posted on February 16, 2002 10:14:12 PM new
Yeah, that is what some guy thought in NY too, ran a casino on a server in another country, lived in NY, and now is in real trouble.
As far as Business is Business, do you really think a bank should be subject to the same scrutiny as a tatoo parlor? Many banks are licensed by the federal government (if they are a National Bank) as well as state governments. The states have traditionally had a large say in how they can do business in their state. FDIC and most federal rules are a post-Depression era idea, relatively recent. Here are a few web sites to look at for banks being licensed by the state:
http://www.banking.state.ny.us/
http://www.state.ia.us/government/com/
http://www.dfi.ca.gov/
My point still stands. Paypal isn't just a business, it is a bank. It may be different than a brick and mortar bank on the street corner, but if they are servicing accounts in a state, then they have to deal with the rules in that state. If they want to avoid it, they should not accept accounts from a state they are not licensed in. I don't think that Louisianna can tell me in Oregon that I can't accept payment from someone in that state, but they certainly can tell Paypal not to allow anyone from their state to have account unless licensed.
posted on February 16, 2002 10:19:17 PM new
Read that section again:
The exemption is "where deposits are required to be insured by an agency of the federal government"
This does not mean that someone licensed by the federal government is exempt, it is where deposits are required to be insured by the federal government. Paypal even if it did have a federal license, would not be required to be insured...
posted on February 17, 2002 06:29:36 AM newPaypal even if it did have a federal license, would not be required to be insured...
and where did you gleen that tidbit from? I am not aware of andy federally lic. bank that is not required to have federal (FDIC) insurance.
Your still trying to make PayPal a seperate "thing". I reject that idea. If they can do it to PayPal, they can do it to "any buisness". for example eBay. PayPal is no more doing business in La. or NY than eBay is. The key will become "doing business with a resident" instead of "location."
Currently a state cannot regulate what goes on outside its borders. La., NY, and several others are trying hard to change that. Once that hurdle is overcome, where will they go next?
posted on February 17, 2002 07:28:08 AM new
WOW some people are so off base here, THE Internet is not the UNITED STATES and I think every user and every government in the world includeing citzens who live in this country would fight if the government try to pull that fight off ....
if they tax the internet it will be taxation with out representation what would they do with the tax money to improive the internet ????????
Would they repave your key board the government does not own the fiberopitic lines that transmit the data they do not own the router hubs nodes switches or ISPs that provide the connection they hold no interest in it other then the fact that it cant exist inless they can keep you 100% dependent on them !!!!!!!!!!!!
posted on February 17, 2002 07:45:59 AM new
I think you are entirely missing the point here.
Its not about local sales tax.........and definately not about paypal.
Its about running a business for profit and making money from it.
Some power seller with 20,000+ feedbacks it obviously making a killing on ebay.
If that same person never sends a single item within his own state still made boat loads of money and is liable for state and federal income tax on those sales.
He does not have a regular job and only sells on Ebay.
Ebay is his income.....his full time job.
Yet just how many people making a killing on ebay report that "INCOME"?
Before 20 more people come to the thread saying well I have all my licenses and an accountant blah blah blah
How many sellers are on Ebay??
Millions
How many full time sellers on Ebay making their only income from their sales or at least a "considerable" amount of their income from Ebay sales?
Thousands
Realistically how many sellers on Ebay report that income???
Think before you answer that question......
How many people making all that money on Ebay think it is tax free because they think it is untracable??
Because it is the internet......the last frontier........anonymous in cyberspace...
Ebay doesn't require reporting your social security number.......nor does it report back to you at the end of the year your gross sales or send form 1099's
If Ebay and other "Venues" starting forcing you to report your social security number and tracted your sales to the IRS.........how many business license applications would start to be made in their home states.......
Hell, if your sales were tracted and reported to the IRS how many Ebay sellers would dissappear from high volume selling.
How many would be liable for back taxes on the last 5 years of "income" made from Ebay sales?
It would not be too far fetched to see the Government crack down on this last frontier to collect their due state and federal income taxes in the next couple of years.
Anyone who understands the concept of allocated tips will see how this will turn out.
I worked as a waitress for many years. In my first 2 years at age 18/19 I wasn't very reliable in reporting all my tips.
At the end of those 2 years on my W-2 form there was a large sum of money in the allocated tips box.
