Senator Wyden Takes A Stand Against Overbroad Tax On Internet Transactions

from the the-shop-canada-and-shop-mexico-bill dept

Last month, we noted that the Senate was coming closer to forcing a sales tax on all internet purchases -- something the big brick-and-mortar retailers have wanted for years to burden online competitors. State governments also love the idea because they're all dying for tax revenue. However, it's unclear why this makes any sense, in particular because it puts a huge burden on anyone selling goods online. And yet, the Senate is pushing forward with S. 743, or what it has euphemistically called the Marketplace Fairness Act. It sounds like Senator Harry Reid is pushing for a vote on it as early as Monday.

Senator Ron Wyden has now stepped up to argue vehemently against the bill, noting that the burden on innovation is way too high, for little clear benefit.
Two of his big concerns: that it takes a government function (taxation) and forces it on small businesses and internet retailers, and secondly that this will drive more people to buying from foreign online retailers, mainly in Canada and Mexico. Even the Congressional Research Service has noted that the bill has a massive loophole for foreign retailers selling in the US and that it is "complicated legally."

Others have pointed out that this bill would also have a massive impact on privacy because it requires retailers to turn over the addresses of buyers to state authorities to figure out where to allocate the tax revenue.
Let’s say a seller of naughty toys were audited by the tax authority in another state. To prove that it has remitted all the taxes due in that state, it woud have to turn over, at the least, data reflecting the amount of its sales by geographical location. There are something like 30,000 state and local jurisdictions with authority to impose sales and use taxes, more than 7,500 of which have already adopted this kind of tax. If not ZIP+4, then the actual address of recipients would have to be turned over. Could they turn over non-identifying summaries? The point of an audit is to check the honesty and accuracy of summary filings, so the answer is no.

So state tax authorities would get troves of data about online purchases delivered into their state. The standard misuses apply. It might be transferred to other organs of government, legally or not, for investigation and examination. Curious state bureaucrats might look up the purchasing habits of ex-spouses, famous names, and political figures. The list goes on and on
The more you dig into this bill, the worse it gets. Just the fact that it's suggesting that internet firms should enforce taxation laws that are outside of their own jurisdiction (i.e, "taxation without representation") raises significant due process questions at a time when lots of countries are looking to try to regulate internet companies outside of their own borders. Passing this law will give fodder to other countries to claim jurisdiction over American companies, and provide them with direct evidence that even in the US we don't take jurisdiction and due process seriously.

On top of that, the bill will apply to not just physical goods, but services as well. While those are often not taxed by states, this could also provide more incentive for them to be taxed, which doesn't seem good for anyone.

Honestly, the biggest question in all of this is why it's even necessary in the first place -- other than the fact states who misused existing revenue are now hungry for more. Perhaps they should focus on getting their own houses in order before just demanding more cash from internet companies (and, more directly, their users).

A bunch of anti-tax groups have also put together a petition against the bill. Whether or not you support their general anti-tax position, it does seem ridiculous to put all the burden on anyone selling goods online to have to collect and distribute taxes in states where they have no presence at all. As a site that has its own small store, the idea of having to figure out how to deliver cash to 50 separate states is terrifying.
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Filed Under: due process, internet taxes, marketplace fairness act, privacy, retailers, senator wyden, state taxes


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  • identicon
    Travis, 19 Apr 2013 @ 1:31pm

    Let's back him up - But don't call until Monday

    Looks like they're voting on Monday afternoon - everyone should call their Senator on Monday to tell them heck no to taxing the Internet. Don't bother getting caught in their voicemail over the weekend.

    link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Apr 2013 @ 1:31pm

    Thank goodness one of our senators has a brain.

    link to this | view in chronology ]

  • icon
    tomxp411 (profile), 19 Apr 2013 @ 1:32pm

    Unfair burden?

    How, exactly, does this put an unfair burden on e-tailers?

    Any good shopping cart should already be able to choose sales tax rates based on ZIP codes, and from there it's a simple matter to account for sales tax by state on the accounting side.

    Yes, you mail an extra 49 checks a year, but any reasonably large e-tailer is already mailing out hundreds of checks a month, so I don't get how this is some huge burden.

    Now if you're going to say that charging sales tax at all is a burden, and that we should get our products tax-free if we buy them from another state, I can't agree with that: I don't know how many other states have this particular bit of tax code, but mine certainly requires me to pay use tax on my tax return.

    So, since all law-abiding citizens are already tracking their out of state purchases and paying their proper taxes at the end of the year, and collecting the taxes isn't exactly a logistics nightmare... where's the problem?

    link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Apr 2013 @ 1:39pm

      Re: Unfair burden?

      Then you would agree that the physical stores would need to get ID from you and calculate the and send tax payments to where you live rather than where the business is located? You know. To be fair.

      link to this | view in chronology ]

      • icon
        tomxp411 (profile), 19 Apr 2013 @ 1:42pm

        Re: Re: Unfair burden?

        huh?

        All they need is the ZIP code of where I live. They send tax payments to the Franchise Tax Board of my state. Anyone that can figure out his income tax can figure out where to mail a tax payment.

        And I'm willing to bet that your accounting program already has a "print and mail a sales tax check" feature built right in. If it doesn't, it will soon.

        link to this | view in chronology ]

        • icon
          Chosen Reject (profile), 19 Apr 2013 @ 1:50pm

          Re: Re: Re: Unfair burden?

