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Online Sales Tax Looms

Discussion in 'The OT' started by Nick, Aug 1, 2012.

  1. Aug 1, 2012 #1 of 21

    Nick Retired, part-time PITA DBSTalk Club

    Apr 23, 2002
    The buzz about states taxing Internet purchases comes up every couple of years, but this time it could be for real. With revenues down around the country, states are calling for new sources of cash and this time, Congress is listening.
    Full story here.
  2. Aug 1, 2012 #2 of 21

    BAHitman Godfather

    Oct 23, 2007
    Austin Texas
    Texas already reached an agreement with amazon to start charging sales tax.... They are still cheaper most of the time...
  3. Aug 1, 2012 #3 of 21

    runner861 Icon

    Mar 20, 2010
    Same in California.
  4. Aug 1, 2012 #4 of 21

    Davenlr Geek til I die

    Sep 16, 2006
    They think money is just going to appear out of nowhere I guess. All it will do for me is cause me to buy less, for the same amount of money. No one is going to get any new found revenue out of the deal.
  5. Aug 1, 2012 #5 of 21

    phrelin Hall Of Fame DBSTalk Club

    Jan 18, 2007
    Yeah, Amazon has to start collecting California sales tax in September. Last year they made a deal with Governor Moonbeam and the Legislature to jointly advocate a federal law before Congress if the state would delay going after them.

    Meanwhile eBay opposes it on behalf of small businesses.:rolleyes:

    Bloomberg has a story to help you keep track of the players.

    In the meantime, a couple of months ago we had this in the LA Times Amazon poised to get a cut of California sales taxes.

    The problem is nobody is willing to collect such taxes directly from the folks who pay them. California, for instance, calls it a Sales and Use Tax which basically says if you don't pay it when you buy it, you still owe it. There's even a space on the California Income Tax Form to tell them what you owe. The Legislature could have required an amount be printed in the blank that you would have to either pay or modify under penalty. But they didn't.

    And, of course, income taxes are collected by one State agency, the Franchise Tax Board, while sales and use tax collections are the responsibility of the State Board of Equalization. The latter's website has spreadsheets you can download for the 1,780 different jurisdictional tax rates in California but they also tell you:
    At least in California you can report and remit to the State for all 1,780 different rate areas. In some locations, local sales taxes are collected by localities.

    The feds could institute a uniform sales tax that would be split between the state of sale and the state of delivery, but that would require a thoughtful compromise. That a compromise could be rationalized by "states rights" ideologues and advocates for "equalizing" the competition which seems to range from those pandering to big box stores to those pandering to on-the-ground small businesses, none of whom would support a uniform federal tax solution, says about all that needs to be said much like this picture:

  6. Aug 1, 2012 #6 of 21
    Christopher Gould

    Christopher Gould Icon

    Jan 14, 2007
    Small bunisness the losser. Never thought of this. Id hate to start a small bussiness and have to pay sales tax in 50 different states.
  7. Aug 1, 2012 #7 of 21

    SayWhat? Know Nothing

    Jun 6, 2009
    You wouldn't. Your buyers would pay it. All you'd have to do it report it and remit it. And only for whatever states you ship to.
  8. Aug 1, 2012 #8 of 21

    pfp Whatever

    Apr 28, 2009
    It's a huge pain in the rear for a business that has to calculate, collect, and remit the sales taxes unless it's standardized nationwide. Amazon could surely handle it but the smaller guys probably can't.
  9. Aug 1, 2012 #9 of 21

    phrelin Hall Of Fame DBSTalk Club

    Jan 18, 2007
    I think he was referring to the task of reporting and remitting it to 50 different states. As I explained above while for California you can report and remit to the State, you have to correctly identify which of the 1,780 different jurisdictions the buyer is located in which does not necessarily correlate to zip code, even 9 digit zip codes, despite what you might read on line.

    For other states you may have to file local returns separately.

    This will be, of course, what I call the National Online Payment Services Profit Increase Guarantee Act. As simply explained by the SBA, for those dozen or so interstate on line sales your business might make, you need to understand only the following:
    I don't know which, if any will file your dozen or so interstate online sales tax returns for you, but the one that does offer the service first stands to do well. Your small business might not gain much, however.