My sales were reported to the IRS. The allocated tips were calculated based on the difference of what sales I made and the tips I DID NOT originally report on those spans of time.
I was liable on the tax value for tips I would have made based on those sales from the times I did not report the tips.
For those of you on Ebay that don't think this could happen.......think again.........it just might.
The IRS and your states would have an interest and cause for attempting to get the income taxes on the money you made.
If the government were to step in to get that lost tax revenue from all those sellers then Ebay sure as hell would finally lose the "Just a Venue" they so love to tout in court.
posted on February 17, 2002 09:25:42 AM new
Hopefuly to clear things up:
For eBay sellers: the state where they run their business from can regulate that business REGARDLESS of selling all items to out of state buyers. Catalog companies are taxed and regulated by states where they are located.
For eBay buyers: The state in which buyers reside can TAX buyers for out of state purchases, such as Ohio does, but Ohio does not actively enforce becuase it is nearly impossible to enforce.
LA can regulate ALL Paypal activities which LA residents participate in. This has NO effect on Paypal users that do not live in LA. CA and NY and other states are now reviewing Paypal's activities for similar regulations. One way a state can "enforce" this is by not enforcing contracts in their state executed by unlincensed "banks" or "money transfer agents" etc.- any contract with Paypal would be void ab initio and unenforceable, this places all of Paypal's commercial activities by LA residents at risk. This can have quite an effect on the institution, because if you owe Paypal money, they have no legal means of forcing payment from an LA resident. States have concurrent jurisdiction with the Feds over banking. States can charter, license, and regulate banks along with the Feds. Many of the SL's that failed in the 1980's were state chartered and were not FDIC insured.
A good example of how non-enforcement of contracts works was a case in Michigan dealing with a Michigan resident that went to Nevada and used his credit card to gamble. The Michigan lower court found that because it is against the law in Michigan to enforce a gambling debt in the courts( because gambling was illegal) , the credit card company could not use the force of the Michigan courts to get payment for the credit card debt. BEFORE any Michigan residents or others try this, you may want to check current law, it may have changed.
This calls into question the "full faith and credit" doctrine of the Constitution, but I don't think the issue has been litigated much when the contract is considered criminal in one juricdiction and not the other. The last time it came to a head, we had a civil war.
eBay's CA jurisdiction and mandatory arbitration requirements are for disputes arising with eBay, this is a contractual jurisdictional and procedural claim, not based on statutory civil procedural law, and would not apply for a criminal suit. Under certain circumstances it will not apply at all, such as if a judge decided it was not "fair" to make a party litigate or arbitrate with eBay in CA.
The bottom line is that whatever activity is based in a state, the state may regulate, tax etc., provided it doesn't offend applicable Constitutional rights. But "state's rights" doctrine is not as well settled as many believe, not because there isn't a basis of case law regarding it, but because it offers acute fundemental philosophical differences between many U.S. Supreme Court justices.
The internet is moving much faster than the courts and Congress. They haven't even settled the issues as between the states and already the internet is being used worldwide for commerce. The EU just passed legislation for taxing some products delivered over the internet regardless of where the seller resides. The U.S. has objected. So while Congress debates making taxes and regulations uniform for the U.S., we are already running into conflicts on a global basis regarding taxing and regulating commerce.
Whether you want "one world govt" or not, countries will be developing "one world" commerce regulations - even though the rules may end being a patchwork of unworkable regulations.
The regulation and taxation problems in the U.S. are dwarfed by what the world has waiting. Just figuring out on a global issue where a multi-national corp is actually a "resident" of is often tortured reasoning, as in where it is chartered or where the bulk of its physical presence is. Many U.S. corps are charted in Delaware and Nevada, but all they have in these places is a PO Box and an attorney on retainer.
As an aside, many of these changes have historically brought about conflicts leading to wars. They happened during exploration and colonization periods and the industrial revolution etc. The recent terrorism, some have argued, is a result of the global economy bringing the culture of one country into another without govt control, and it is uncontrolable due to technology. A country could shut down a movie theatre, or not broadcast a TV program, but they can't really stop internet transmissions, or smuggling CDs/DVDs into their country, or covert satelite uplinks. Presenting a free culture to a country that is not free is a threat to these regimes. Better ideas are a dangerous thing.
