Posted on 12/22/2005 7:31:47 AM PST by 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.
WHY DON'T THEY JUST TAKE MY WHOLE D@MN PAYCHECK....
It will happen if the sheeple elect Hillary the Heinous Harridan as POTUS. Remember her mantra: "We are going to take things away from you for the common good."
Translation: Only I know what you need and how much you need. You will get only what I think you need to live on, peasant; the government gets the rest. "From each according to his ability; to each according to his need."
Heaven help us all!!
You know, I'd be for this IF the money was to go to national defense or paying down the deficit but all it will do is give states more money for entitlements to go to people who are "disabled" because crack has deteriorated their brain or they're too friggin' lazy to work or getting SSI because they weigh 580 pounds....... Nah, no use going on.
Why not just cut spending and let internet shopping be another form of a "tax cut"?
State Governments Have $612 Billion of Your Tax Money That They Are Not Using.
http://www.cafrman.com/Articles/Art-SC-S1.htm
"So glad to see my state, South Carolina, sees this madness for what it is."
Wisconsin isn't on the bandwagon yet, but that's only because Governor Diamond Jim Doyle (D, WI) hasn't found a way to skim re-election funds off of it. Yet. ;)
Main Page
http://www.cafrman.com/
You are absolutely correct - they (the Senate) have the demeanor, the manner and the intelligence of a junior high debate team. The most useless gathering of politicians anywhere on earth...we the people would be much better off if these fools and idiots only convened every 5 years....
And therein lies the, well, lie... Tax revenues are NOT being drained by internet sales. Especially when you consider that the majority of online transactions I have conducted in the last year HAVE been taxed. And to top it off - the actual revenue stream, at least here in Arkansas, has NOT been "sapped", and in fact has been up in the last year.
This is as it should be. A retailer physically located in Podunk receives police and fire protection, public utilities, etc from Podunk; a retailer who merely ships stuff to Podunk does not.
"The Al-Qaeda Revenue Stream Protection Act"
Run your business out of Montana or Oregon - no sales tax.
Isn't there a moratorium on internet taxes? I distinctly remember last christmas time or something George Allen pushing for his bill which banned internet taxation.
Business with a physical presence in your state actually use local services, and thus incur a duty to pay for them. Remote businesses that merely ship stuff to your state do not get that benefit (and are owned by people who have no representation in your state), and thus have no such obligation.
and forces politicans to increase property taxes.
Bravo Sierra! If they're getting less money than they want, then they simply have to cut their spending accordingly.
>The internet company uses none of your state services.<
No they use plenty of our services.They use the roads,law enforcement,courts and fire protection.Tax free zones like the internet are just government giving an unfair advantage to a few.
Yet another reason to never vote democrat or republican again, as if we needed one.
Ugh.. leave it alone damn it. Gubmint yoke would tax a cold if they could.
"Hello, Sausilito Police Department? We've just had a break-in; could you send an officer to 1313 Mockingbird Lane in Manchester? That's Manchester, New Hampshire... Well, I don't see why not -- we shipped a package there the other day and paid taxes on it. Those taxes pay your salary, so don't you get snippy with me!"
>Bravo Sierra! If they're getting less money than they want, then they simply have to cut their spending accordingly.<
I get it now.You are an anarchist.Fire the Police and close the fire Department.Quit paving the streets and let roots grow into the sewer lines.
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