          I've been asked my zip code while making a purchase probably a handful of times in my life. I assure you, for the vast majority of purchases I've made in my life, the only information the seller needed from me was what items I was buying and what my method of payment would be. That's because you are taxed based on the location of the seller, not where you live. I don't see why this should change.

          Plus, what you are describing is called regulatory capture. Sure big etailers aren't hurt by this. Amazon used to be against it, but is now in favor of an internet tax. Why? Not because they feel sorry for the lost tax revenue of states. It's because it's easy for them and hard for little upstarts.

          link to this | view in chronology ]

          • icon
            tomxp411 (profile), 19 Apr 2013 @ 2:57pm

            Re: Re: Re: Re: Unfair burden?

            Well, here's a little story: I live in an unincorporated county area. The sales tax here is around 8%.

            The closest CITY to me has a .5% sales tax on top of the state tax. So let's call it 8.5%.

            I am looking at cars right now. I've been told by several people that if I walk in to the car dealer with my driver's license that shows my county address, I will get the lower sales tax rate of 8%.

            I've also been told that you should be able to do this at any retailer, but that most retailers either can't or won't adjust sales tax because the cashiers don't know how or because their registers aren't capable of charging different tax rates.

            So I wouldn't be surprised or mind at all if one day I walked in to WalMart, they ask for my ZIP, and I end up paying half a percent less. That adds up to quite a bit of money over the course of a year.

            link to this | view in chronology ]

          • identicon
            Anonymous Coward, 21 Apr 2013 @ 4:21am

            Re: Re: Re: Re: Unfair burden?

            Really? Never been asked for your zip code? So Etailers don't ask you where you want to send the item? That must be really nice for the random person who gets your item shipped to them at your expense.

            link to this | view in chronology ]

      • identicon
        Anonymous Coward, 19 Apr 2013 @ 1:43pm

        Re: Re: Unfair burden?

        That's fine with me. to be fair.

        link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Apr 2013 @ 1:48pm

      Re: Unfair burden?

      "Yes, you mail an extra 49 checks a year, but any reasonably large e-tailer is already mailing out hundreds of checks a month, so I don't get how this is some huge burden."

      Actually, boy, you'd end up mailing several hundred thousand checks.
      State taxes, city taxes, county taxes, district taxes.
      Hell, in some cities (Chicago, for example), the sales tax is different if your address is downtown or uptown!

      link to this | view in chronology ]

      • icon
        tomxp411 (profile), 19 Apr 2013 @ 2:59pm

        Re: Re: Unfair burden?

        Again, as I mentioned before, I live in a state that has to pay on-line tax no matter where I buy.

        I pay the STATE tax. I do not get charged county or city add-ons.

        link to this | view in chronology ]

        • identicon
          Anonymous Coward, 19 Apr 2013 @ 7:44pm

          Re: Re: Re: Unfair burden?

          Which has nothing at all to do with what the bill is suggesting. The bill would require you to collect taxes for all states and communities you are selling in, then figure out how much goes to where, and pay them. Some 30,000 different jurisdictions and tax codes. That you cannot see past what your state already does and what the federal government is proposing... well, I have no words for it.

          link to this | view in chronology ]

        • icon
          Cynyr (profile), 20 Apr 2013 @ 7:58am

          Re: Re: Re: Unfair burden?

          but not everyone lives in such an area.

          If the federal government wants to make internet sales taxed the simply thing to do would be to start a federal on-line sales tax for purchases where the ship to and ship-from states are different (interstate trade). The requirements of online retailers would be then to collect the federal tax, and report the ship-to state. The feds then take some % of the sales tax and pass the rest to the state.

          For example; Federal internet sales tax is 10%. I buy a $100 widget from www.widgets.com. www.widgets.com charges me $110+shipping and send the $10 in tax and the state on the ship to label to the feds. The feds take 3% or $0.30 and send the remaining $9.70 to the state.

          The federal law states that these payments are to be treated exactly like state sales tax collected in the state. If a state doesn't want to collect sales tax for physical locations in the state they simply need to en-act a state law that says the tax rate in the state is 0% and what to do with any money that comes from that. No change to people that live there and shop at a physical store, since the state collects no sales tax.

          What this would likely encourage is major on-line retailers to set up distribution in each state and to simply move inventory between distribution centers to ensure that the ship-from address matches the ship-to state. Though I'm not sure if there already rules in place at the federal/state level to make those inventory exchanges tax-able.

          link to this | view in chronology ]

        • identicon
          Anonymous Coward, 20 Apr 2013 @ 8:07am

          Re: Re: Re: Unfair burden?

          "I pay the STATE tax. I do not get charged county or city add-ons."

          Not yet.
          It'll change.
          Then what?

          link to this | view in chronology ]

      • identicon
        Anonymous Coward, 20 Apr 2013 @ 6:37am

        Re: Re: Unfair burden?

        Actually, boy, you'd end up mailing several hundred thousand checks.
        State taxes, city taxes, county taxes, district taxes.
        Hell, in some cities (Chicago, for example), the sales tax is different if your address is downtown or uptown!


        You really are a fucking idiot. That's not how it works. It's STATE sales tax only. Go crawl back under your rock and overdose on something.

        link to this | view in chronology ]

        • identicon
          Anonymous Coward, 20 Apr 2013 @ 8:14am

          Re: Re: Re: Unfair burden?