Not only do we have to resolve these issues in the U.S., but also globally. Paypal's challenges are just a paradigm of what is coming internationally.
posted on February 17, 2002 10:18:14 AM new
Look a legal Business is a legal business if you are registed and have a tax number in the state you do business is located you are a business and should be paying the taxes that apply to that businesss even if part or all of that business is ran on the internet.
No one argues that If you own a b&M bank in any or many states you should be regulated by the states you loan money in and do money transaction and should be FDIC insured even if you add online banking to your services.
I dont think any one is fighting this at all.
BUTTTTTTT Every seller on the internet is not a business they do not have tax numbers most are selling personal item and collections basically a online garage sales.
they are not a registed business in any state they do not have a state tax number and they dont pay sales tax.
the income they make over a certin amount of $$$$ is concidered capital gains to be reported on there income tax form yearly.
and you only have to py this if you dont reinvest the earnings.
if you sell your house and use the money to buy another house or as a down payment there is nothing to claim infact the closeing costs and interest on the old loans become a deduction on your taxes.
if you sell a house and dont reinvest the profit over a certin amount becomes capital gains it dont make you a business
PAYPAL is not a B&M bank or anything it is a computer full of scripts and data operateing world wide on the internet.
they act as a third party in credit card transactions the merchants they use must be licenced to be able to do the transaction.
they do not loan money to any one like a bank they do offer a way to invest your money to earn profit but this to is through another company that is licenced to do business .they are just an electronic go between who charges a fees to play messanger bettween the merchants and the public.
now my Question still is this if the US goverment or any state has a right to regulate any of this what state of this country is the internet in and who gets these tax dollars and licenceing fees and how will these fee represent the internet community ...
I don;t know about you but I live in the USA which was the results of a war over taxation with out repersentation .
this is the internet how will these licenceing feed and taxes they would like to charge improve this world wide internet community ????
Tell me will this government start provideing unemployment insurance for ebay sellers ???
Will there be a internet food stamp program a internet retirement program, will there be a internet medacade to help out when a online seller gets ill and must be hospitalized and cant pay the bills ???
can an ebay seller collect unemployment when his sales don't support his familly for more then two weeks in any month ???
Will the government fight to see that ebay offer every full time seller a group health care plan and dental insurance.
WIll they help fund an internet police department and I don't mean the FBI or CIA.
posted on February 17, 2002 10:44:38 AM new
You are looking in terms of real world laws and governing which does not work in the virtual internet world.
So I have a computer I Have some knowlege and some room in my computer I open it up to you to store some of your data in a BBS you can list items you have in your actic you would like to sell to get rid of I am not a business and either are you
posted on February 17, 2002 10:44:54 AM newI think you're blurring the issues. LA is telling Paypal that they need to get a license to transfer funds between LA and other states like established banking institutions already do. The law is already in place, they're just telling PP to comply. This doesn't mean that the next step is that LA will consider all PP payments to be "in state" and thus sales-taxable.
posted on February 17, 2002 12:48:23 PM new
The lines between what is a business and what is a hobby become blurred on eBay just as elsewhere.
Garage sales are lincensed in some places because of this. People were having year long garage sales every year. Local rules for what constitutes a business vary widely.
If you're moving small amounts of stuff in low gross amounts yearly on eBay, the IRS probably won't dispute your hobby status. But if you are listing on eBay weekly year after year and pass a threshold of gross receipts, the IRS will flag your return and dispute that your sales constitute a hobby, because capital gains are taxed at a lower rate than income. By the same token if you lose money every year the IRS will not allow you to claim your sales as a business.
Taxing internet activities are simple on one hand, yet complicated on the other.
Taxing a business by where it has a physical presence is simple. Applying sales taxes based on where a buyer resides becomes complicated.
It also beomes complicated taxing a business by where it has a physical presence and not paying sales taxes to the buyer's state. You have a one-way tax revenue flow all going to where the business is located all the while the buyers jurisdiction must supply public services to the buyers yet get no revenue from these sales.
Even having a uniform and universal federal sales tax is not without problems. How will the federal govt divvy up the sales tax among the states ? Also, what percentage do they use, some jurisdictions have a relatively low sales tax rate or no sales tax at all and derive their tax revenue in other ways,while other states have a relatively high sales tax rate.
