Senators propose taxing Internet shopping

CNET ^

[BradJ]

This may be the last holiday season to enjoy tax-free Internet shopping, thanks to new legislation in the U.S. Congress.

Two bills introduced Wednesday propose sweeping changes to how Americans are taxed for online and mail order purchases. Businesses initially would be required to collect sales taxes on purchases shipped to roughly half of the country, and that percentage is expected to rapidly increase.

"Main Street retailers collect sales taxes, while many online and catalog retailers are exempt from collecting the same taxes," said a statement published by Sen. Mike Enzi, a Wyoming Republican. "This is costing states and localities billions in lost revenue." (A related bill has been introduced by Sen. Byron Dorgan, a North Dakota Democrat, who is a former state tax commissioner.)

At the moment, if you order something from a company that's located entirely out of state, you're typically not charged sales tax. Seattle-based Amazon.com, for instance, does not collect sales taxes when shipping to California.

Technically, you're supposed to estimate and pay these taxes voluntarily to your home state every April 15. But practically nobody does.

State tax collectors would like to change that. They complain that the Internet is sapping tax revenues and are supporting Enzi's bill to force companies to collect taxes on many out-of-state shipments in the future. Traditional retailers such as Wal-Mart Stores, which collects taxes on shipments from Walmart.com because it has physical locations in every state, are also supporting the bill.

"It is now time for Congress to provide states...with the authority to require remote retailers to collect sales tax just as Main Street retailers do today," Enzi said. Four years ago, in a CNET News.com editorial, Enzi warned: "Other forms of taxes, such as property or income taxes, may then have to be increased to offset these lost revenues."

Critics of this approach warn that it will complicate life for small businesses and be an unfair burden on states like Delaware, Montana and New Hampshire, which do not have sales taxes.

"The tax commissioners are overreaching by pressing Congress for a national mandate on a collection scheme that is still in the oven," said Steve DelBianco, director of the NetChoice coalition, which represents companies such as America Online, eBay, Oracle, VeriSign and Yahoo. "They haven't worked out the software they need to collect, a compensation system for sellers, and the states themselves are still struggling (to put policies into place). In other words, there's a lot of work left to do before pressing Congress for a national mandate."

Tax "fairness and simplification" Enzi's bill, called the Sales Tax Fairness and Simplification Act (click here for PDF), would affect only shipments sent to participating states. If California joined the so-called compact, for instance, the bill would require Amazon to collect sales taxes even if the state of Washington objected and did not sign up.

The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.

So far, 18 states have fully signed on. Those include Arkansas, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Utah, West Virginia and Wyoming. Twenty-two other states, including California, Illinois and Texas, have moved in this direction.

Dorgan's office did not make the second bill, which he also introduced Wednesday, immediately available. But a "discussion draft" seen by CNET News.com would order the Small Business Administration to determine which businesses would be required to comply with the tax collection rules. Congress would be required to ratify that decision.

For mandatory tax collection to take place on mail order and online purchases, the Supreme Court has said, Congress must act. A 1992 case, Quill v. North Dakota, said remote taxing--in the absence of a federal law--violated the U.S. Constitution's interstate commerce clause.

Earlier efforts in Congress to enact such a law have failed, in part because e-commerce companies pointed to the dizzying complexity of taxes. But the states participating in the so-called Streamlined Sales Tax Project hope that if they pledge to simplify their tax systems, they can persuade Congress to make collection mandatory.

[BradJ]

If you want to put a hamper on internet sales this is one sure way to do it. Thank You Senate for continuing to infringe on us with confiscatory taxes every chance you get /s.

[SlowBoat407]

If you're going to tax us for shopping at home, at least open up ANWR so we can afford to go out for our taxation.

[MNJohnnie]

Not going anywhere. No one is going to vote to raise taxes in an election year.

[eleni121]

The states...coming after everything they can get...states rights...yeah /s

[SoFloFreeper]

"Main Street retailers collect sales taxes, while many online and catalog retailers are exempt from collecting the same taxes," said a statement published by Sen. Mike Enzi, a Wyoming Republican. "This is costing states and localities billions in lost revenue." (A related bill has been introduced by Sen. Byron Dorgan, a North Dakota Democrat, who is a former state tax commissioner.)

Screw you, Enzi...AND Dorgan. Nothing is stopping brick and mortars from going online and selling to others. THE GREEDY HAND OF GOVERNMENT MUST BE STOPPED!

[Havok]

Politicians, in general, suck.
Just my two cents.