          "You really are a fucking idiot. That's not how it works. It's STATE sales tax only. Go crawl back under your rock and overdose on something."

          You obviously didn't read the text of the bill.
          (Now THAT'S a "fucking idiot".)
          It's to create "equality", so it's a match to ALL sales taxes for your zip code (including local).
          Feel free to prove otherwise with an exact quote from the bill.

          link to this | view in chronology ]

          • icon
            tomxp411 (profile), 20 Apr 2013 @ 5:04pm

            Re: Re: Re: Re: Unfair burden?

            Actually, there are two different collection and calculation methods.

            One uses the streamlined system that apparently lets the seller remit taxes to his own state, and the states then hash it out. The other method requires states to charge a "Single tax base" for all purchasers in the state.

            So, in other words, at most, retailers only need to calculate taxes for the 50 states and send checks to 50 states. However, the real situation will be better, because states that use the streamline system will reduce the number of checks you have to write.

            link to this | view in chronology ]

          • identicon
            Anonymous Coward, 6 May 2013 @ 5:01am

            Re: Re: Re: Re: Unfair burden?

            No he had it right, you are a fucking idiot!...

            link to this | view in chronology ]

          • identicon
            Anonymous Coward, 6 May 2013 @ 5:01am

            Re: Re: Re: Re: Unfair burden?

            No he had it right, you are a fucking idiot!...

            link to this | view in chronology ]

    • icon
      Chuck Norris' Enemy (deceased) (profile), 19 Apr 2013 @ 2:59pm

      Re: Unfair burden?

      Yes, you mail an extra 49 checks a year, but any reasonably large e-tailer is already mailing out hundreds of checks a month, so I don't get how this is some huge burden.

      Actually not so simple. You can't just mail a check to the tax authority...they would have no idea what it is for. To collect sales tax for a state you will have to register to the tax authority for a tax ID number and most likely apply/register your business in that state. Multiply that across 50 states with 50 different sets of tax rules and registration requirements...doesn't sound so easy anymore.

      link to this | view in chronology ]

      • icon
        Chuck Norris' Enemy (deceased) (profile), 19 Apr 2013 @ 3:01pm

        Re: Re: Unfair burden?

        And I forgot to mention the annual tax forms to the Feds and each state.

        link to this | view in chronology ]

      • identicon
        Anonymous Coward, 20 Apr 2013 @ 8:11am

        Re: Re: Unfair burden?

        " Multiply that across 50 states with 50 different sets of tax rules and registration requirements...doesn't sound so easy anymore."

        Add the cities, then the districts/bouroughs/business districts/whatever they call them within the city limits (for example, NY State/New York City/Brooklyn) who also charge sales tax and it becomes a nightmare!
        As someone pointed out, Chicago charges two DIFFERENT sales taxes, higher for the downtown area, lower for outside downtown!

        link to this | view in chronology ]

    • icon
      John Fenderson (profile), 19 Apr 2013 @ 3:25pm

      Re: Unfair burden?

      all law-abiding citizens are already tracking their out of state purchases and paying their proper taxes at the end of the year


      Every time the subject of sales tax comes up, all I can think is thank god I live in a region that doesn't have sales tax.

      link to this | view in chronology ]

      • icon
        BearGriz72 (profile), 20 Apr 2013 @ 6:29am

        Re: Re: Unfair burden?

        Every time the subject of sales tax comes up, all I can think is thank god I live in a region that doesn't have sales tax.
        Oregon FTW! (Again, Again!)

        link to this | view in chronology ]

    • identicon
      varagix, 19 Apr 2013 @ 3:43pm

      Re: Unfair burden?

      So, since all law-abiding citizens are already tracking their out of state purchases and paying their proper taxes at the end of the year, and collecting the taxes isn't exactly a logistics nightmare... where's the problem?


      Technically true since you qualified it with 'law abiding' citizens, but a majority of people don't, because they aren't even aware that it's a requirement, let alone how to comply if they do know. As I hear it, its a chronic problem that legislators complain about, yet make no effort to educate people about or to enforce compliance on average citizens.

      Case in point, I literally only found out about this in general today based on comments in the article. So now I have to worry about whether I have outstanding sales taxes because I sometimes pick up some groceries in Ohio or Kentucky on my way home from work to my home in Indiana.

      link to this | view in chronology ]

      • identicon
        varagix, 19 Apr 2013 @ 3:56pm

        Re: Re: Unfair burden?

        And yes, -I- realize that the tax is actually paid to the state of the point of transaction, but the average person doesn't.

        link to this | view in chronology ]

        • icon
          K.E.Mort (profile), 19 Apr 2013 @ 7:39pm

          Re: Re: Re: Unfair burden?

          varagix,

          If you paid sales tax in the other state and that sales tax was equal or greater to your state's tax then usually the law would be that you do not owe anything in USE TAX to your state.

          Since groceries aren't generally taxable, there's no burden of use tax there.

          However, if you buy a new hard drive at a store in Ohio and pay 5% sales tax on it, but use it at home in Indiana and the sales tax is 6%, then generally it'd be written you owe Indiana the difference in the sales tax but they'd call it "use tax" instead...although it's the same darn thing.

          Now, think about them apples when it's a car and you move from say Delaware to Maryland...yea...Oops.

          link to this | view in chronology ]

          • identicon
            varagix, 20 Apr 2013 @ 1:57am

            Re: Re: Re: Re: Unfair burden?

