posted on February 6, 2003 09:01:41 PM new
I wonder how long it will be before they start pressuring small eBay sellers to collect taxes outside of their home state.
posted on February 6, 2003 09:43:07 PM new
I seriously doubt you'll see that happen. The retailiers in question have brick and mortar operation in most states which is the only reason there was a problem. No body believes that an ebay seller is going to file 50 state tax returns every year and there is no way they any state could afford to prosecute someone in another state for non-filing.
The only way the concept would work would be a national sales tax and I am DYING to meet the elected official who brings that one to the table.
posted on February 6, 2003 10:27:44 PM new
That is my take on the issue, all of these businesses are in 50 states already, so shouldn't they be collecting sales tax anyway? I don't see this as coming from the agreement, and I certainly don't think they will make ebay sellers collect taxes anytime in the near or distant future.
posted on February 6, 2003 10:32:45 PM new
Better read the article again. These net retailers are collecting taxes for states and juricdictions that they normally would not be required to. If they had a physical presence in any taxing jurisdiction they had to collect a sales tax. WalMart uses a subsidiary to run its net sales, so the physical presence of their B&M stores doesn't count towards collecting sales taxes from their net sales.
Under this new agreement, they are collecting in 38 states whether they have a physical presence there or not. And they have made the taxes uniform for these 38 states. Under these terms it doesn't need to be a national/federal sales tax.
[ edited by REAMOND on Feb 6, 2003 10:35 PM ]
posted on February 6, 2003 10:51:57 PM new
So does this mean that even if we are just measly little sellers like me that are using ebay as our virtual garage sales and making less than $50 a week, we should start charging sales tax. that is, even if we don't have a B & M store?
posted on February 7, 2003 12:23:05 AM new
The states want all businesses to collect sales taxes regardless of size. The states will probably inact "reciprocity" agreements for sales tax collection enforcement. While you the seller may be in Florida and your buyer may be in Colorado, you must collect a sales tax and turn it over to Colorado or the state of Florida will come after you, the same would apply to a seller in Colorado and a buyer in Florida.
For now the tax collection is voluntary. But you can bet your bottom dollar that if the system woks, states will start taking steps to make it mandatory.
posted on February 7, 2003 02:14:02 AM new
It's inevitable, and it should be.
I think that ultimately there will be a tax collection mechanism similar to the "Trans Pass" used for collecting tolls that go to various jurisdictions.
The states are hurting for revenue (and the article mentioned that these firms were strong-armed because they apparently were not collecting taxes already required).
This program will help rationalize the sales tax schedules (or push us to a national sales tax), and treat all businesses more fairly.
As for collecting, well, hey, what do you think computers are good for? I recall that when this was broached a few years ago, the large on-line sellers said this would be too cumbersome. Hmm, they can't manage approximately 50 sales tax schedules that can be tracked by the zip code information they collect, but they can manage to keep sending me emails based on my purchase history and tastes in merchandise. Interesting.
posted on February 7, 2003 07:27:26 AM new
If you're going to fund your government with sales tax (which is one of the most regressive taxes around, but hey, let's not go there) then those people who actually owe the tax should have an equal obligation to pay. If these big retailers were just following the law the huge rate of losses would go down, and there would be no need to talk about a uniform Internet sales tax.
Florida's law says that any business with a physical presence in the state owes sales tax on any sales to Floridians. In my pre-Christmas shopping, I noticed that Wal-Mart and Barnes and Noble (which does not appear to have been party to this settlement) were both ducking tax by setting up separate corporations. But it was SO clear they were just dummies for the sake of avoiding tax - both stories allow Internet returns to their brick and mortar locations, and my local BN even pulled a book off its shelves to replace a damaged-in-transit copy. This is tax evasion 101 and they should've been popped.
(I am by no means "big," but I do follow the law as well. When I sell to a Floridian, I collect tax. It says so right in my auctions and again in my "About Me" page.)
posted on February 7, 2003 07:53:21 AM new
why not just ask the venue provider to collect that,make it part of the final value fee??
watch out for IRS,some retailers have problems and his ebay records become part of the investigation.
posted on February 7, 2003 11:58:37 AM new
The Federal govt sooner or later will have to be heard from. Under current law, the physical presence standard is what determines if you must collect sales taxes.
Collecting sales taxes without a physical presence in the taxing state is de facto regulation of interstate commerce, which is the express domain of the Federal government and the states are not allowed to do.
Either consumers and/or catalog companies will file a Federal suit over this. It is interesting that the collection is termed "voluntary", but for whom ? No one has mentioned if the consumer may voluntarily pay or not pay the tax to the vendor.
posted on February 7, 2003 12:18:53 PM new
N.C. has taken a "reverse sales tax" approach. They charge you a certain amount extra on the N.C. state income tax return that is supposed to cover what the average person spends on out of state purchases. The tax is thus collected from the buyer, not the seller. Go figure.
N.C. still collects from retailers too, of course.
posted on February 7, 2003 01:25:40 PM new
What will they think of next to get their grubby little hands on my dollars...
Like so many others, I pay for my business license etc, usage, State, Federal, unemployment, Sales, Property & SS taxes and also a hefty sum for my accountant to keep track of it all. This on top of the $1,100.00+ out of pocket each month for myself and my families heathcare. Forget the mortage and other living expenses. That's extra! I am the self employeed, a species that is becoming more and more rare in today's world.
