Senate Approves Internet SalesTax

[Guest FourAces]

This is not good. Hopefully it will get lost in the house. What bothers me just as much is eBay thinks its a good idea, WTF? If passed into law will that change your online buying habits?

The Senate approved a long-anticipated Internet sales tax proposal on Monday, moving the legislation one step closer to enactment and paving the way for shoppers to pay sales tax on the majority of online purchases.

The so-called Marketplace Fairness Act would allow the 45 states (and the District of Columbia) that currently charge sales taxes to require large online retailers to collect tax on purchases made by their residents. The law would only apply to online sellers that have sales of at least $1 million outside of states where they have physical operations, like a store or a warehouse.

The Senate voted 69 to 27 to approve the bill, which enjoyed bipartisan support. But before it can become law, it must be approved by the House, where Republicans are split on the issue.

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[Guest NCBored]

It will be a headache for the big internet retailers, but I'm sure they can handle the coding.

it won't change my shopping habits. My state (NC) already requires you to pay an estimated internet sales tax as part of your annual income tax. (I'm not sure how many people actually DO it, tho.)

[Guest hitoallusa]

Never done it..

My state (NC) already requires you to pay an estimated internet sales tax as part of your annual income tax. (I'm not sure how many people actually DO it, tho.)

[RA1]

TN requires each individual who buys something on the internet and has it delivered to TN to pay sales tax BUT there is no enforcement or really any way to enforce it.

The proposed law is attempting to make it somewhat fair but it creates a paperwork nightmare as 4A has suggested. I see one of two things happening. Either large internet sales organizations will have to continue to absorb the shipping costs ( which rise all the time) or lose a lot of business IF the sales tax law is passed.

Ask yourself: How often is the lack of sales tax or absorbed shipping the biggest difference between where you buy a product?

Convenience at major holidays will allow many to continue then but in the long run what is that worth?

Best regards,

RA1

[lookin]

Call me crazy, but I've been doing it for a few years now. Amazon's my most used site, and I run a report at the end of the year and figure the sales tax. California calls it a 'use tax' and I add it to my State income taxes in a box they thoughtfully provide for just that purpose.

It never tops a couple hundred bucks.

I figure as much as I bitch when local companies go under, or state services get cut, I'd feel kind of hypocritical not to kick in my share. This way, I can continue to kvetch freely and without a shred of guilt.

After Amazon complained for years about the near-impossibility of doing the bookkeeping and collecting the tax, they started doing it this year with a minimum of fuss and bother. I'm sure the rest will too.

[RA1]

So you deduct the tax paid to Amazon on your CA tax return? Just curious?

Best regards,

RA1

[caeron]

It will be a headache for the big internet retailers, but I'm sure they can handle the coding.

it won't change my shopping habits. My state (NC) already requires you to pay an estimated internet sales tax as part of your annual income tax. (I'm not sure how many people actually DO it, tho.)

Don't be so sure. This is a real nightmare with different goods taxed different ways in each of the jurisdictions. This will be a hugely expensive problem for on-line retailers.

[Guest hitoallusa]

It could be expensive but it might be also a comvenientt way to cook their books.

[lookin]

So you deduct the tax paid to Amazon on your CA tax return? Just curious?

No, like other online sites, Amazon didn't collect tax. So I just added up what I bought every year, calculated the tax, and paid it with my State income taxes. That's what California wants you to do, and they made noises about it, but most folks just ignored it. Now Amazon has started collecting state sales taxes, which helps level the playing field for retailers.

My reasons for buying from Amazon were never to avoid paying sales tax. They're just really convenient for certain items, and sometimes their prices are better, tax or no.

[RA1]

Thanks for the reply and clarification. I realized what you are saying must be the case after I had already posted.

I find it pretty interesting that any product can be cheaper after paying sales tax and shipping. Shipping one item or even several is far more expensive that a whole truck load or train car load or ship load. Therefore convenience (or possibly availability) have to be the prime reason(s) to use what used to be called mail order buying. Still, I think that the price of convenience is going to go up in most folks minds with sales tax + shipping.

