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10 comments

1 EiMitch  Mon, Apr 22, 2013 5:35:23pm
I haven’t heard a word from Grover “no new taxes, EVER” Norquist on this.

Of course not. This won’t cost large corporations a penny. Beyond that, “Americans for Tax Reform” don’t give a damn about taxes.

2 Aligarr  Mon, Apr 22, 2013 6:38:23pm

You haven’t because this is just another way the rest of America picks up the slac for the rich and the big corporations . BTW , if you worked and paid taxes in 2012 , a comforting thought - you paid more taxes than General Electric , which paid $ 0 .

3 Danforth  Mon, Apr 22, 2013 7:39:08pm
“…if you worked and paid taxes in 2012 , a comforting thought - you paid more taxes than General Electric , which paid $ 0 .”

Mainly because GE runs multiple businesses and can write off losses from one against profits from the other…just like every other tax filer can do.

Not a fan of GE, just of the facts.

4 lawhawk  Mon, Apr 22, 2013 7:52:42pm

A couple of clarifications here. All but a handful of states impose a sales tax and a use tax. Sales tax is generally collected by the retailer/seller, while use tax is usually reported by the purchaser. Internet sales pose a thorny issue for states because of a court case known as Quill - there’s got to be nexus between the state and the seller that meets constitutional muster. Sufficient sales would do that. Mere advertising, without more, would not.

So retailers from out of state have an advantage over in-state sellers who have to collect and report the sales tax. Unless the out of state seller voluntarily collects the tax, or the state tax department finds that there’s sufficient contacts for requiring licensing/reporting, there’s not much the states can do - and they lose sales and use tax revenues in the process.

Most people should be paying use tax on Internet sales, but don’t. It’s either not collected by the retailer or the states don’t have an effective mechanism to collect the tax because the purchaser has to report.

This bill is a legislative attempt to deal with the Quill problem, and one that states have tried to deal with in a haphazard manner in the form of Amazon-laws and affiliate nexus laws that find that where an out of state retailer has affiliates in-state in the same kind of business, that the out of state seller has nexus by law.

States estimate that they’re losing billions of dollars because of Internet sales that they aren’t collecting - either the sales or the use tax, and this evens the playing field.

Some states have tried to fix the problem by incorporating use tax reporting in to personal and corporate income tax returns (that use tax is calculated as a percentage of income if you can’t provide and back up the figures otherwise, etc.).

Oh, and the main reason that Norquist isn’t being heard from is because all the states that impose sales and use tax in a bipartisan manner are looking to recover the revenues lost to the Internet.

It doesn’t solve all the problems with sales tax - namely the local sales tax requirements that localities (counties, cities, special districts) can impose above and beyond the state rates, but it likely begins moving in the direction of getting more states involved in the Streamlined Sales and Use Tax Agreement - it harmonizes sales tax definitions and reporting requirements as well as acts as a clearinghouse for rate changes.

Contrary to what some are saying, this wont bring about a national sales tax, but allows states to more effectively collect tax their already owed under the law.

5 Flounder  Tue, Apr 23, 2013 5:24:46am

I was going to type up something, but Lawhawk sucked up all the air the the room ;)

6 steve_davis  Tue, Apr 23, 2013 7:51:31am

re: #5 Flounder

I was going to type up something, but Lawhawk sucked up all the air the the room ;)

Regardless of whether an internet sales tax is fair or not, the reason I use Amazon has nothing to do with their failure to charge me a paltry sales tax on my orders. It’s that shipping is fast and free, what I am looking for is always there, and the price I’m offered is often—not occasionallly, but often—50% of what I would pay to a brick-and-mortar state company. Physical stores here aren’t going to get one more dime of my money simply because Amazon suddenly has to start collecting sales tax. It would possibly give me more incentive to purchase used off Ebay for bigger-ticket items.