            And how many people know that? I didn't before today. Most people I know don't seem to know that. I don't think I know anyone who's even -heard- of a use tax before. I certainly hadn't. And as I said before, I wouldn't even know who to pay and how now that I do. It also seems generally unenforceable in any practical way.

            Switching the burden to retailers, whether in general or for specific businesses (e-tailers and catalogs) makes it more enforceable, but as you point out down thread, it's a huge burden on retailers, especially smaller ones, for the reasons you give. Amazon.com could handle it easily (and practically already does in many ways), but Ma and Pa's Yard and Garden Crafts wouldn't be able to.

            link to this | view in chronology ]

    • identicon
      cpt kangarooski, 19 Apr 2013 @ 4:06pm

      Re: Unfair burden?

      Any good shopping cart should already be able to choose sales tax rates based on ZIP codes, and from there it's a simple matter to account for sales tax by state on the accounting side.

      First, zip codes are merely a convenience for the Post Office, merely indicate what delivery routes an address is on, are not static, and should not be treated as being more meaningful than that. Zip codes sometimes cross state lines, county lines, and municipal borders.

      Second, sales taxes are not necessarily uniform statewide. States may have sales taxes, counties may have additional sales taxes, municipalities may have additional sales taxes, and while I can't think of any examples offhand, the boundaries of areas where sales taxes are levied may not correspond to political boundaries at all, much less mail delivery routes. In fact, they may not even correspond to an address, in the case of a person who lives on a parcel of land that crosses tax boundaries and has a house in a different jurisdiction than their mailbox. The areas may also change at random times, as in the case of a family I know who lived in the county, and eventually had the city annex their land so that they could live in the city jurisdiction without having to move.

      And the sales taxes for different places may apply to different types of goods or services, and may have different rates for specific types. For example, in Massachusetts, some types of shoes are taxed, and others are not, unless the price of the untaxed shoes is over a certain amount, and then the excess is; meanwhile, in Florida, IIRC, all shoes are taxed.

      And the authorities that levy the taxes may arbitrarily declare tax holidays, often in late summer before school starts. But they may also choose not to. And it's not uncommon for this to be a last minute decision, and the holiday may only apply to some items, and not others, and up to varying limits.

      Knowing what taxes to apply based on the location of the purchaser, rather than the seller, is a huge logistical nightmare in the US. And you dare not make even a tiny mistake, or else you're in serious trouble for not paying taxes!

      The only way this will work is if the taxes to be charged are made extremely simple, and even then, it will have a lot of problems. Frankly, I'd rather just eliminate sales taxes, on the grounds that they're regressive taxes, and enjoy the side effect of putting online and physical stores on a more even footing in a simpler manner. Let's increase progressive taxes on income, capital gains, and wealth to make up for the problem instead.

      link to this | view in chronology ]

      • identicon
        out_of_the_blue, 19 Apr 2013 @ 4:24pm

        Re: Re: Unfair burden?

        @ "cpt kangarooski": "zip codes are merely a convenience for the Post Office" -- You make a common but serious mistake that I'm pretty sure you know but must never be lost. It's NOT the "Post Office" any more but "United States Postal Service", a private for-profit corporation having special provisions in law with quasi-gov't powers. In short, not gov't service but a fascist wealth-transfer scheme.

        This is a difficult problem, but I agree with your last paragraph and especially last line: "Let's increase progressive taxes on income, capital gains, and wealth to make up for the problem instead."

        link to this | view in chronology ]

        • icon
          AzureSky (profile), 19 Apr 2013 @ 7:19pm

          Re: Re: Re: Unfair burden?

          but but but, the republicans who pushed so hard to privatize the postal service assured us all that it would cut costs and even profit the govt, then they went on to insure that wasnt possible.....

          gotta love the way the the right and left think....no true logic or objective facts can change their viewpoints....

          i feel both sides are a bit retarded....:P

          link to this | view in chronology ]

          • identicon
            Anonymous Coward, 20 Apr 2013 @ 8:16am

            Re: Re: Re: Re: Unfair burden?

            "...gotta love the way the the right and left think....no true logic or objective facts can change their viewpoints...."

            Just like OotB!

            link to this | view in chronology ]

    • icon
      K.E.Mort (profile), 19 Apr 2013 @ 7:32pm

      Re: Unfair burden?

      Yes, you mail an extra 49 checks a year"

      HAHA! This is great. More like the truth would be you're sending tax statements to the states, every quarter.

      See you're going to have to register to collect sales tax in each state. Here in FL it is the same form you are supposed to use to report "use tax" which is basically sales tax.

      Oh and if the city you are in, or presumably the city the buyer is in, you could end up paying a muni tax as well - but this varies widely state to state.

      See once you do that registration they have you, and you are required to file every quarter no matter if you have any sales tax to remit or not.

      So yea it isn't just once a year. Get that notion out of your head right quick.

      I would argue if you put this law into place then no state would really have the standing to also demand use tax as well. Which, by the way many if not all states have - and yes us lowly consumers are technically supposed to pay it on all of our online purchases since by buying out of state we've robbed our poor home state of that tax revenue...at least in their eyes.

      But alas, I'd think the states will still think you owe another tax even if this does pass.

      link to this | view in chronology ]

    • icon
      timmaguire42 (profile), 20 Apr 2013 @ 9:53am

      Re: Unfair burden?

