posted on November 10, 2005 07:03:10 PM new
In the November issue of Internet Retailer, there is an article concerning sales tax. It seems that 18 states are currently participating in a multi-state program called the Streamlined Sales and Use Tax Agreement, or SST. The SST features fee tax collection software and back tax amnesty. The plan kicked off October 1st as a voluntary program for merchants with sales over $6 million dollars. There is hope that the success of this program will eventually lead to a mandatory national program by next year.
It appears that our friends at Amazon.com are pushing for inclusion of retailers of all sizes. Apparently Amazon and its long list of partners are seeking a tax system that all retailers of any size must comply with.
Thankfully, equally as large ebay has taken a leading role in pushing to keep the exemption of $6 million dollars. This would mean small retailers like us would not have to collect sales tax for other states.
If the SST group is successful, they plan to push their plan as a national tax collection plan.
Congress is our only hope. I think we should all write to our elected representatives, stressing the importance of a sales tax free Internet.
I almost forgot, the 18 states are: UT, WY, ND, SD, NE, KS, MN, IA, OK, AR, MI, IN, KY, TN, OH, WV, NC and NJ. NV is close to joining the group.
[ edited by kozersky on Nov 10, 2005 07:06 PM ]
posted on November 10, 2005 07:39:30 PM new
Ho Hum...Here we go again. Some young liberal tax and spend bureaucrat with a Batchelors degree with the ink still wet has dreamed up the perfect way to fill the state's coffers by getting other states to collect sales tax revenue for him on internet sales. He charmed his counterparts in 17 other states into a scheme to help each other. The one thing he forgot about was the constitutional clause that prohibits states from taxing interstate commerce, plus the numerous court decisions, including at least 3 from the U.S. supreme court that interprets and upholds that clause. The only tax you will ever see on interstate commerce will be imposed by the IRS, not any individual state. The feds arn't about to give up that perk, and congress so far has refused to let them impose such a tax.
A $75.00 solid state device will always blow first to protect a 25 cent fuse ~ Murphy's Law
posted on November 10, 2005 08:21:10 PM new
Ebay can program into its system to calculate sales tax based on bidder zip code,when you are ready to send invoice,there will be another line besides bid amount,shipping,insurance called sales tax.
If the bidder chooses to pay via paypal,seller can opt to have paypal withhold the sales tax and remit for him.
posted on November 10, 2005 08:43:35 PM new
Sparkz is absolutely correct.
Article 1, Section 9, Clauses 5 and 6 of the US Constitution:
Clause 5: No Tax or Duty shall be laid on Articles exported from any State.
Clause 6: No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.
-------------------
This is pretty clear, you would need a constitutional ammendment in order to have one state allow another to tax you. I think talk is just talk, but if it ever came to pass, there would be a fight.
posted on November 10, 2005 09:16:34 PM new
Ebayvet...There have already been several fights over this issue. States have been trying off and on for over 225 years to circumvent this provision. I was in the interstate trucking business for over 40 years, and the practice is especially prevalent there. The primary purpose of a driver's log book is to record miles operated in a state, fuel purchased in a state, and hours spent in a state. This data is used solely to allow a state to tax an out of state truck only for the prorated amount they would tax one of their own trucks. It's a very complicated process, that consumes a good deal of time for any interstate carrier's accounting department. There's probably no other taxing process in the country that has been more clearly defined by the courts than the interstate commerce process. And you are correct. It will take a constitutional amendment to change it before the states could collect a nickel.
A $75.00 solid state device will always blow first to protect a 25 cent fuse ~ Murphy's Law
posted on November 10, 2005 09:17:51 PM new
No, a seller in California would collect the sales tax from a buyer in Arizona and remit the sales tax to Arizona (or a third party such as ebay or PayPal would facilitate the collection and payment).
