Internet Sales Tax to become a reality?

[Vapor Vinny]

"Legislation that would empower states to tax online purchases cleared a key hurdle in the Senate on Monday after winning an enthusiastic endorsement from President Obama. "

The White House says it's about "leveling the playing field"

Hmmm...maybe another way to level the playing field is to have no sales tax for anyone.

Our federal government sucks. They exist for only reason. To figure out ways to take your money.

 

[Fiamma]

First a 'sales tax' then followed by a state 'excise tax' for vapor products one assumes. Money hunger is rampant these days. If they figured out a way to put everyone back to work in the country at a living wage taxes would take care of themselves.

 

[Dave_in_OK]

When times are hard you can always account on the government to find a way to make things worse.

 

[skoot]

That law will only apply to businesses over $1M annually, which probably excludes the small vendors. But still, a huge amount of extra paperwork.

 

[orson]

At 1mil a year your'e still a pretty small retailer. I can't imagine the nightmare of remitting sales tax to the 7500 local tax jurisdictions in the US.

Truly large online retailers are probably eating this up as they will be able to accomplish compliance efficiently while small retailers will have yet another disproportionately large regulatory compliance cost (in relation to number of employees).

 

[BuGlen]

Question: Has anyone here read the bill? I saw in a post in the OUTSIDE about this bill that there are provisions that would require the states who collect these taxes to employ a system that would simplify the process for online retailers.

I'm not saying that I'm at all for this tax, but I do think that there are many people doing the "chicken little" thing who know nothing about the provisions therein. If anyone who has a degree in law (or a student) can decipher this bill and post the effects in plain English, it would help us to understand what it does and does not do.

 

[skoot]

No law degree but I run an e-commerce site that's close to $1M (not in this industry). 99% of all e-commerce sites are rented space- you pay a company to host your site but it's all run on their servers using their software. Volusion, Big Commerce, etc. are HUGE, with tens of thousands of vendors. They are most likely already working on a simplified solution that will be delivered to their vendors in a very easy to implement way. I have no concerns about the technological burden it would place on me, and every e-cig site I've used uses these companies.

But it is another thing to keep track of and makes tax time harder.

 

[Dave_in_OK]

To Read the full text (only a few pages) go here Bill Text - 113th Congress (2013-2014) - THOMAS (Library of Congress)


S.743 CRS Summary
SUMMARY AS OF: 4/16/2013--Introduced.

Marketplace Fairness Act of 2013 - Authorizes each member state under the Streamlined Sales and Use Tax Agreement (the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002) to require all sellers not qualifying for a small-seller exception (applicable to sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million) to collect and remit sales and use taxes with respect to remote sales under provisions of the Agreement, but only if such Agreement includes minimum simplification requirements relating to the administration of the tax, audits, and streamlined filing. Defines "remote sale" as a sale of goods or services into a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided by this Act.

 

[BuGlen]

To Read the full text (only a few pages) go here Bill Text - 113th Congress (2013-2014) - THOMAS (Library of Congress)


S.743 CRS Summary
SUMMARY AS OF: 4/16/2013--Introduced.

Marketplace Fairness Act of 2013 - Authorizes each member state under the Streamlined Sales and Use Tax Agreement (the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002) to require all sellers not qualifying for a small-seller exception (applicable to sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million) to collect and remit sales and use taxes with respect to remote sales under provisions of the Agreement, but only if such Agreement includes minimum simplification requirements relating to the administration of the tax, audits, and streamlined filing. Defines "remote sale" as a sale of goods or services into a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided by this Act.

The bolded red text was the provision that I had heard about. It sounds like they must not only provide a simple method of calculating and collecting the tax, but also a simple method to file with each of the state agencies to which you must pay that tax as an online merchant. Who knows if the actual implementation will be fairly simple, but to me, it sounds like they're at least trying to consider the smaller businesses who don't have an accounting staff on the payroll.

 

[datacreek]

it'll never pass the House

 

[CaSHMeRe]

it'll never pass the House

This was my thought as well.

I don't see it getting through.

 

[Dave_in_OK]

I find it almost funny that Amazon now supports the bill; with a warehouse in almost every state their customers are required to pay tax. Amazon now wants a law to help protect them from smaller companies much like the brick and mortar companies wanted a few years back to protect them from Amazon.

 

[eric1973]

This is just another step of more to come. It is even more curious to see where it would lead...

 

[klynnn]

I believe this is just a matter of time.

 

[orson]

I confess I had not read the bill before making my comment, I had only listened to a news story on NPR regarding the proposed regulation.

It's entirely possible that the Federal Government would implement a streamlined sales and use tax policy for online commerce that would be straightforward, coherent, cohesive and easily complied with.

It's also possible that a monkey sitting at a keyboard typing random keys would eventually compile the lyrics to the Star Spangled Banner.

The Streamlined Sales Tax Governing Board, Inc. is one of the main lobbying interests pushing this legislation. On their website they have a document titled "Streamlined Sales and Use Tax Agreement" which outlines their streamlined sales tax policies.

It's 230 pages long. If that's not enough to scare you here is a random sampling to give you a taste of what 'streamlined' means to a lawmaker:

25 Section 310: GENERAL SOURCING RULES

A. Except as provided in Section 310.1, the retail sale, excluding lease or rental, of a
product shall be sourced as follows:

1.When the product is received by the purchaser at a business location of the seller,
the sale is sourced to that business location.

2.When the product is not received by the purchaser at a business location of the
seller, the sale is sourced to the location where receipt by the purchaser (or the
purchaser's donee, designated as such by the purchaser) occurs, including the
location indicated by instructions for delivery to the purchaser (or donee), known
to the seller.

3.When subsections (A)(1) and (A)(2) do not apply, the sale is sourced to the
location indicated by an address for the purchaser that is available from the
business records of the seller that are maintained in the ordinary course of the
seller's business when use of this address does not constitute bad faith.

4.When subsections (A)(1), (A)(2), and (A)(3) do not apply, the sale is sourced to
the location indicated by an address for the purchaser obtained during the
consummation of the sale, including the address of a purchaser's payment
instrument, if no other address is available, when use of this address does not
constitute bad faith.

5.When none of the previous rules of subsections (A)(1), (A)(2), (A)(3), or (A)(4)
apply, including the circumstance in which the seller is without sufficient
information to apply the previous rules, then the location will be determined by the
address from which tangible personal property was shipped, from which the digital
good or the computer software delivered electronically was first available for
transmission by the seller, or from which the service was provided (disregarding
for these purposes any location that merely provided the digital transfer of the
product sold)

 

[Firestorm]

As a resident of Illinois, I'm already supposed to pay sales tax to online merchants who have a presence in Illinois (thanks Gov. Quinn). Although V4L includes sales tax on my orders, I was pleasantly surprised when another e-cig vendor in Illinois neglected to include sales tax on a recent order. I think it's only a matter of time before everyone gets their cut.

 

[retired1]

it'll never pass the House

I wouldn't be so sure about that. The Internet Tax Freedom Act was never meant to be a permanent tax exemption for online businesses. The current extension runs out next year, and unless the state economies are doing a lot better by then, I don't see the bill being extended for a 4th time.

Some states already require a state tax to be collected, however it's rarely enforced as it's a pain in the behind to enforce and collect.