      I don't understand the whole debate. I already pay sales tax on my online purchases. So WTF?

      link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Apr 2013 @ 1:33pm

    The only reason, I buy things of the internet. The retailers in my community, dont sell the products, I need.
    So let's tax internet sales, but when I have to order parts. The store that doesn't sell, has to pay the internet tax. I'm fine with that.

    link to this | view in chronology ]

  • icon
    Rikuo (profile), 19 Apr 2013 @ 1:42pm

    So this is a "Sales Tax", right?

    Lemme guess, if it passes, US citizens will finally see advertisements to "Licence the song on iTunes" not "Buy this song" since surely licences don't count for this tax?

    link to this | view in chronology ]

    • icon
      tomxp411 (profile), 19 Apr 2013 @ 1:43pm

      Re:

      heh. Good point. I don't think I've paid sales tax for any Internet downloads, even when the seller is in the same state as I am.

      link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Apr 2013 @ 1:47pm

      Re:

      Can't complain about sites being clear about what they're selling, sorry leasing.

      link to this | view in chronology ]

  • identicon
    Lord Binky, 19 Apr 2013 @ 1:44pm

    Not even the government wins.....

    It is also a huge burden on the government. Although, since we all know the government is generally good with money, I'm sure it won't cost the government more to handle the taxes than what they recieve in the taxes.

    link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Apr 2013 @ 1:57pm

      Re: Not even the government wins.....

      Starting Monday the government will begin demodernizing their computer system at a cost of $900 billion dollars a year in order to make the process as slow and painful as possible for everyone.

      link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Apr 2013 @ 1:55pm

    I fail to see how a sales tax at a rate similar to the state's sale tax is an unreasonable burden to online businesses.

    Lots of brick and mortar businesses pay that tax and are doing just fine.

    And individuals pay taxes on their income all the time, yet I don't feel burdened and crushed by 'crippling' taxes that are actually rather low compared to most of the 1st world nations (and are probably too low when consider our 16 trillion dollar national debt, you can't fix a problem that massive on spending cuts alone).

    Also, all the government should really need to audit an internet company to make sure they're paying the internet sales tax to the right people is to see the dollar amount of the goods bought and go "$100 in goods plus shipping and handling with a 6% sales tax means they owe $6 sales tax".


    But foreign companies and the sales tax could be an issue yes, the law should be rewritten in such a way to make sure foreign businesses also pay the tax on any goods Americans purchase from them/any goods that the buyer has shipped to America.

    link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Apr 2013 @ 2:18pm

      Re:

      the law should be rewritten in such a way to make sure foreign businesses also pay the tax on any goods Americans purchase

      Since when did congress have sovereignty over other countries?

      link to this | view in chronology ]

    • identicon
      Anonymous Coward, 19 Apr 2013 @ 2:28pm

      Re:

      "I fail to see how a sales tax at a rate similar to the state's sale tax is an unreasonable burden to online businesses."

      The problem is that it's not just the state's sales tax, boy.
      It'll also the city, district, etc. sales taxes that ALL have to be added in.

      link to this | view in chronology ]

      • icon
        tomxp411 (profile), 19 Apr 2013 @ 2:47pm

        Re: Re:

        I don't know how this law is written, but it would actually make more sense to charge the sales tax applicable at the place where the retailer is incorporated or has their headquarters.

        Of course, this simply means that every etailer would move to Florida.

        Seriously, though: I am sure that if this passes, we'll quickly see on-line databases of zip codes and sales tax amounts. For that matter, I'd be extremely surprised if there's not already some sort of streamlined system to collect sales tax in 50 states. If there's not, then there will be very soon. After all, if this is a huge burden, someone will gladly take retailers' money i order to make things simpler.

        link to this | view in chronology ]

      • icon
        tomxp411 (profile), 19 Apr 2013 @ 2:52pm

        Re: Re:

        Oh, I just remembered this little tidbit: the last time I ordered on Amazon, I had to pay my STATE sales tax, not my local county or city tax.

        link to this | view in chronology ]

        • icon
          AzureSky (profile), 19 Apr 2013 @ 7:56pm

          Re: Re: Re:

          then you need to figure out what % is owed to your local county and city and pay that if you want to remain law abiding.

          amazon charges for all states, in part because they plan to or already have offices in every state.

          this law wouldnt harm amazon and other large operations, the ones it would screw over are small businesses who really cant afford to take the hit trying to track online sales tax for 50states with many counties and cities in each....

          services will pop up to deal with this, BUT they will also take a sizeable chunk of the profits much as medical billing companies do(i work at a chiropractors office i see it all the time)

          honestly, the way i see it, if they want to do something like this, make it a single tax set as a median rate(average of sales taxes across the nation), then distribute the tax based on purchases per location to the states/counties/cities/exct.

          but the people behind this have a goal, its to put small time entailers out of business, make it not worth the trouble to sell online.

          link to this | view in chronology ]

        • identicon
          Anonymous Coward, 20 Apr 2013 @ 6:41am

          Re: Re: Re:

          Oh, I just remembered this little tidbit: the last time I ordered on Amazon, I had to pay my STATE sales tax, not my local county or city tax.