    Or if you want to file on your own, Louisiana has a centralized Parish E-File web page that offers the following:
    There are, of course, thousands of other jurisdictions to discourage you from being in business.:nono2:
  10. WestDC

    WestDC Well-Known Member

    Feb 9, 2008
    Gee No extra Cost for that is it--Those that Don't earn a living TAX those that do.
  11. James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

    Apr 17, 2003
    The "report and remit" is a burden ... if sites were allowed to charge local sales tax (like stores) it would be easier. But that would just encourage sites to move to states with less or no sales tax (the way credit card companies moved to Delaware and other friendly states).

    Paying for a service that knows the local taxes for everyone (including county and city taxes) plus different tax rates for different products is a burden.
  12. djlong

    djlong Hall Of Fame

    Jul 8, 2002
    New Hampshire
    This patchwork quit may be what starts up talk of a National Sales Tax.
  13. RasputinAXP

    RasputinAXP Kwisatz Haderach of Cordcuttery

    Jan 23, 2008
    We're paying tax through Amazon now. Sigh.
  14. Stewart Vernon

    Stewart Vernon Roving Reporter Staff Member Super Moderator DBSTalk Club

    Jan 7, 2005
    Kittrell, NC
    If they want to do this... then they need a federal law. States can't do this by themselves... interstate commerce would require a federal law... which really means a national sales tax.

    Meanwhile... the other problem in this notion is that it doesn't quite work fairly.

    Sure, it would collect tax on an online sale for your state... but what about when I drive across the Virginia border and buy something in a VA Best Buy? I pay sales tax in VA for that purchase... would I then have to also pay sales tax in NC when I bring it back home? If so, how is that fair? If not, how is that fair?

    Why should I pay NC sales tax for an online order I place from a VA store if I don't have to pay NC sales tax for a purchase I drive to pick up.

    It's all a big mess.

    IF states want people to pay sales tax, they should be thinking of ways to encourage small and local businesses to be more competitive while also inviting more businesses to open locations in their state, thus making them a local presence and making the normal local sales tax rules apply.
  15. Rich

    Rich DBSTalk Club DBSTalk Club

    Feb 22, 2007
    Piscataway, NJ
    But only on those websites that maintain a brick and mortar presence in our state but sell on Amazon, right?

  16. RasputinAXP

    RasputinAXP Kwisatz Haderach of Cordcuttery

    Jan 23, 2008
    Nope, Amazon struck a deal with the Gov. They're locating facilities in-state, and they'll start collecting NJ sales tax.
  17. Rich

    Rich DBSTalk Club DBSTalk Club

    Feb 22, 2007
    Piscataway, NJ
    Oh, that's just wonderful. That brightens up my day. Nutz!!! Got any time frame on this? First he attacks the libraries in the state and then this? He failed to destroy the library system. Is there any hope this latest attack will fail?

    And he wants to be President?

  18. kikkenit2

    kikkenit2 Icon

    Oct 25, 2006
    Amazon sales to California should be huge in August.
    Everything goes up about 8% or more in September.
    Time to stock up on stuff.
  19. runner861

    runner861 Icon

    Mar 20, 2010
    From what I have read, at least in California, Amazon expects that charging sales tax will increase its revenue. I am not familiar with the tax laws, so I am just going off the newspaper. But as I understand it, sales to California residents will be taxed. Amazon will have a California brick-and-mortar presence. However, the city in which the brick-and-mortar is located will receive one percent of the tax revenue, with the rest going to the state. The state tax in California is 7.25 percent.

    The cities in California started a bidding war to pay Amazon a rebate of a percent of that one percent tax revenue to set up shop. San Bernardino, a city which is currently in bankruptcy, is the city that Amazon selected. The word is that San Bernardino is going to rebate to Amazon 80 percent of the tax revenue that they pay to San Bernardino.
  20. phrelin

    phrelin Hall Of Fame DBSTalk Club

    Jan 18, 2007
    Actually, the war among California cities and counties over distribution in California is just starting. The issue will be is there a "point of sale" for a company that doesn't have a retail presence of any kind? The argument will be that what is being collected is not a "sales tax" but a "use tax", and that the tax revenue distribution locality will be defined by where the items are delivered, the point of use.

    In the end, the Legislature will have to act.

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