[trebb]

Many sites already charge sales tax, depending on where the actual stores are located and where you live. if there is an outlet in your State, you end up paying the taxes. If not, they tend to err on the side of charging the taxes.

[Semper Paratus]

Soon laws will require ISPs to force subscribers to log any money transactions by their subscribers and deduct any taxes deemed applicable from their checking accounts immediately.

[Founding Father]

...Sen. Mike Enzi, a Wyoming Republican.

The difference between pubbies and democraps is ...

[upchuck]

"It is now time for Congress to provide states...with the authority to require remote retailers to collect sales tax just as Main Street retailers do today," Enzi said. Four years ago, in a CNET News.com editorial, Enzi warned: "Other forms of taxes, such as property or income taxes, may then have to be increased to offset these lost revenues."

Apparently Mr. Enzi is too stupid to realize that cutting government bloat can accomplish the same thing.

So far, 18 states have fully signed on. Those include Arkansas, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Utah, West Virginia and Wyoming. Twenty-two other states, including California, Illinois and Texas, have moved in this direction.

So glad to see my state, South Carolina, sees this madness for what it is.

[VeniVidiVici]

And I'm impressed that my state, Florida, which lives or dies by the sales tax, is not on the list.

[MCH]

Great plan to destroy the economy big-time. As usual in a free market economy, whole businesses are springing up and growing to support something new & of value to people - in this case the burgeoning on-line business environment. Taxes will put a major damper on it, add layers of bureaucracy (cost), and shut down new & vibrant businesses built around the Internet - which is the biggest current engine of economic growth we have.

We already have to pay shipping costs for on-line stuff, which often more than makes up for taxes. However, it's still worth doing to eliminate the hassle of driving around (good for environment) looking for something you can quickly find online. Plus the online world is more competitive, so you can usually find a better deal to offset the shipping costs. Throw taxes on top of shipping charges and we'll be forced back to the cave man days of driving all over kingdom come to hope to happen upon the right store that sells something for a reasonable price & actually has it in stock -- all to avoid draconian shipping charges PLUS taxes on top of anything you buy on-line.

The message to date has been obvious to modern retailers. Go on-line to grow your business, or risk going out of business. These "legislators" don't like this. They are out to maintain the status quo & protect mom & pop stores against progress and new competition presented by the Internet and on-line shoppers. Kind of like protecting the whip & buggy industry. Plus, they just can't keep their money-grubbing hands out of anything that involves growing revenues in the private sector. Greedy, knuckle-dragging jerks - no matter what party they're in.

[weegee]

Technically, you're supposed to estimate and pay these taxes voluntarily to your home state every April 15. But practically nobody does.

Bullzogby. This NEVER was the case with mailorder catalog sales.

Your state sales tax could vary even within the state depending on which county the sale took place in. You didn't have to "make up the difference" to your home county.

Also sales tax was not due on Income Tax day. It can be quartely, monthly, or annually depending on how many sales you make in a year. My annual return followed the calendar year.

This guy is giving tax advice???

[Arkinsaw]

The states...coming after everything they can get...states rights...yeah /s

I am a big states rights supporter. But the states already established a tax compact for this purpose....its called the Constitution. The Federal government, in this instance, is the compact's agent.

In this case, if anyone is going to tax internet sales it should be the federal government. Otherwise, it will be a whole bunch of states taxing interstate commerce. Just one of the things the union was set up to prevent.

[vinylsidingman]

If you're going to tax us for shopping at home, at least open up ANWR so we can afford to go out for our taxation.

Compromise? I say, since we're shopping online {conserving fuel} there should be NO tax !

Hey, if you're going to wish, might as well wish GOOD

[mewzilla]

If you want to put a hamper on internet sales this is one sure way to do it. Thank You Senate for continuing to infringe on us with confiscatory taxes every chance you get /s.

They can only do it if we permit it.

[weegee]

IIRC Rhino/Warner Entertainment in California charged me 9% sales tax for a shipment to Houston (where the top sales tax in Texas is 8.25%). I asked them why I was charged tax and at this rate. They never did clarify.

[capydick]

Politicians, in general, suck.

All of them. It's the power that corrupts them, no doubt about it.

Just my two cents.

Make that 2.2 cents to cover the sales tax.

[sarasota]

I'm finding sales taxes on many/most of my internet buys. What's up with that?

[tumblindice]

`If you drive a car
they'll tax the street,
if you take a walk
they'll tax your feet . .

another Beatle golden oldie:
"You say you want a revolution . . ."
(Happiness is a warm gun, yes it is)