I understand convenience and appreciate it as much as most but it has to have a reasonable price for me to be completely happy. My life experience suggests that folks with much more money (than me) are more willing to pay for convenience than I am. Here I am mainly thinking of people who own shares in aircraft. They pay a huge price for convenience and to avoid what I consider the minor irritations of owning the whole thing. Not only dollars but also having a different pilot on every flight as well as a different aircraft each time. Generally my folks and passengers recognize me as being the pilot.

I wish and hope the state of California is as happy to receive your contributions as you are to make them and that they will do something useful with the money. I know you would if you still had it.

Best regards,

RA1

[Guest zipperzone]

I buy a lot of books from Amazon. The reason is that they are 37% cheaper than buying them from a local bookseller plus the convenience of free door to door delivery. I realize that some people may criticize me for not supporting local merchants, but 37% is a HUGE difference.

[BiBottomBoy]

Amazon is just as evil as wal-mart. This levels the playing field and gives real brick and mortar companies a chance.

[RA1]

What is a "real" brick and mortar company anymore? Haven't they succumbed to the same allure of foreign workers and the internet as internet "only" companies? How often do you go into a bank anymore? I do 90% of my banking on the internet and write maybe 5 checks a year (from the paper stock I have). As you know, there are internet only banks.

I would prefer to do more business locally but they have to increase their efficiency and offer the products and services I want. Obviously their prices need to be competitive also.

A counterpoint to my previous lament about the cost of shipping is the cost of driving around. Basically if the business is not located very near to my route from the airport to my house, I don't do business there. People who drive even a short distance out of their way to save 5 cents on a gallon of gas are kidding themselves. If you buy 15 gallons and save 75 cents but drove even one mile out of the way (at $1 a mile) you lost money. Anyone who thinks it does not cost between 50 cents and $1 a mile to drive their cars either drives a whole lot with a "cheap" car or hasn't done the "real" math. I have spent a good amount of time over the years doing these kinds of calculations to save money on Jet A fuel. Even with a $2 per gallon savings and buying 300 gallons, one cannot fly somewhere specifically to buy fuel.

Best regards,

RA1

[AdamSmith]

the cost of driving around.

Right on. Another piece of that cost is the value of time.

Granted, there was nothing to beat browsing in person at the late lamented Borders stores (whose corporate buyers had exceptionally broad, informed, and catholic lower-c tastes). Or at one's local bookshop where the proprietor's sensibilities can guide you to new treasures (our gem here in Raleigh has long been Quail Ridge Books).

But if I know what I want, or if as RA1 observes it is banking business or some other rote errand, anything that lets me claw back some precious minutes and hours is a mercy.

[Guest CharliePS]

I'm waiting for the Internet gas stations.

I still prefer to go to banks to make deposits and write paper checks. I buy almost nothing online, since I want to try on the clothes and shoes, leaf through the book, sit on the chair, feel the fabric, play with the computer, etc., before I buy them. And I won't be able to do any of those things if the "brick and mortar" places disappear because customers think they can buy cheaper online, where they can get away with paying no sales tax. Online retailers complain that having to collect sales tax will cost them money, but it also costs the local retailers money to do so--why should the online retailers get a special advantage? Why should people who can't shop online--no computer access or no credit cards--have to pay taxes that others can easily avoid?

All that being said, I wonder if the online retailers would have been happier if they were simply required to keep records of sales and forward them to the individual customers' home states, and let the state bill the customer directly, since each state has different tax laws, and the local retailers only have to know and deal with one set of laws.

[RA1]

Charlie-

You are my favorite "tactile forever" poster. That is my favorite modus operandi with attractive young guys.

Internet gas stations are here. All you have to do is buy an electric car.

Consumers who do not (by choice) or cannot shop online often have other ways of saving money shopping. This includes barter and other trade-offs for goods and services. No sales tax collected with these.

Records of sales, required or otherwise from states, are no different from the headache of collecting sales taxes and paying them. The paperwork is the issue, at least the main issue.

The "real" way to cure this would be a national sales tax (ridding us of income taxes) but there are problems with this to include the political climate and states rights vs. national interests.

Best regards,

RA1

[Guest CharliePS]

Although a national sales tax sounds easy, there are more problems than just convincing the residents of the states that currently have no sales tax to accept one. There is no agreement now among the states that do have sales tax over what should be taxed. Should I pay tax when I "purchase" a window cleaning, a tennis lesson, or cancer surgery? Is renting a place to live a purchase? Is renting s storage space different? Should some distinction be made between objects that are necessities--like clothing--and those that are luxuries, and if so, how does one draw the line? (Is a fur coat bought in Minnesota a necessity, but the same coat bought in Florida a luxury?) States don't even agree on whether it's fair to tax food or medicine.

