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New Bill Would Require Online Retailers to Charge Sales Tax to All Customers
by IhartU
May 6, 2013 at 8:46 AM

 

New Bill Would Require Online Retailers to Charge Sales Tax to All Customers

 

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By Ashley Davis, Sun, May 05, 2013

A new law that is likely to pass in Congress on Monday will make it so all retailers have to charge their customers tax, even those who live in a different state.

Many sites like Amazon and eBay have private sellers who only charge tax to those who live in the same state as them. Under a law, states can only require stores to collect sales tax if the store has a physical presence in the state. That means many online retailers do not charge the majority of their customers a tax fee.

This new law will make it easier for states to collect sales taxes on online purchases. Most larger retailers are happy about the news, but for small-business owners, the law is worrisome.

"It's a huge burden for a company like ours," Sarah Davis said, co-owner of Fashionphile.com. "We don't have an accounting department, we've got my father-in-law."

In 1999, Davis started the company. Now, she runs it with her brother-in-law. It is a small business but makes $10 million a year in sales, mostly online.

The company sells lightly used designer handbags and purses from its website and on eBay. They also have three stores, in Beverly Hills, San Diego and San Francisco.

While the law says companies like Fashionphile don't have to charge sales tax to out-of-state customers, it does require those customers to pay the taxes when they file state tax returns.

They're called "use taxes" on state income tax returns. They apply to purchases made over the Internet, from catalogs, television and radio ads.

Officials admit that very few people pay these taxes.

"I do know about three people that comply with that," Sen. Mike Enzi, R-Wyo. said. He is the main sponsor of the bill.

The bill empowers states to require businesses to collect taxes for products they sell online, in catalogs and through radio and TV ads. The state the shopper lives in would be sent the sales tax.

Businesses that make less than $1 million a year in out-of-state sales would be exempt.

In total, states lost about $23 billion last year because they could not collect sales taxes on out-of-state purchases. Around $11.4 billion of that was lost from Internet sales, the rest came from catalogs, mail orders and telephone orders.

"This is a sales and use tax which is on the books," Michael Kervcheval, CEO of the International Council of Shopping Centers said. "This isn't a tax issue. It's a tax collection issue."

Though the goal of the bill is to help the states, some believe it is limiting the freedom of the Internet.

Many young people are protesting the bill on Facebook, bombarding Enzi's page with messages asking him to not go forward with it.

Generation Opportunity, a nonprofit in Washington D.C., is one of the main opponents of the bill. The group represents people ages 15 to 30.

"We don't want federal or state governments taxing the Internet," Evan Feinberg, president of Generation Opportunity, said. "If the young people's voices are heard, it will tip the scales in favor of freedom."

Sources: Daily Mail, Trib

Replies

  • -Celestial-
    May 6, 2013 at 8:48 AM


    Quote:

    "I do know about three people that comply with that," Sen. Mike Enzi, R-Wyo. said. He is the main sponsor of the bill.

    Thought Republicans were against taxes......
  • meriana
    by meriana
    May 6, 2013 at 9:12 AM

    Quoting -Celestial-:


    Quote:

    "I do know about three people that comply with that," Sen. Mike Enzi, R-Wyo. said. He is the main sponsor of the bill.

    Thought Republicans were against taxes......

    maybe they're only against the taxes businesses, especially big business have to pay but not the ones they collect.
  • yourspecialkid
    May 6, 2013 at 9:48 AM

     I am from Wyoming....Enzi is an idiot that needs to retire or be replaced...we are working on that.

    This is a horrible idea.  It will cost businesses thousands of dollars a year just to maintain the tax permits.  This is before the time is spent to make the monthly/quarterly filings/payments.  It will put a lot of places out of business..which in turn will reduce other tax revenue.

    I am not opposed to collecting sales tax.  If they are going to do it, they should allow the state the store is in to collect tax for all sales...not allow multiple states to collect from a business with no vested interest in their states.

    I am a Libertarian that votes mostly Republican............I am against most of the taxes we already pay and not exactly for a bunch of new ones.

  • Ziva65
    by Ziva65
    May 6, 2013 at 10:00 AM

     I tend to agree with you.

    Incidentally, for business who purchase on the internet, this already occurs. Annually, we get a notice to declare anything that we purchase online that we haven't paid taxes on. It's an accounting nightmare. I end up paying our book keeper and CPA more to figure this out. We have a lot of purchases. So- instead, for the business I no longer purchase anything from out of state that doesn't charge me tax. The result, my declaration on the form is zero. I only purchase from large retailers; honestly I don't even go through the motions to figure out who will charge me tax, because often you don't know until the end of the purchase. I'm sure I spend more in purchases as a result.

    The description above said this tax will be collected as a use tax by consumers when they file their taxes. Same deal. Who personally does their home books this way? I don't I keep all receipts, just important things in files in tax preparation and scrap the rest.

    I think it will go through- the collection process will be interesting to say the least.  It will definitely affect how I shop-

     

    Quoting yourspecialkid:

     I am from Wyoming....Enzi is an idiot that needs to retire or be replaced...we are working on that.

    This is a horrible idea.  It will cost businesses thousands of dollars a year just to maintain the tax permits.  This is before the time is spent to make the monthly/quarterly filings/payments.  It will put a lot of places out of business..which in turn will reduce other tax revenue.