7 Skip Intro  Tue, Apr 23, 2013 8:49:10am

re: #6 steve_davis

Regardless of whether an internet sales tax is fair or not, the reason I use Amazon has nothing to do with their failure to charge me a paltry sales tax on my orders. It’s that shipping is fast and free, what I am looking for is always there, and the price I’m offered is often—not occasionallly, but often—50% of what I would pay to a brick-and-mortar state company. Physical stores here aren’t going to get one more dime of my money simply because Amazon suddenly has to start collecting sales tax. It would possibly give me more incentive to purchase used off Ebay for bigger-ticket items.

I agree. Even though Amazon started collecting sales tax in California last year, I still shop there for the reasons you mention. There’s no point in driving all over town trying to find something that nobody carries when I can just go to Amazon and find and buy it in less than a minute.

One benefit Californians have from the new Amazon arrangement is that overnight shipping is becoming common, even though Amazon isn’t charging extra for it. Unless brick and mortar stores can figure out a new business plan, they’re going to be my last choice for shopping for anything even slightly unusual or higher end.

8 lawhawk  Tue, Apr 23, 2013 9:51:53am

re: #7 Skip Intro

I agree. Even though Amazon started collecting sales tax in California last year, I still shop there for the reasons you mention. There’s no point in driving all over town trying to find something that nobody carries when I can just go to Amazon and find and buy it in less than a minute.

One benefit Californians have from the new Amazon arrangement is that overnight shipping is becoming common, even though Amazon isn’t charging extra for it. Unless brick and mortar stores can figure out a new business plan, they’re going to be my last choice for shopping for anything even slightly unusual or higher end.

One of the reasons Amazon now supports the federal legislation is that they’ve pretty much set up the distribution network to do same day delivery - trumping brick and mortar locations for convenience. They’ve cut deal with states on taxes and locating distribution centers (which would establish nexus and sales tax collection liability in any event) knowing that the ultimate goal is to push delivery to same day. It’s a turn from their opposition to any attempt to require the company to engage in tax collection.

It also comes from the fact that as an established company, they can set the groundrules that limit competition from growing up to challenge them. They think that the new federal legislation would help them cement their position.

It’s why Amazon has supported the thresholds where Congress put them - relatively low. eBay opposes because they want to see an even higher reporting threshold (allowing companies with millions of dollars in sales revenues from having to report).

For states, the trick is to get their tax collection system up to snuff - unifying sales and use tax collection to the state tax commission/department, making it easier to figure out local tax rates, and providing consistent and regular updates on rate information.

9 Skip Intro  Tue, Apr 23, 2013 9:58:33am
For states, the trick is to get their tax collection system up to snuff - unifying sales and use tax collection to the state tax commission/department, making it easier to figure out local tax rates, and providing consistent and regular updates on rate information.

I think the out of state tax rate should be whatever the base rate for the state is. In California, nearly every county has its own rate in addition to the base sales tax, and it’s not unusual for me to be charged the highest tax rate in the state instead of my local one. It would simplify things for everyone if there was only a single tax rate charged on out of state purchases.

10 lawhawk  Tue, Apr 23, 2013 11:05:50am

re: #9 Skip Intro

I’ve seen a couple of proposals floated that out-of-state retailers would have to remit only the state rate, but computer databases are such that a retailer would be able to access them to get the appropriate local rate easily (though not without cost to the retailer for compliance).

That’s the rub. I think that this current legislation requires the states to provide the information free of charge and holds the retailer harmless if there’s an error in the database through no fault of the retailer’s.

States can fix the problems a few ways, but making a single rate - eliminating the local taxing would hit home rule hard, so that’s not going to happen. State collection of local rates already happens in many states, but some localities maintain a home rule on collection - which would have to change.

It’s the complexity and keeping up with the tax rate changes that have some thinking this would result in a national sales tax. It’s much easier IMO to get the states to clean up their own sales tax laws by equalizing the rate across the state/broadening the tax base/lowering tax rate as part of fixing the nexus issue.


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