It'll never happen.

[RA1]

Of course, I agree. A national sales tax will never happen. But, that does not change all the issues otherwise involved.

Best regards,

RA1

[Guest NCBored]

Don't be so sure. This is a real nightmare with different goods taxed different ways in each of the jurisdictions. This will be a hugely expensive problem for on-line retailers.

Caeron, you may be right. I wasn't considering the fact that not all goods are taxed in the same way across states.

I was also under the impression that the bill referred to STATE sales taxes, and not local ones. If city/county taxes have to be collected as well, it becomes much more complicated.

[AdamSmith]

Boehner suggests House will take its time on Internet sales tax

By Bernie Becker and Mike Lillis - 05/07/13 12:10 PM ET

http://thehill.com

Speaker John Boehner (R-Ohio) suggested Tuesday that the online sales tax legislation that easily cleared the Senate this week was not one of the House's top priorities.

Boehner referred reporters at a news conference to the chairman of the House Judiciary Committee, Rep. Bob Goodlatte (R-Va.), who has expressed concerns about the Senate bill.

“I think they have jurisdiction over this. I've not talked to him about it,” Boehner said. “I don't know what his intent is, in terms of whether he's interested in moving it through his committee or not.”

“I'm for regular order,” Boehner added, when pressed about whether he is personally interested in the bill.

The Senate passed the bipartisan Marketplace Fairness Act by a 69 to 27 vote on Monday, with most Democrats — except for five who represent states without a sales tax — backing the bill.

Senate Republicans split roughly down the middle — 21 for, and 22 against — on the proposal. The breakdown underscores that the measure likely faces a rockier path in the GOP-controlled House.

But retail groups and state governments, which could gain more than $20 billion in new revenue each year under the bill, have made the sales tax measure a major priority. Because of that, Boehner, Majority Leader Eric Cantor (R-Va.) and other GOP leaders will find themselves under intense pressure to bring the bill to the floor, according to a leading House Democrat.

“I think the overwhelming number of Democrats are for this bill, I think a large number of Republicans are for this bill,” Minority Whip Steny Hoyer (D-Md.) told reporters shortly after Boehner’s comments. “I think they're going to get a lot of pressure from retail people in their states who are having to compete with online sellers who don't pay tax.”

Currently, states can only charge sales tax to retailers that are physically located there, a situation that brick-and-mortar retailers say gives some online shopping outlets an unfair advantage. The Marketplace Fairness Act would let states collect sales taxes from online U.S. retailers with at least $1 million in out-of-state sales, no matter where they’re located.

“I think that this is a bill that Boehner's going to find — or Cantor — find difficult not bringing to the floor for a vote,” Hoyer said. “And I think that when it's brought to the floor for a vote, it'll pass — pass handily."

Goodlatte said following Monday’s Senate vote that he still had major concerns about the bill, and the burden it would place on smaller retailers to collect sales taxes for so many jurisdictions.

“While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said in a statement about the Senate bill. "There is still not uniformity on definitions and tax rates, so businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions."

But Goodlatte has also said that he understands the concerns of brick-and-mortar retailers.

Some leading groups on the right, like Grover Norquist’s Americans for Tax Reform and Heritage Action, have slammed the sales tax proposal, saying it should be viewed as a tax increase on consumers and that it would open businesses to more audits and higher compliance costs.

http://thehill.com/blogs/on-the-money/domestic-taxes/298211-boehner-talk-to-the-committee-about-online-sales-tax

[RA1]

Of course it is a tax increase on consumers and businesses as well as consumers will suffer. Not sure what either has to do with what is right and fair.

Best regards,

RA1

[Guest NCBored]

Caeron, you may be right. I wasn't considering the fact that not all goods are taxed in the same way across states.

I was also under the impression that the bill referred to STATE sales taxes, and not local ones. If city/county taxes have to be collected as well, it becomes much more complicated.

FYI: at least one company has collected the data: http://www.zip2tax.com/z2t_lookup.asp

It's correct for my current city but I think it's left out some local taxes for my hometown.

