Posted on 04/17/2009 7:33:04 PM PDT by Comparative Advantage
Well, this outta make a good movie, then... let me get the cameraman... :-)
Calvin Coolidge
For anyone who wonders why Coolidge is so reviled in history textbooks.
Credit card to Amazon.
Thanks
Thanks
So if I sell garage sale stuff on ebay, I’ll have to pay taxes? And file quarterly tax statements and all that crap? It’s not worth the trouble.....
And sales tax reports because you will have to charge sales tax on what you sell.
Okay guys, since I do this for a living, let me give you a brief run down.
1. Generally, sales tax is collected by the seller and remitted to the state. Retailers are *required* to act as agents of the state. This has been litigated ad nauseam. If someone does not have a physical connection (or nexus, as has been mentioned by others) with the state, they cannot be forced into becoming an agent for that state. There is a 4 prong test when determining sales tax nexus, which I won’t get in to.
2. There is almost always a corresponding use tax. If someone buys something from a seller who has no physical connection (nexus) with the buyer’s local jurisdiction, they are *required to remit the tax directly to the jurisdiction*!!!
This is *not* new to online sales. This has been going on since the advent of the catalog. Companies figured out they could create separate legal entities to make catalog and internet sales without being required to charge sales tax.
THE USE TAX IS STILL DUE from the purchaser. That means the purchasers have to fill out a return and remit the tax. If they don’t and they know they should or should know they should, they can be hit with fraud.
The states cannot do anything about this arrangement. Why? The Commerce Clause gives that power to Congress.
The states are upset because their citizens are not filling out use tax returns and they can’t effectively audit individuals for online purposes (although it has been done when sellers of expensive items - like furniture - complete voluntary disclosures with states and turn over customer lists and sales records).
Enter the Streamlined Sales Tax Project. http://www.streamlinedsalestax.org/
Read the link to you heart’s delight, because I won’t get into it. It basically promises that states will simplify their tax rates and tax decisions in order to get Congress to give them the right to require remote sellers to collect their taxes.
Here is the main problem. Having gone through the history for years, it started off just fine. Definitions and exemptions were all simplified (e.g., What is clothing? What is food? Where does the manufacturing process begin?). As more and more states came on board, they kept adding more and more “options” to definitions and exemptions, until the word “simplification” means “as simple as it was before we started.” In defense of the project, this was usually done to protect exemptions for industries.
Then came the real fun. Someone dared to ask the question: Are online sales *really* costing states tax revenue? Most states tax telecom services much more than sales of tpp (tangible personal property). A representative (I can’t remember who) offered legislation to help mitigate the situation. This would have allowed the states to tax remote sellers if they reduced their telecom taxes, surcharges, fees, PUC “contributions,” etc. to the plain old sales tax rates.
Any takers? NOPE. Why? They get more revenue from telecom services than they lose from folks not reporting taxable purchases.
“A warehouse doesn’t count, it’s a retail store that does. Amazon et. al., hasn’t flaunted anything.”
That’s simply not true.
Look up Complete Auto Transit.
1. Does the seller have a physical presence?
Yes.
2. Is the tax fairly apportioned?
Probably.
3. Is the tax facially discriminatory?
Probably not.
4. Is the tax fairly related to services provided by the state?
If the warehouse catches on fire, the police and fire department will probably show up.
If you’ve got a warehouse in a state, you make a sale into that state, and that state has a sales tax, you best be collecting or they will lock the warehouse doors.
“So if I sell garage sale stuff on ebay, I’ll have to pay taxes? And file quarterly tax statements and all that crap? It’s not worth the trouble....”
Not necessarily.
Your state may have casual sale exemptions, so that neither you nor your purchaser may be required to pay tax.
If you do it a lot and you sell to people in your local jurisdiction, you may already have a collection and reporting obligation.
“I wonder how long before they have inspections of yard sales.”
Some states, notably Oklahoma, already do.
There’s a big Amazon warehouse a few miles from my home.
I haven’t paid sales tax (yet)
With “Amazon Prime” it all ships free too.
My daughter even gets diapers that way, says it’s the best deal (with 3 in diapers, she oughtta know, LOL)
THREE in diapers? OMG. Poor lady!
twins were the underlying cause :- )
FWIW grandparenting is even better than advertised
How precious to have twin grandchildren! Hard on mom, but wonderful for you. Double the love.
Well, that should neutralize the un-president’s tax cut and then some.
My understanding is that Amazon is operating warehouses as separate legal entities. I believe they receive an order online, “purchase” the product from the amazon warehouse and then have the warehouse drop-ship the item.
However, if it is determined that these warehouse entities are merely acting as agents of the online entity, the agency relationship along with the physical presence of their agent will cause them problems.
They are in trouble in several local jurisdictions. One is Virginia. http://hamptonroads.com/2009/01/complaint-amazoncom-should-charge-tax-sales-va
If you are buying stuff online to “avoid” sales tax, I think you should know that the states will probably not consider your actions to be tax avoidance, but tax evasion. The tax is due. If you don’t pay it to your vendor, you have to remit it to the state yourself.
Are books or diapers taxable in your state? I don’t know. How can you find out? Well, the states expect you to go out to their ever-so-friendly web sites and figure it out. If not, you can call a clueless person at a 1800 number who is more likely than not going to tell you that all sorts of nontaxable items are taxable. If you figure out later you shouldn’t have paid the tax, good luck with that refund!
Do you think this is a stupid system? I sure do, and sales tax is my bread and butter. IMHO, we should get rid of all taxes, federal and state, but one: a single flat consumption tax with no exemptions. NONE.
The problem is that we have this little thing called states’ rights. All y’all can agree to pay more local taxes through your locally elected officials. Therein lies the sales tax dilemma. Every local jurisdiction gets to decide what to tax and what not to tax, who pays it and what the rate is. For a company with Nexus in a lot of places, this is extremely expensive. There are billing system issues, compliance issues, guaranteed audits from lots of states. Heck, I used to be an auditor for Louisiana living in Texas. There are Texas auditors living in California, California auditors living in Oklahoma, etc.
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