By the way, taxes do help the internet. Our federal tax dollars built the internet back when it was a "nuclear proof" communications network for the DOD. Many tax dollar supported state universities help build and still maintain the backbone of the internet. The "users" never paid to build the internet, the taxpayers did.
Our tax dollars also bulid and manitain the transportation network which allows our internet sold goods to be transported, as well as maintain the legal system that helps secure the transactions.
There have been ideas floated to have a "use" tax rather than a sales tax, wherein a user is taxed for their internet connection by his/her state and keep the ban on state sales taxes for internet sales. If we don't apply the use taxes libraries or universities, guess where many eBayers and others may start doing their internet sales from, not to mention many others (our buyers) will just stop using the net if their use/connection is taxed in a manner high enough to replace lost sales tax revenue.
One thing is for sure, it is not a question of "if" internet commercial activity will be taxed and more regulated as more commerce moves through the internet, it is only a question of how it will be taxed and whose Ox is going to be gored. There is no way I should expect the B&M down the street to support the school system, roads, law enforcement, etc., while I set here enjoying the benefits of those things and not contributing because my purchases or sales are over the internet.
The "Paypal" question isn't one of "where" Papal is located or the fact that it is just a group of servers in CA- that's for CA to deal with. The regulation and licensing are based on transactions with LA residents. A judge in NY has already ruled that a transaction takes place where the customer hits the computer keys, as in the off shore internet gambling case in NY. The judge ruled that the customer sent the gambling transaction information from his/her home computer in NY, the gambling was therefore being done in NY, and they jailed one of the operators that was in NY to litigate the case. But there are a million ways to get around this ruling. You know who is screamed the loudest about internet gambling ? The B&M casino operators whose states will not allow online gaming. They have a huge investment in their B&M casinos which could become finacial disasters overnight if internet gambling takes off. Vegas and Atlantic City may have to become regular amusement parks as gamblers turn to the internet for ease of use and it's cheaper and could offer better odds - but it's ripe for fraud and demands govt regulation.
We also have the judiciary, and legislatures full of a generation that doesn't know sh%t about computers and the internet, and they're going to be making the laws dealing with all of it. Heaven help us !
posted on February 17, 2002 04:51:57 PM newLA is telling Paypal that they need to get a license to transfer funds between LA and other states like established banking institutions already do.
The problem with that is, established banking institutions are exempted from the money transer law.
posted on February 18, 2002 12:07:07 PM new
Hi
After reading all the debates about LA requiring Sellers to collect taxes from buyers in their OWN state, and require a business license to sell on Auctions, here is what I have experienced:
I live in Az. and when I buy ANYTHING from any of the big Mail Order houses like Amazon, QVC, Lands End etc. Tax is ALWAYS included in the invoice although these companies do not have stores in my state (Amazon ONLY sells on the internet). I asked QVC one time why are they collecting this tax when I don‘t live in their state. Their reply was that in order to do business in THIS state, they were PRESSURED by the LOCAL department of revenue into collecting the tax up front (smaller companies do not collect this tax). I know of no such law (but I am no expert). This tells me the tax collector is more powerful than our wishes or existing laws. In a way we are in the Mail Order Business so who knows what's next....
posted on February 18, 2002 01:04:16 PM new
Comparing Paypal to eBay sellers is like comparing apples to oranges. Paypal is a financial institution. It accepts and transfers monies. Therefore it falls under certain regulations. All this is for the courts to decide.
CA where I reside has some pretty simple laws. If you make $400 a year selling (flea markets, garage sales, eBay), you are a business, period. If you ship an item from CA to a CA location, you must pay sales tax.
I had a buyer dispute the sales tax because although he wanted the item shipped to him in CA, he claimed to be a resident of another state. Believe it or not, I've had plenty of transactions go south because of the sales tax. The last one created a flurry of angry emails over whether the tax was 8% or 8.5% (my county also charges a tax). What a hassle over three cents!
The sellers' side is pretty simple. Pay your fair share of taxes and you won't get in trouble. Try to blur the line, and you can expect trouble from the IRS. I imagine most sellers who don't pay tax figure that the IRS won't find out.
A federal sales tax is possible, but many Internet businesses only offer a service that is non-taxable. It will take a while for the laws to catch up to the Internet.
posted on February 18, 2002 01:39:12 PM new
Twinsoft
I could be wrong but I don't think anyony here is disputing the paying of local state tax on sales to that point there is a few law that need to catch up with the internet on that measure.