I collect and submit sales tax on sales that take place in my State. I have no brick & mortar presence, just online, and I pay every damn nickel that is owed. In other words, I comply with the law! Our Governing bodies better wake up and see that it will be overwhelmingly difficult, if not impossible, for small business to comply with such a ridiculous proposed taxing scheme. No software will be able to facilitate the many ever changing variables that will be required to collect such tax. The day that us small business should be required to submit for all 50 States is the day that our Government figures out a convenient way to collect and submit this tax. The idea of even possibly burdoning small business with this liability is way out of line. Imagine the compliance and submission forms that will need to be filled out! We're talking thousands of dollars to have this done with an accountant. Who cares? Not our Government... They have had no problem burdoning small business in the past. We are the over taxed and under compensated. We are the drive and carry the weight of the economy on our shoulders. We are small business!
posted on February 7, 2003 02:25:46 PM new
The only way a Internet tax could ever work is if it was a flat rate national tax. There is no easy way for sellers to figure out the thousands of different tax rates for every state and city, a lot of cities have a tax on top of the sales tax and each city has a different rate. In Minnesota clothes don't get taxed but other states tax them, some candy bars get taxed and others don't if they use flour as an ingredient.
posted on February 7, 2003 03:05:12 PM new
As the old Chinese curse goes- 'May you live in interesting times'...
What about Amazon, Half.com, and Paypal which act like a pay agent ? You know that if these new tax requirements go through the government will insist that those acting as pay agents collect the taxes, and you know Paypal, Half, and Amazon will want the seller to pay for this imposed "service".
This new tax treatment will also stand personal jurisdiction on its head in the courts. If I am in New Jersey and Nevada INSISTS that I collect a sales tax from a buyer there, what is Nevada going to do if I say no ? They can't haul me into a Nevada court because I have no significant contacts with Nevada. They can't haul me into the NJ court because NJ has no issues with me, so they go into Federal court and the rule there is physical presence, of which I have none with Nevada. But none of this is certain.
There is a ruling out of New York dealing with online gambling that staes that online gambling takes place where the gambler hit the computer key to send the bet.
On an eBay sale, as far as eBay is concerned, the transaction takes place at a venue in California. I suppose that New York would insist that the sale takes place where the buyer pushes the computer key to buy, which I suppose is determined by your IP address, which can be masked or re-routed anywhere through an anony-server.
How do you prove where a buyer is from? A shipping address ?
All this was somewhat easy to figure out under physical presence and significant contacts with the jurisdiction standard, but this is goingto get very weird.
posted on February 7, 2003 03:22:04 PM new
I believe that a move was underway with a number of states getting together on this - on their part, simplifying the sales tax structures in preparation for this type of collection.
Assuming some rationalization of the sales tax categories, it would not be all that difficult. Merchandise would be assigned a code according to type, enter the shipping zip code and the tax computes. Sellers would send payment to tax clearinghouse; money then distributed to states/localities.
As far as interstate commerce goes, that can be changed. States will need to make up the revenue loss they have now; if not through sales tax through something else - and the federal government may be forced into action, rather than sending more money to the states.
Despite the arguments about enforcement and collection, the truth is that the online sellers love the edge they get through the non-collection of sales tax.
posted on February 7, 2003 05:09:52 PM new
Well, I've been wondering what the additional shipping charges from Mexico will do to me sale when I move down south later this year. Looks likke nothing is they start enforcing this, the increase will be negated by the lack of sales tax.
posted on February 7, 2003 09:08:44 PM new
They were trying to get away with not paying taxes when they had a physical store in the same state...they got caught.
Reading between the lines:
Most of the retailers involved have physical locations in the 45 states that levy sales taxes.
Online units are often chartered as separate entities and maintain physical locations in only a handful of places, thus exempting customers from most states from paying sales taxes.
In return, 38 states and the District of Columbia agreed to absolve the retailers from any liability for taxes not previously collected on Internet sales.
posted on February 8, 2003 08:49:04 AM new
To add to the confusion, I heard one argument that for eCommerce it was difficult to say where the sale took place, it could depend on where the server was located. It's also the responsibility of the buyer (at least in Mass) to report the purchase and pay a use tax - it's not up to the seller who ships out of state. Governor Mitt asked all citizens of Mass to please comply with the use tax. Of cours, there is (or was) a space on our state tax form to report illegal income - wonder how many dodos fill that one out.
posted on February 8, 2003 01:01:14 PM new
What if the seller and/or buyer are both located offshore and the goods are in the US and the buyer has them shipped to a US address but neither is a citizen ? I have a UK buyer now that wants the item shipped to a friend in Florida.
What about drop shipping where the seller never actually takes possession of the goods ?
I think software can take care of collecting the taxes, but coming up with rules for the software to apply is the problem.
posted on February 8, 2003 03:13:18 PM new
Reamond - if proceeds from the sale are deposited in an "off-shore" account thru PayPal linked to an offshore account no sales tax is applicable.
posted on February 8, 2003 04:55:25 PM new
Funds deposited and paid from off shore have nothing to do with paying sales taxes. I bank at a credit union 300 miles away in another state and still have to collect sales taxes for items that are sold to buyers within my state, but I have no sales tax responsibilities to the state where I bank.
The problem with the system is applying the old standards of physical presence. Selling through the internet can be done with a physical presence in a no tax jurisdiction, but the previous barriers of reaching thousands or millions of customers have fallen due to the internet. It gets even stranger when we apply the standard to internet services such as gambling or porn.
The internet provides the possibility to have millions or billions in sales and not pay any taxes. The alternative is that countries and jurisdictions will attempt to block access to tax haven or illegal sites.
