posted on December 7, 2000 12:20:13 PM
This has to do with some silly folks who keep complaining that sales over the Internet are not taxable and therefore the states are losing millions. A moratorium was out on Internet taxation which runs out soon. The way I (and lots of others) see it, this is not a new problem. Mail order sales have always been untaxed. The Internet has just made everyone more aware of this.
The real reason for this "problem" (if you see it as a problem) is that the states are greedy. If they all got together and said every business must charge the tax in its own state regardless of where the item is actually going, it would have been solved. If they had said every business must charge the same flat percentage which all gets sent to one location and then gets divided equally among all the states, it would have been solved. But since every state wants to charge its own rate and refuses to share what it collects with anyone else, the end result is that businesses can only collect in their own state, leaving this big loophole where a lot of sales are not being taxed at all.
In order to "fix" this "problem" (assuming you see it as something to be fixed) all the states would have to agree to change the tax laws that affect all mail order sales. Since it hasn't been done in all these years, I doubt anything will change.
There is a little more to it than that.
A little thing called interstate commerce.
The type of tax you ptopose would need to
come at the federal level, guess who would get the cash then.
posted on December 7, 2000 12:36:33 PM
This seems to be confused all the time. There is a difference between a Sales Tax, that is paid to certain states, and a Tax on Gain/Profit that is paid to the Federal Government by a business.
Anyone who is buying items to resell should be filing the correct papers on their yearly income tax returns. Doing this in the legal proper way is the only way to deduct expenses etc. and pay the Federal tax due. The sellers who are filing these correct Federal Forms would also be filing the correct State Forms.
Most Mail Order businesses do pay sales tax (paid by the buyer) on sales to those who live in their state of operation. Those who buy from a state outside their residence are supposed to be paying their state's sales tax (if there is sales tax in their state.)
I live in Ohio...If I order something from Provantage.com (located in my State), I pay sales tax on the sale. When I buy from Buy.com, there is no sales tax added on to that sale. I think I am suppose to then pay this sales tax to Ohio...but I have no idea how I am supposed to do that.
edited for UBB boo boo
[ edited by Meya on Dec 7, 2000 12:37 PM ]
posted on December 7, 2000 12:46:09 PM
Folks, don't sweat this too much. The Federal & State Government are still are wrestling overing how each is going to get their mits on the money. The Moratorium, I believe was extended an additional 4 years. If Bush wins the election, it will be many years from now until we have to worry about it. If Gore somehow wins, it will take effect immediately retroactive to 1996 payable next Wednesday.
posted on December 7, 2000 12:49:06 PM
Folks don't realize that sales tax is actually called sales and use tax. It means that you are supposed to pay the tax where the item is being used. The seller is only obligated to collect it if the sale is in a state where he has a base of operations (nexus). But even if the seller doesnt collect it, the customer is supposed to pay it. A few years ago, NJ tax collectors "raided" some very large NY merchants of electronic equipment. They went through the books and recorded all NJ residents who purchased expensive equipment mail order. Then they sent these folks bills for tax plus interest and penalties. Some of them tried to protest it, sue the store claiming they weren't informed, etc. The ruling was that ignorance of the law was no excuse. In some case, the penalties were waived but not the tax (I dont know about the interest). The store was not held liable.
When NJ first started its no tax on clothing, New Yorkers drove across the border to shop. NY tax agents went to NJ and recorded the license plates of the NY cars. Then they sent notices saying "we know you bought stuff in NJ. Now send in the tax." In that case, the NY folks did not pay because the agents could not prove what was bought.
I often have NY customers who ask me to make the bill out to someone in NJ to save the tax. I tell them that first, I will have to ship it to NJ. Second, by law the person in NJ is then obligated to pay the tax. Third, if they need service, they will have to contact the person in NJ to get it done. Fourth, if they are buying it for a business, they lose the deduction. Is it worth all that for 8%?
posted on December 7, 2000 12:49:36 PM
"There is a little more to it than that.
A little thing called interstate commerce.
The type of tax you ptopose would need to
come at the federal level, guess who would get the cash then."
Businesses would love a uniform Federal sales tax, provided state and locals were precluded from charging a sales tax. It would eliminate millions of dollars in accounting and administrative costs.
It would be nice to rachet it up further and use a Federal sales tax to eliminate the Federal income tax.
posted on December 7, 2000 12:57:09 PM
Yes,Gore did invent paypal. It was just after he created the internet. His grand plan is to accept Federal tax payments via paypal. He'll then freeze everyone's account, get rid of the referral bonus and raise the transaction fee.
posted on December 7, 2000 01:16:30 PMA few years ago, NJ tax collectors "raided" some very large NY merchants of electronic equipment.
I would really like to see the specifics on this case. The constitution specifically gives the right to regulate interstate commerce to the US Congress. States simply do not have the rights to go in and "raid" a business in another state.
Moreover, if I live in Idaho, purchase an item from a seller who lives in New York, who has the item drop shipped thorugh Arizona, and all of this is facilitated through servers in San Jose, who exactly am I supposed to be paying taxes to?
posted on December 7, 2000 01:22:14 PM
>>I would really like to see the specifics on this case. The constitution specifically gives the right to regulate interstate commerce to the US Congress. States simply do not have the rights to go in and "raid" a business in another state. <<
A friend of mine was a sales manager for a very large electronics mail order company in NY that is now out of business. You might remember the name. Hint: it was named after the street they were on. He was there when the auditors came in. Maybe it was NY tax auditors who caught the NJ folks working in conjunction with NJ auditors, but they did have the right to examine the books and the end results made lots of folks unhappy.
>>Moreover, if I live in Idaho, purchase an item from a seller who lives in New York, who has the item drop shipped thorugh Arizona, and all of this is facilitated through servers in San Jose, who exactly am I supposed to be paying taxes to?<<
You are supposed to be paying taxes to Idaho, the state where the item will be used. That is the whole point of the use tax.
posted on December 7, 2000 03:43:18 PM
No, it takes a lot of tax dollars to put people out to hug the trees and stop you from running over snails and pissants. Do you have any idea of how expensive it is to hire people to make sure spotted owls continue to be an issue? Mega billions.
