Posted on 06/21/2018 7:58:37 AM PDT by Reno89519
If the US is going to have an Internet tax, then I propose the following:
Each transaction is viewed a source and destination.
Source is where it is shipped from, destination is where it is delivered. Each state then publishes a tax rate for their source and destination values.
Retailers then average the source and destination rates, charge the average to the customer and then remit half to the tax authority for source and the other half to the tax authority for the destination.
They are bound and determined to ruin the economy. With revenues as high as they are why else are they doing this?
And will us foreign companies be required to register in the state? I was required to in Alaska last year—state contract. Waste of money, cut into my limited profit. And creates filing burden. I also had a California contract and they took the money out of the state issued payment! Now I am forced to file to get that withholding back, because the services were not taxable but I have to prove I am a foreign company not subject to the tax filing. It is nearly $4,000 so worth filing, but at what cost. How many companies just ignore it?
All reports about this mention state state sales taxes, but there are also many counties and municipalities that charge sale taxes. I expect they will also be able to collect their normal sales taxes from online vendors.
And I bet some small towns will realize a windfall because people in small towns are ordering merchandise online that they haven’t bought locally for decades. It’s the malls and larger towns that have lost part of their business from people who drive in from smaller towns to shop, but now shop online.
And someone needs to be developing a giant sales tax data base to make available to all the online vendors who’ll have to charge and collect sales taxes and remit them to thousands of jurisdictions nationwide.
It is going to be interesting to see how this all works out. I think small businesses that operate their own web sites will forced into Amazon, Ebay, etc ecosystems where the sales tax will be dealt with, for a small fee of course. Government promoting and expanding monopolies.
Boo & hiss on them.
Unless Amazon is physically located in your state, they don't have to. The customer then is responsible for paying the tax due. The issue is between the state and the consumer, not the retailer from out of state.
No way! Already too many hands in the cookie jar. Besides, what a gun dealers that are banned from Amazon and others?
As much as we all hate taxes, I have never seen so many people whine over a sales tax. The battle is to be won by eliminating income tax and pay higher sales tax.
So! Which state collects the tax, the sellers location or the purchasers location?
Limbaugh gets audited every year by NY state even though he has not lived there for decades. Harassment audits by blue states could become common.
“A state’s tax on another state’s exports - a federal issue and unconstitutional (Art. I, Sec. 9, Cl. 5).”
Incorrect. It reads: “No Tax or Duty shall be laid on Articles exported from any State.” The FEDERAL government cannot tax interstate commerce.
“If congress were allowed to lay a duty on exports from any one state it might unreasonably injure, or even destroy, the staple productions, or common articles of that state. The inequality of such a tax would be extreme. In some of the states, the whole of their means result from agricultural exports. In others, a great portion is derived from other sources; from external fisheries; from freights; and from the profits of commerce in its largest extent.”
http://press-pubs.uchicago.edu/founders/documents/a1_9_5s4.html
This is a case of a state taxing a sale that is received inside the state’s borders. A state has every right to do so. If the seller doesn’t want to sell products inside that state, he need not do so. But if he does, he needs to cooperate in collecting the taxes owed.
In Arizona, for example, everyone in the state owes payment of sales tax on items bought from outside the state but paid for inside the state. However, the state has no way of tracking, so the payment is effectively voluntary. This just says if you want to conduct business inside the state - which you effectively do by taking payment from someone in the state and delivering the goods to the person inside the state - then you ensure the tax is paid. Sales tax. On items bought inside the state, by someone who IS conducting business in that state even though they are not physically there.
And since it involves commerce taking place between individuals in different states, it is a reasonable affair for the Federal government to decide.
My business includes live online classes. I have students all around the US. Am I supposed to now collect taxes on their signup? And am I supposed to look up each person and see if services (my classes) are subject to taxes, which state, county, and city tax applies, are their other reporting requirements, etc.?
And who is going to pay for the accountant and lawyer, the time to figure it out, collect it, file the reports. And will states then all require me to register as a foreign corporation in order to make those filings?!
This is really complicated. It is a potential no-win situation for small businesses and really for any but the biggest like Amazon.
Further, what is the effective date?! Is it from today forward or from some past date within the statute of limitations. And taxes have different one. Many of my students are in states that tax services. Do I now need to audit and for how far back? I never collected taxes, definitely can't afford to pay what wasn't collected, and the chance of me getting people from potentially years ago to cough up unpaid taxes is ridiculous.
Whine? That is too simplistic a dismissal and not fair conclusion.
And how am I as a small business owner supposed to sort out state, county, and local taxes for each customer?!
1. The small businesses go bankrupt.
2. A company creates software that tracks all of the various tax laws in all the states, counties, cities, and strip malls and charges tax accordingly - and sells it to the companies that don’t go bankrupt.
I have a feeling, though, that this is limited to state taxes only. But that will probably be tested in the SCOTUS as well.
They opened up a can of worms here. Seriously.
I honestly thought this could never pass because of the reasons it didn’t before. But as with Obamacare decisions, it really comes down to what they think “must” happen, as opposed to what is really constitutional.
And yeah, our founding fathers would have been shooting by now, but it is a different world. It is a fools errand to fight this violently.
I don’t regard the states clamoring for tax revenue as showing the system is broken. For seller and consumer it is working just fine. Which I believe is the goal of commerce. Envious brick and mortar merchants should be cautious about urging states to tax online businesses. Unless they think they will be immune for other innovative means of sharing more of their revenue.
Even if we talk about today, if I make an online sale today that is subject to some state's existing tax code, am I liable now?
Maybe I charge a 10% tax on all transactions to cover potential tax liabilities?
Any business and tax lawyers out there, any accountants, with an idea on how this changes things for today, tomorrow, and for the past?
The only saving grace is “can” instead of “shall”. It would be a good idea to head this off at the pass at your state’s legislature. Contact a rep you know would be friendly to a ban on online sales tax or at least a minimum sales amount to trigger it. Show money lost because of businesses being forced to shut down.
I live in Iowa, so while I can’t talk about your situation specifically, I can say what I have been told.
If I buy a physical product in say Nebraska and take it to my house, I only have to pay the tax where I buy it (Already figured in by the seller). If I am in another state, order something online and ship it to my hotel, I have to pay the tax where I am registered to live.
I used to travel a lot, and Iowa has a place on their tax form to declare online purchases. My accountant at the time told me that is what I should do to be compliant according to the law.
They do that for shipping costs already.
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