          Ding ding ding. That's right. It's only state tax, and it's super simple for them to collect and remit. Only tech-apologists like Mike and Ron can try and spin this as being a bad thing. Anything that hurts the bottom line of tech is "bad."

          link to this | view in chronology ]

          • identicon
            Anonymous Coward, 20 Apr 2013 @ 8:30am

            Re: Re: Re: Re:

            "Ding ding ding. That's right. It's only state tax, and it's super simple for them to collect and remit."

            If you bothered to read the bill, you'd see that's not the case.
            Feel free to provw otherwise with a quote from the bill...

            link to this | view in chronology ]

      • identicon
        Anonymous Coward, 20 Apr 2013 @ 6:39am

        Re: Re:

        The problem is that it's not just the state's sales tax, boy.
        It'll also the city, district, etc. sales taxes that ALL have to be added in.


        Nope. You're still wrong. And still a complete moron.

        link to this | view in chronology ]

        • identicon
          Anonymous Coward, 20 Apr 2013 @ 8:20am

          Re: Re: Re:

          "The problem is that it's not just the state's sales tax, boy.
          It'll also the city, district, etc. sales taxes that ALL have to be added in."

          "Nope. You're still wrong. And still a complete moron."

          Feel free to quote the exact text in the bill that proves otherwise.
          Oh, you haven't read the actual bill?
          Now THAT'S a "complete moron".

          link to this | view in chronology ]

      • identicon
        Anonymous Coward, 21 Apr 2013 @ 4:50am

        Re: Re:

        Really? Never been asked for your zip code? So Etailers don't ask you where you want to send the item? That must be really nice for the random person who gets your item shipped to them at your expense.

        link to this | view in chronology ]

    • identicon
      varagix, 19 Apr 2013 @ 2:37pm

      Re:

      So not only will America set itself up as the world police, but as the world tax collectors as well?

      Fact of the matter is, it's not that simple, because (in part) those drafting it don't want it to be that simple, and partially because such e-tailers don't have physical sales location. Where will the taxes go? Where the retailer's corporate HQ is? Where their servers are located? Where the customers are located? Where the customer picks up their mail(if their personal address and mailing address of different)? All of the above (and if so, how will it be calculated)? If foreign retailers are included in this, how will it be enforced? Can foreign governments similarly impose such a tax on US retailers who do business with foreign citizens? It's a can of worms, made worse by an already rather complicated and expansive tax law.

      link to this | view in chronology ]

    • icon
      Todd Knarr (profile), 19 Apr 2013 @ 2:38pm

      Re:

      One crucial difference: the brick-and-mortar store pays sales tax based on it's address, not the customer's. They know where their store is, and they only have to worry about one single sales tax rate. If the customer lives where the sales tax rate is different, or lives in another state, the store doesn't have to worry about that. Technically the customer owes the sales tax to the city, county and state where he lives, not where he bought the goods, but the responsibility there is on the customer and not the merchant.

      Compare this to the on-line sales tax proposals, where the burden of figuring out what tax is owed to who is placed on the merchant instead of the customer.

      link to this | view in chronology ]

      • icon
        tomxp411 (profile), 19 Apr 2013 @ 2:50pm

        Re: Re:

        Actually, the tax is charged based on where the transaction takes place.

        In the case of on-line transactions, this is presumed to be the billing or shipping address of the buyer.

        link to this | view in chronology ]

        • icon
          silverscarcat (profile), 19 Apr 2013 @ 3:08pm

          Re: Re: Re:

          But what if the bill makes you pay ALL appreciable sales tax, not just your state?

          What if Online retailers decide to find the highest sales tax in the country and make everyone pay that on top of the shipping and handling just to cover their bases?

          Sure, it's all what-ifs right now, but...

          Sometimes what-ifs become reality.

          link to this | view in chronology ]

          • icon
            tomxp411 (profile), 19 Apr 2013 @ 5:25pm

            Re: Re: Re: Re:

            This would be the "slippery slope" argument, which is a logical fallacy and a dead-end. Let's stick to likely scenarios...

            And let's also separate what you WANT (to save money) from what's RIGHT (to pay your state the taxes you owe them.)

            The most likely scenario is going to be that retailers collect tax at the state level, ignoring county and city taxes. This also happens to be the easiest to implement; it's not trivial, but it is definitely a "first year programming student" kind of task. I really don't see the huge burden here.

            The second most likely scenario is that etailers end up having to calculate taxes per ZIP code. I can guarantee you that by the time this legislation actually is in force, there will be several companies with products that will provide a tax amount based on ZIP code. In fact, the code to do so is identical to tax-by-state; the only difference is that your database is a few thousand rows, rather than 50.

            In that second scenario, I could even see this being part of already existing billing solutions from payment processors: you already process CC transactions through webservice calls; adding a simple webservice call to determine the sales tax is simple.

            And, again, this is something that several states already require, so any large etailer is already doing this. Yes, it's a job for the smaller guys, but I can guarantee that someone will take up the task. Hell, if nobody else does, maybe I'll do it.

            Now the IDEAL solution here would be for the Fed (as in the company that handles electronic money transactions through the entire country) to build a clearing house that works much like the ACH already does; but this would be a clearing house for state tax transactions. Allow retailers to post their tax payments directly to this ACH-ST system at the time of sale. Let the ACH-ST system then send the money where it needs to go.

