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Internet Sales Tax Passed

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Tinman57:

[ The internet sales can't compete with brick and mortar stores if you have to pay for shipping & handling AND taxes...]

Senate passes Internet sales tax

05.06.2013 10:44 PM

The U.S. Senate has voted to allow states to collect sales tax from online retailers, making it more difficult to buy tax-free products online.
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http://tinyurl.com/crustt4

eleman:
But online stores do not have to pay for fancy store designs, store rent, franchise fees, and salaries of as many staff as brick and mortar thingies have to employ.

I'm curious what will be the next argument of those who are feeling the brunt of obsolescence.

app103:
It has nothing to do with brick & mortar being able to compete with online stores. It has to do with people evading taxes by buying online.

If you live in a state where residents are subject to sales tax, you are supposed to be paying the tax on any and all taxable goods, regardless of where you bought it from...whether it's locally, online, or in another state. Just because a merchant didn't collect the tax doesn't mean you are off the hook for it. Technically, you are supposed to report it and pay it when you file your state income taxes. But nobody does that and the states lose a lot of money because of it.

Online stores will not be charging you this extra money, they don't get to keep it. They are collecting the tax you owe on the purchase and turning it over to the state you live in.

The alternative would be forcing online merchants to give customer data to the states, who bought what and how much it cost, and if you don't pay the taxes on it when you file your income taxes, they come and arrest you and charge you with tax evasion. Because that's what it is when you deliberately don't pay your taxes.

kyrathaba:
^ 100% correct.

wraith808:
It has nothing to do with brick & mortar being able to compete with online stores.
-app103 (May 08, 2013, 04:35 AM)
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That is one of the most naive statements I've ever heard.  Have you seen who the lobbyists are to the legislative body that caused this even to be an issue/brought up before the legislature?  

Among the groups supporting the Marketplace Fairness Act are the American Conservative Union, Consumer Electronics Association, the National Retail Federation, the Retail Industry Leaders Association, Amazon.com, Best Buy, the American Booksellers Association and the Alliance for Main Street Fairness.

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And look at the name of the Act... they aren't shying away from this at all, i.e. the Marketplace Fairness Act.  And if it was because of the fact that they are losing revenue, why is there an exemption clause?  At the level of the exemption, this is aimed squarely at larger sellers, i.e. Amazon.

"The bill would protect small Main Street businesses from unfair competition from Internet sellers," said Senator Lamar Alexander, a Tennessee Republican.

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And while what you say is true in theory, it is also not true universally.  Some states don't charge a use tax for transactions out of state.  And it places an undue burden on those (especially small businesses) that do business with out of state customers, having to keep up with the tax laws in each state/municipality, since even in a state, the sales tax for the local region varies by municipality.  And it changes.  That's not an insignificant amount of data to keep up with, and you can be that they will have to pay for the service.  While the B&M will only have to worry about a grand total of 1.  And then having to deal with the disbursements to each municipality state separately.  Believe me, having worked in retail for a small shop in a state where they passed something similar (but it was amended and watered down later because of the collateral damage), it's a lot easier and in the long run less expensive just not to ship out of state depending on your revenue from the same. (section 2 on tax simplification handles this, and creates a mandate to create, maintain, and provide for free the software to do this)

Though they tout the revenue gained by this, it was squarely and surely aimed at the online retailers, not the consumers.  And it was squarely aimed at increasing the perceived costs (though you say they won't be charging you, the perception is totally different).

And what about all of those people selling second hand good on e-bay and amazon marketplace? (Section 2c handles this, as you have to have reported sales of over $1 million a calendar year to be required to collect taxes)

This is one of those times that I'm glad that neither party has a majority in both branches of Congress.  Hopefully it won't make it out of the House alive.

UPDATE: I completely read through the bill, and the part stricken above isn't applicable to this, because of a couple of provisions.  Though it does require that the state provide at its own cost the software to report, maintain a database of products, and allow payment.  Knowing (from working for the state on a few software contracts) how inefficient and sometimes almost criminal the waste is on these projects, one also wonders the actual revenue that each state will actually receive after paying taxpayer monies for such programs/maintenance...

ADDITION: In my opinion, if what we're really concerned with is the tax remuneration, there's an easy way to deal with it.  The taxes should be collected for the state where the company is located.  Instead of a use tax, just make it a sales tax.  Charging for use of the item is just backwards, it's called a sales tax, and should be a sales tax if you're going to collect it.

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