reported, I don’t remember if it was Obamacare or something else). I guess you could just have the value reported, but then how would the state know if the item was taxable or not?
Anyway, I am not an advocate for the bill. But I have no problem with the idea of the bill should it pass, and I can and do argue that it is a good thing.
I do agree with the various problems that people point out. It isn’t often that you can find a way to get government involved where there aren’t significant downsides.
In the end, it could be that sales tax is just not a good way to collect money for government. However, from a conservative perspective, it’s one of the few taxes that is not skewed toward rich people (in principle — in fact, state governments often find ways to minimize tax on things poor people by more of, and vice versa).
It is hard for the state to raise sales taxes, because EVERY VOTER feels the pain.
Yes it will create a crisis and they love those, the only way to solve it will be for all the companies to pay one flat rate to the federal government who will then redistribute some of it back to the states.
Game, set. match.
About the Survey
This survey was conducted on behalf of ICSC by Opinion Research Corporation (ORC) using a computer assisted telephone interviewing (CATI) system randomly selected from a national probability sample of 1,005 adults comprising 500 men and 505 women 18 years of age and older, living in private households in the continental United States. Interviewing for this survey was completed during the period October 25-28, 2012.
SOURCE International Council of Shopping Centers
PR Newswire (http://s.tt/1u4T1)
Howmany were in a mall stealing while pretending to be shopping during normal working hours.
Can’t possibly be true, Obozo said campaigning for his first term that our taxes wouldn’t go up one dime..of course he didn’t say anything about a bunch of dimes. I loathe him and all democrats and RINO’s too.
I look forward though, to those I know that voted for their hero, to the howls when the taxes come hailing down on all the fools who believed all the bull from Obama. They deserve whatever comes their way, unfortunately we all will be collateral damage too.