            Again, none of this will present a tremendous burden to the e-tailer. Yes, they'll all spend some time implementing a little extra code on their shopping carts, but this is all just software design, and again - it's really VERY simple stuff for anyone who has any background in programming and databases. This is the kind of stuff a programming teacher would use as a class project, not something that will bring Internet sales to its knees.

            link to this | view in chronology ]

            • identicon
              Anonymous Coward, 19 Apr 2013 @ 6:34pm

              Re: Re: Re: Re: Re:

              This is the kind of stuff a programming teacher would use as a class project, not something that will bring Internet sales to its knees.

              Yes, but that is not consistent with the Mike Masnick narrative. So you are not allowed to say it here.

              link to this | view in chronology ]

              • identicon
                AC Unknown, 19 Apr 2013 @ 8:49pm

                Re: Re: Re: Re: Re: Re:

                Will you shut up and let the adults talk?

                link to this | view in chronology ]

              • identicon
                Anonymous Coward, 20 Apr 2013 @ 8:26am

                Re: Re: Re: Re: Re: Re:

                "This is the kind of stuff a programming teacher would use as a class project, not something that will bring Internet sales to its knees."

                Will the programming teacher or the students contact every business district in the country to get their tax rates?

                link to this | view in chronology ]

                • icon
                  tomxp411 (profile), 20 Apr 2013 @ 4:43pm

                  Re: Re: Re: Re: Re: Re: Re:

                  Stop being an idiot. Internet sales tax will only be collected by state, not by municipality. You're trolling on purpose, and it's not going to work.

                  link to this | view in chronology ]

        • identicon
          PRMan, 19 Apr 2013 @ 4:07pm

          Re: Re: Re:

          Note to self: Get a billing address in Oregon and set up a credit card account with that address...

          link to this | view in chronology ]

        • icon
          K.E.Mort (profile), 19 Apr 2013 @ 8:02pm

          Re: Re: Re:

          Correct, retailers COLLECT sales tax. They are doing this on behalf of the state, and then remit what is actually the state's funds back to the state treasury.

          If I am paying sales tax on something I buy online, then that retailer must have a brick & mortar presence in my state. If not, then I pay no sales tax. However, in that case I still owe USE TAX which most people either do not know about or do not pay. And if you're a business you're going to have to register with the state to pay it, and once you do...you're on the hook to report it regularly even if there's nothing to pay.

          In Florida if you collect more than $1000 in sales tax you must report/remit it monthly. If only $100 then annual. There's a nice little chart for that which I am sure most states have.

          The big problem is that unless the bill manages to normalize all sales tax code nationwide, it's a failure because despite what you think, it's going to be a nightmare for smaller outfits to set up to collect & remit the taxes, not to mention all of the various filing requirements. Sure eventually there might be software for that but for a small outfit, trying to account for tax changes in 50 states? Come on.

          So while it does matter where the transaction takes place, it is not just a matter of IF there is a sales tax in play at the customer's location, as that's true in all states but 5 IIRC, there is also the matter of the actual business having a presence there.

          I sell a software license to someone in a state I don't operate in, I am not required to collect sales tax for that state.

          What they'd do in this bill is essentially kill that, so no matter where you sell you are required to collect it. IF it is made simple enough that A) Remit only once or twice per year B) Only collect the primary state tax (no munis etc) then it could possibly work. It is still a burden on the retailers, so you can expect prices to go up or discounts to thin.

          I know you don't think it's much of a burden, but it is.

          link to this | view in chronology ]

    • icon
      silverscarcat (profile), 19 Apr 2013 @ 3:06pm

      Re:

      But I don't have a 6% sales tax, my state has a 5% sales tax. My city has an additional 2% sales tax, so I end up paying 7%.

      Other states have a 2.5% sales tax. And others have 8%, some have none.

      See how it gets tricky quickly?

      link to this | view in chronology ]

      • identicon
        Anonymous Coward, 19 Apr 2013 @ 6:36pm

        Re: Re:

        So what do you think happens when you order from Sears.com or walmart.com? Maybe that added a few lines of code? Ya think?

        link to this | view in chronology ]

      • icon
        tomxp411 (profile), 19 Apr 2013 @ 9:36pm

        Re: Re:

        It's not complicated at all: again, shopping cart software already does this because it has to do so for the few states that require it.

        A retailer's shopping cart software has a data table that lists tax rates by state or by ZIP code. When a user enters a ZIP code and the system calculates S&H, it also calculates sales tax.

        The software then records the sales tax paid by state. At the end of the month, your accounting module spits out the sales tax paid per state. A good accounting package will print the checks automatically. All you need to do is lick and stamp the envelopes.

        I've done this for a living. I know exactly how it works on a competently built system.

        And like I've already mentioned, I'm sure that the established vendors of shopping cart software will be adding ZIP code to Sales Tax databases very quickly, assuming this passes.

        So ALL of this is simply an exercise in software engineering. The only thing that retailers need to do is install the upgrades that will be coming from their vendors.

        (If you rolled your own sales software, then you get to roll some new code. Hopefully, someone will be distributing a downloadable list of sales tax by ZIP code. As to the specific who & how, I admit I have no idea yet.)

        link to this | view in chronology ]

        • identicon
          Anonymous Coward, 20 Apr 2013 @ 1:28pm

          Re: Re: Re:

          "I've done this for a living. I know exactly how it works on a competently built system."

