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.

[Big Horn]

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!


Here in Wyoming we have a 2 billion dollar surplus in state gov. of about 450 Thousand people. Go figure.
They should eliminate sales tax on food and utilities.

[6SJ7]

Sales Tax Fairness and Simplification Act...

Better known by its acronym BOHICA.

[Mr. Jeeves]

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

No representative with a portion of his voting base on a government "salary" is ever going to propose cutting that salary in the interest of a concept as nebulous to those same voters as sound fiscal management.

Mr. Enzi isn't stupid, he's "dancin' with the girl that brung him." ;)

[rattrap]

Is it just me or does the Senate seem to get more useless every year?

[Fawn]

AHHHHH!! WHY DON'T THEY JUST TAKE MY WHOLE D@MN PAYCHECK....

[eleni121]

I am a big states rights supporter
..............................................
Well I'm not. The tyranny of the state/village/small town can be far more repressive than the tyranny of a national govt.

As for the rest of what you say.. fortunately that is the case. States have no business taxing interstate commerce -it's illegal for one. So why is it that NYS for instance demands that we pay tax on what we purchase in neighboring states?

[Natural Law]

Not surprising. How are they going to buy Peter's vote withou first having to rob Paul?

[penowa]

And I am a Republican because the Republicans are so much better on taxes than the Democrats. Yeah, right! Are there really two parties anymore?

[IamConservative]

"The government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

Words of a very wise conservative - Ronald Reagan

[Necrovore]

The way this was explined to me was that if a company has a store or office where they conduct business in multiple states and you happen to live in one of those states, and then purchase something from one of their stores not in your state, they charge you the tax rate of the state in which you bought the product from. In your case Your sale was finalized in california so you got charged at that rate.

[mulligan]

Give them time they will destroy everything.

[redgolum]

Kind of wondered when that loophole was going to close.

Politicians just can't stand people not paying more taxes. It makes them nuts.

Kind of like NYS trying to tax anyone who has ever traveled into or through it.

[xzins]

Repeal all taxes.

[freekitty]

Anything to continue to stick it in the eye of the taxpayer and to pay for their extravagent lifestyles.

They were not elected to live these lifestyles. They were elected to serve the interests of the public; not themselves.

[freekitty]

You take these creeps money away, such as getting rid of taxes and they can't operate. It's that simple.

[celejrm313]

I have noticed a lot of rhetoric about "lost revenue". Any chance that food stamps or welfare checks will be reduced to make up for this revenue loss?

[TChris]

Well, that seals it. I am officially declaring my opposition to Enzi's reelection. As a resident of Wyoming, please accept my apologies for Mr. Enzi's disloyalty.

He voted for the McCain amendment against "degrading" treatment of sworn enemies of the United States. Now he is leading the charge to add new and grandiose taxes on American consumers.

Goodbye, Mr. Enzi. Your services are no longer needed, nor wanted.

[Arkinsaw]

States rights is a tool to prevent the tyranny of the national government...the national government, through the 14th Amendment, is the tool to prevent the tyranny of the state/local government.

As the Federalist Papers say, it is the duty of the citizen to, in each case, "adhere" to that jurisdiction that is best defending their liberties at that moment.

Unfortunately, we have not done a good job as citizens. We have used states rights as a tool to supress the liberties of our neighbors rather than defend the liberties of all. Many of us have also adhered to the federal government to use it as a tool to enforce the will of a few onto the many.

The combination of states rights, and national sovereignty, are supposed to be played off against each other by citizens to keep each in check. It has basically worked, just with wider swings between state and federal than one would hope.

When the national government becomes to powerful or violates liberties then citizens can use the state to interpose itself as a shield. When the state becomes to powerful then the citizens can appeal to the national government to interpose between them and the state.

Do not discount the tool provided to us by the founders just because we have not used it as they intended.

[Blessed]

>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.<

You are so totaly confused you are advocating against the free market instead of for it.The Government has no right to create a tax haven for internet companies that allows then an unfair competitive advantage.If the store down the street has to add 8-10% to the cost of the purchase in the roll of bagman for the government the internet guys should to.

I do not want some internet company in California enriching itself by avoiding paying taxes on goods sold in my state.This robs my schools and fir protection and forces politicans to increase property taxes.

Realizing you just collect a paycheck and are not responsible for anyones profit and loss this side note.The local retailer has already paid those draconian shipping charges and it is included in the price.In case your father never told you"Their is no FREE LUNCH!"

[YouPosting2Me]

"They can tax it when they pry my Cold, Dead, Mouse from my pocket."

Sincerely,

George and Lenny.