    I am not opposed to collecting sales tax.  If they are going to do it, they should allow the state the store is in to collect tax for all sales...not allow multiple states to collect from a business with no vested interest in their states.

    I am a Libertarian that votes mostly Republican............I am against most of the taxes we already pay and not exactly for a bunch of new ones.

     

     

  • MeAndTommyLee
    May 6, 2013 at 12:17 PM

    We already have the highest sales tax in the country!  A 3 liter bottle of Country Time Lemonade is $1.12.  A large Dunkin Donut coffee is $2.04 after tax on $1.79 cup.  This is outrageous. Over the years we have grown a good portion of what we eat, stopped driving because the price of gas in Illinois is the highest in the country ($4.39 per gallon on a good day).  Now they want to tax our internet purchases?  When exactly do we pay enough?!  Very angry.

  • MsDenuninani
    May 6, 2013 at 12:43 PM

    It's about time.  Businesses should not be able to skirt state tax laws because they don't have a physical dwelling there. If they sell there, the taxes should be applicable.

  • romalove
    May 6, 2013 at 1:38 PM


    Quoting MsDenuninani:

    It's about time.  Businesses should not be able to skirt state tax laws because they don't have a physical dwelling there. If they sell there, the taxes should be applicable.

    I think it will have a chill effect on small internet businesses.

    Amazon and Zappos don't have to worry so much, they have all kinds of ability to handle 50 different state tax laws and accounting.

    I do.

    So the big guys will flourish and the little guys will either have to stay or become little (I, for example, am launching an online site and was going to be for everyone, now I will only sell within my state).

    I think it's not a good law.

  • MsDenuninani
    May 6, 2013 at 1:44 PM

     


    Quoting romalove:


    Quoting MsDenuninani:

    It's about time.  Businesses should not be able to skirt state tax laws because they don't have a physical dwelling there. If they sell there, the taxes should be applicable.

    I think it will have a chill effect on small internet businesses.

    Amazon and Zappos don't have to worry so much, they have all kinds of ability to handle 50 different state tax laws and accounting.

    I do.

    So the big guys will flourish and the little guys will either have to stay or become little (I, for example, am launching an online site and was going to be for everyone, now I will only sell within my state).

    I think it's not a good law.

    Here's what I think (or maybe hope).  Just as there are websites/services/apps that make it easier for you to sell things on line (like paypal) there will be services that will handle that kind of knowledge for you for some kind of fee.  There will clearly be a need; I know if I were a company like paypal I would try to fill the void.  

  • romalove
    May 6, 2013 at 1:46 PM


    Quoting MsDenuninani:



    Quoting romalove:


    Quoting MsDenuninani:

    It's about time.  Businesses should not be able to skirt state tax laws because they don't have a physical dwelling there. If they sell there, the taxes should be applicable.

    I think it will have a chill effect on small internet businesses.

    Amazon and Zappos don't have to worry so much, they have all kinds of ability to handle 50 different state tax laws and accounting.

    I do.

    So the big guys will flourish and the little guys will either have to stay or become little (I, for example, am launching an online site and was going to be for everyone, now I will only sell within my state).

    I think it's not a good law.

    Here's what I think (or maybe hope).  Just as there are websites/services/apps that make it easier for you to sell things on line (like paypal) there will be services that will handle that kind of knowledge for you for some kind of fee.  There will clearly be a need; I know if I were a company like paypal I would try to fill the void.  

    I thought about that.

    I also know that there is a floor, I think if you sell under a million it doesn't apply or something like that.  But depending on your business, that's not necessarily a very difficult floor to meet.

    I don't understand why it can't be like credit cards.  Credit card companies set up in places that are most friendly to their own interests, so you have Delaware law, for example, ruling your cards even if you live in Alaska.

    Why can't it be that you have one place that's "your" establishment and pay the taxes to that one place?  If you live in Texas and I am in NJ, you pay NJ tax, like that.

  • MsDenuninani
    May 6, 2013 at 1:50 PM

     


    Quoting romalove:


    Quoting MsDenuninani:

     

     

    Quoting romalove:


    Quoting MsDenuninani:

    It's about time.  Businesses should not be able to skirt state tax laws because they don't have a physical dwelling there. If they sell there, the taxes should be applicable.

    I think it will have a chill effect on small internet businesses.

    Amazon and Zappos don't have to worry so much, they have all kinds of ability to handle 50 different state tax laws and accounting.

    I do.

    So the big guys will flourish and the little guys will either have to stay or become little (I, for example, am launching an online site and was going to be for everyone, now I will only sell within my state).

    I think it's not a good law.

    Here's what I think (or maybe hope).  Just as there are websites/services/apps that make it easier for you to sell things on line (like paypal) there will be services that will handle that kind of knowledge for you for some kind of fee.  There will clearly be a need; I know if I were a company like paypal I would try to fill the void.  

    I thought about that.

    I also know that there is a floor, I think if you sell under a million it doesn't apply or something like that.  But depending on your business, that's not necessarily a very difficult floor to meet.

    I don't understand why it can't be like credit cards.  Credit card companies set up in places that are most friendly to their own interests, so you have Delaware law, for example, ruling your cards even if you live in Alaska.

    Why can't it be that you have one place that's "your" establishment and pay the taxes to that one place?  If you live in Texas and I am in NJ, you pay NJ tax, like that.

    Makes sense to me.

     

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