Now, the plan is an attempt to satisfy the Supreme Court rulings. This is an attempt to show Congress that sales tax can easily be collected and remitted to the state where the buyer resides. Which was a concern of the Supreme Court ruling.
posted on November 10, 2005 09:41:19 PM new
"Clause 5: No Tax or Duty shall be laid on Articles exported from any State."
The buyer is in Arizona, the seller is in California. Arizona can't collect sales tax on a purchase from California, even if California is the tax collector. The simple truth is that the item is being exported from California to Arizona. The only way that Arizona can legally collect this tax is if there is a constitutional ammendment, or if Arizona and California were to merge into one state.
I'm sure that states will try this, I'm not saying they won't. I'm just saying that I am not terribly worried (I live in a sales tax free state, which is nice) but this will be challenged, and ultimately the supreme court will rule against any such agreement. Their job is to determine what is constitutional, which is sometimes difficult. However, when it is CLEARLY spelled out in the constitution, there isn't much they can do. They have just as much of a chance of establishing a national religion as they do taxing imports from a different state.
posted on November 10, 2005 10:02:23 PM new
No, the key word here has been "nexus," which has been the physical location of the seller. In 1967, the US Supreme Court in National Bellas Hess v. the Department of Revenue of the State of Illinois, ruled that sellers are required to collect sales tax only from buyers in states where the seller maintains a physical presence (known as Nexus). In that case, the Supreme Court found that imposing sales tax collection duties on non-nexus merchants would create an "unconstitutional burden on interstate commerce." That decision was further upheld in Quill Corp. v. North Dakota, a 1992 case. In that case, the Court also noted that Congress had the ultimate power to resolve the tax collection issue.
The SSTP was formed to prove that a multi-state system could be efficient and not impose a burden on interstate commerce.
The SSTP is an attempt to win Congressional approval for full blown expansion across all 50 states.
posted on November 10, 2005 10:16:57 PM new
Further, under current law in effect where states have a sales tax, when a seller sells to a buyer in a state where the seller has no nexus, the buyer is supposed to remit a use tax to their own state based upon their state's sales tax.
In other words, a seller in California, a buyer in Arizona. Upon purchase, the seller does not collect Arizona sales tax, while the buyer has to pay a use tax equal to the sales tax, to Arizona. How many buyers do you think do this?
posted on November 10, 2005 11:35:17 PM new
Yes, that is a situation I am well aware of, I live in Oregon 3 miles south of Washington. There is no sales tax here, there is in Washington. Washingtonians who shop in Oregon are supposed to pay taxes, I believe there is even an office set up to collect. Must be a very lonely place. That being said, it still doesn't change things much. The key is "Articles exported from any State" - That has nothing to do with whether a nexus is established or not. In this case, a Washingtonian who goes into Oregon to purchase something may be obligated to pay Washington state sales tax, but someone who orders something from a mail order company in Oregon who has no nexus in Washington is not obligated to do so - That would be a violation of the constitution. Again, I'm not arguing whether they will try to enact this, I am pretty sure there will. I also believe it will be struck down by the Supreme Court (though I was mildly suprised they did not strike down affirmititve action last year, which in my opinion violates the 15th ammendment)
posted on November 11, 2005 04:33:34 AM new
It figures that Ohio would be in on this mess. Ever since the Governor has lost the state millions, he's been trying to come up with a way to have it paid back. This is just another attempt. It will be a cold day in he**!
"Our lives begin to end the day we become silent about things that matter." - Martin Luther King, Jr.
posted on November 11, 2005 07:16:24 AM new
Don't be too sure that Congress won't try to enact this. My state senator, Kay Bailey Hutchinson, is on record as stating that enacting something similar would be a good thing. I've written her about why it's not a good idea. But the national retailers association - sorry, don't have my Internet Retailer copy with me for the exact name - is lobbying for it as well - some deep pockets, there.
It's supposed to be unconstitutional to take private property for private development efforts, but we've all seen how well the Supreme Court upheld the constitution on that one. If Congress allows something like the sales tax initiative to become mandatory, the Supremes might very well decide it passes muster.