These taxes are pretty clear cut for business,even if its brought to the interenet and sales are made.
The problem here is a pure internet company such as paypal and ebay and licenseing fees maybe your right maybe some of these should be licenced and regulated.
for pure internet companies the question is what country and state is the internet in the answer honsetly is none the internet its self is not own or held by any country or state .
So if and when these fees and so on are paid who should get paid and how will these taxes and fees repersent and improve the internet its self
When you pay school and property tax you know you get road repair snow removal you get public education for your childern you get police protection ECT.. what will these fees and taxes collected do to better the internet community as a whole.
keep in mind the US tax payer has paid 10X and over for the internet, and yet we still must pay to use and access it so are original tax dollars spent over the 60s and 70s to build the net work and we are still payig to access it now they want to fees the services that the community built and tax it more how will this benifit the world wide web community keeping in mind the internet does belong not the this country or any other and who should get these fees
posted on February 18, 2002 01:54:02 PM new
Rich, you could argue that the Internet doesn't belong to any state or country. However, businesses do exist in fact. The idea that the Internet is a free-for-all is a holdover from the old BBS days, but now more and more companies ARE doing business in cyberspace, and so they should by all rights be regulated and taxed. The idea that the Internet is some kind of big tax shelter just doesn't wash.
When it comes to financial institutions like Paypal there should be regulation. Whether Paypal does its banking out of a brick and mortar establishment, by email, telephone, or carrier pigeon, doesn't matter. Those laws are in place to protect comsumers. The same goes for online "gaming." It's only a matter of time before the government catches up to Paypal, eBay, online gaming, etc., but of course government investigations move at a snail's pace and you can bet companies with clout will do everything they can to stonewall improvements.
posted on February 18, 2002 03:01:16 PM new
I am not saying in any way that the internet is some kind of a tax shelter at all.
How ever the internet is not a providence of the United States Either
I agree financial institutions should be regulated on the internet and they are in fact , how ever paypal is not a financial institute in any way just a third party go between for merchants connected to financial institutions and the online community.
paypal does not make you keep money in any account with them you are free to send it off to your bank for deposit or get a check from them for it.
They do allow you to keep money with them for investment and Visa will isssue you a debit card to access that investment but visa is a regulated financial institutions .
regulating paypal wont protect sellers from charge backs if anything it will make them more so responcable for them as well FDIC insurance dont protect you from this either infact The FDIC will see that the money is removed from a sellers checking account for all charge backs with out writen permission to do so to protect paypal funds and all its users just like billpay if you get a charge back welfargo goes directly in your checking remove the charge back pluss a $10 fee related to the charge back they are FDIC insured and a regulated financial institutions as well
posted on February 18, 2002 03:24:46 PM new
Well, that is the big question, isn't it? Is Paypal a financial institution like a bank? That is something the courts will have to decide. Personally, I don't have a problem with states like California and New York investigating this problem. In a nutshell, many of Paypal's practices are legally questionable at best.
The way Wells Fargo treats your money is vastly different than the way Paypal treats your money. Wells Fargo is subject to scrutiny by state and federal regulators. Paypal is not. Trusting Paypal to watch over your money is like trusting the fox to watch the hens.
I'm not suggesting Paypal is doing anything wrong, only that there should be the same oversight applied to any money laundering, er ... transfer, service.
posted on February 18, 2002 04:05:36 PM new
actually the way bill point and paypal treat a credit card payment are nearly identical with the exception that paypal dont directly deposit your money, you must volenteer to give your information to request tranfer for deposits.
or ask for a check..
billpoint requires both your credit card number and checking account number to even do business you must give billpoint aproval to remove money from your checking account for a charge back and agree to there fees if there is no funds pend in your billpoint account...
With paypal they can not go into your check account and to get money inless you go to the bank and make out a form to give them a one time aproval to get the $$ for a charge back if your paypal balance is less then a charge back.
This is why paypal freezes accounts when there is a charge back and the member wont work with them they hold the account till the balance of the charge back is paid back to them this holds down cost over all for all there members if they had to back all charge back the fees to use the service would be 5 or 10 times more.
no regulation in the world can save you from common sense practice.
I have no problem with states looking into a companies pratices either but when you look at all the problems users claim to have with paypal most are self inflicted problems.