[RA1]

Yesterday I bought something via the internet from NY state. As anyone knows I live in TN. However their written opinion was that I and everyone who bought from them was taking delivery in NY state so they charged and collected NY sales tax. An interesting point of view and one that I have found to not be correct many, many times before in dealing with various states. Virtually every state allows for a resident of another state to take delivery without paying sales tax except in their state of residence. There likely will be some paperwork involved to do so but that is the rule under which I have operated for many years. In this case the choice seemed to be pay the NY tax or do not do business with this vendor. I chose to pay the $16 tax and get my goods. However, I would not have done so with a larger purchase.

Best regards,

RA1

[TampaYankee]

Don't be so sure. This is a real nightmare with different goods taxed different ways in each of the jurisdictions. This will be a hugely expensive problem for on-line retailers.

Does anyone know specifically what the law says with regard as to what will be taxed, exactly? How can this be anymore of a 'nightmare' than developing software and payment mechanisms to calculate and fill out forms not only for a myriad of variations of federal income taxes, some quite complex, but also for the income taxes of all the states that collect income taxes? Sales tax calculation seems like a minor 'nightmare' by comparison, and yet, a dozen or more enterprising private concerns have slain that much bigger dragon.

I suspect that before this sees the light of day states will be obligated to provide a state menu of taxable items, maybe in machine readable format, that the industry trade group creates a standard 'tax package' with database and 'checkout counter' addition that folds into current or new checkout software. Fold this into the cost of doing business.

We all knew that this day would come. Internet sales have taken off in the last five years. State revenues have been in the dumps the last five years and continue to hurt. Strangely, states need money to fund schools, fire houses, bridge and roadway repair, etc. We all wish there was a free ride to be had but we know that ain't so. We must pay our own way. Internet purchasers have been getting a free ride. States cannot afford any more free rides and the internet has matured into a stable commerce venue.

I was vehemently against this for years. Internet commerce needed nurturing, not the tax man. In all honesty, it has come of age. With the exception of groceries and bulk items like auto tires and yard lime, I do virtually all of my shopping online these days. In the beginning I did very little because it seemed to me that the prices online were virtually the same and the shipping was exorbitant. I'm thinking of Amazon in the early days.

Over the last five years the online market place seemed much more competitive to me and shipping seemed more reasonable either because they dropped in costs (sometimes free if you were willing to wait a week or more) or because I could combine purchases covered by a single modest shipping bill.

However, what really tipped the scales for me in terms of actual participation was the tremendous upsurge in fuel prices the year prior to the Wall St meltdown. Driving ten miles one way to shop for a single item with $4.00 gas made any online shipping charges irrelevant.

One final experience cemented my embrace of internet commerce. Four or five years ago I bought a 42 in flat screen TV through an Amazon special for $698 with equivalent units listing for $899 - $999 and to top it off, with free shipping. I was concerned that I might collect a bag of glass chards and circuits when it arrived, but Amazon seemed ok about their return policy. It arrived in pristine condition ready for plug-and-play.

Bottom line, the time has come, internet commerce has matured into a substantial viable commerce avenue, the states need the money, its the fair thing to do for overall commerce. The tech collection issues are easily surmountable.

Will it hurt online commerce? Maybe a little at first, but it is my gut feel that most shop the internet not to beat the taxman but for the selection, convenience and price competitiveness between vendors. Any decline is likely to be short term IMO. The benefits remain overwhelming.

[TampaYankee]

Yesterday I bought something via the internet from NY state. As anyone knows I live in TN. However their written opinion was that I and everyone who bought from them was taking delivery in NY state so they charged and collected NY sales tax. An interesting point of view and one that I have found to not be correct many, many times before in dealing with various states. Virtually every state allows for a resident of another state to take delivery without paying sales tax except in their state of residence. There likely will be some paperwork involved to do so but that is the rule under which I have operated for many years. In this case the choice seemed to be pay the NY tax or do not do business with this vendor. I chose to pay the $16 tax and get my goods. However, I would not have done so with a larger purchase.

Best regards,

RA1

RA1, your are a more forgiving man than I. I would have cancelled the transaction right away unless I knew every other venue that had the item available was charing more that $16 extra, and then I might have still canceled out of pique.

Paying a fair share in one thing. Being taken advantage of is quite another.