          Exce;;emt!
          So you're qualified to prepare the code for EVERY city, business district, bourough, etc. in the country when this law goes into effect?
          Let me know when you're done, son.
          I'll buy it from you on the condition that it covers every known sales tax from every civic location.
          Miss one and I'll demand a full refund.

          link to this | view in chronology ]

    • icon
      John Fenderson (profile), 19 Apr 2013 @ 3:28pm

      Re:

      the law should be rewritten in such a way to make sure foreign businesses also pay the tax on any goods Americans purchase


      Two problems. First, the US can't (or shouldn't) impose it's laws on other nations. Second, the burden of paying sales tax technically falls on the buyer, not the seller.

      If there's an issue with sales taxes not being paid, the states should chase the actual lawbreaker: the person who made the purchase.

      link to this | view in chronology ]

      • identicon
        PRMan, 19 Apr 2013 @ 4:08pm

        Re: Re:

        Ahh, but if you implemented a federal sales tax and eliminated income taxes, you WOULD tax foreign nationals, illegal aliens and H1B and green card workers.

        link to this | view in chronology ]

        • icon
          John Fenderson (profile), 20 Apr 2013 @ 10:23am

          Re: Re: Re:

          But then everyone would be saddled with having to deal with sales taxes. I'd much prefer to keep the income tax instead. Sales tax is, in my opinion, one of the worst kinds of tax.

          Besides, all of those groups you name pay taxes anyway, unless their employer is a tax cheat.

          link to this | view in chronology ]

    • identicon
      Anonymous Coward, 20 Apr 2013 @ 6:39am

      Re:

      I fail to see how a sales tax at a rate similar to the state's sale tax is an unreasonable burden to online businesses.

      That's easy. This is Pirate Mike and Sen. Wyden, so you know that whatever they're touting is good for tech--fuck everyone else. All they come up with is "Innovation!" and "Privacy!" But this is really only about tech's bottom line, and Mike and Ron and the rest don't give a shit about anything else. It's so transparent and dishonest that it hurts.

      link to this | view in chronology ]

      • identicon
        AC Unknown, 20 Apr 2013 @ 11:32am

        Re: Re:

        Shut up, you stupid troll. You're the only one being "dishonest" here, you numbskull.

        link to this | view in chronology ]

  • icon
    Todd Knarr (profile), 19 Apr 2013 @ 2:06pm

    Turn it around

    How about instead of opposing this, we turn it around and push to make brick-and-mortar merchants collect sales tax based on where the buyer lives just like on-line merchants would? In many cases, if the big retailers argued you could present them with their own statements on the record where they said this system was acceptable... Fair's fair, if they want this complication then let everybody live with it.

    link to this | view in chronology ]

    • identicon
      Anonymous Coward, 20 Apr 2013 @ 8:24am

      Re: Turn it around

      "How about instead of opposing this, we turn it around and push to make brick-and-mortar merchants collect sales tax based on where the buyer lives just like on-line merchants would?"

      A ten year-old kid walks into a Dollar Store, buys a couple of toys for a buck each, doesn't remember his zip code (and doesn't have ID)
      What sales tax do you charge him/her?

      link to this | view in chronology ]

      • identicon
        Anonymous Coward, 21 Apr 2013 @ 5:00am

        Re: Re: Turn it around

        That's idiotic. The point is to define one unambiguous location where the transaction occurs. For a brick and mortar the easiest thing to do is say that it's at the site of the brick and mortar. When it's online it's currently fuzzy. The easiest thing to do is say that it's the buyer's residence. What's so hard about that?

        link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Apr 2013 @ 3:09pm

    'The more you dig into this bill, the worse it gets. Just the fact that it's' being pushed by Harry Reid should make people think twice. he isn't, in my opinion, the sharpest knife in the drawer!

    'Passing this law will give fodder to other countries to claim jurisdiction over American companies'.

    this should make the DoJ rethink the stupid idea whereby it's trying to get the law changed so it can go after organisations and companies that have no USA address. if that happens, it's going to reinforce the reverse happening too. i bet that wont go down very well when US companies start getting sued in foreign countries. the DoJ name will be associated with crap even more than it is now!!

    i wonder why it is that those that have the power to make changes that will affect 1,000s of people, in the main, seem to have less common sense than a rocking horse?? the fuck ups they make are unbelievable! is it a 'limelight' thing, do you think? have to get some attention? have to have their name associated with something, even if it is a disaster? beats me!!

    link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Apr 2013 @ 5:44pm

    As a site that has its own small store, the idea of having to figure out how to deliver cash to 50 separate states is terrifying.

    Ever the drama queen? There are plenty of stores with brick and mortar presence who have to submit taxes to various states. Most accounting programs will do it for you. So spare us the theatrics. From the sound of it, you can just put a couple of ones in an envelope and mail it, covering yourself in most every state.

    link to this | view in chronology ]

  • identicon
    Anonymous Coward, 19 Apr 2013 @ 6:16pm

    "...the idea of having to figure out how to deliver cash to 50 separate states is terrifying."

    Is it being suggested that there is an inability to "innovate" a solution to avoid sellers being terrified?

    link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 19 Apr 2013 @ 9:10pm

    Because this was easier than just removing tax breaks giant corporations enjoy?

    How about they fix the broken tax laws that allow major corporations to pay tax rates lower than people who make under the poverty line before demanding more people pony up cash for the coffers.

    link to this | view in chronology ]

    • icon
      tomxp411 (profile), 19 Apr 2013 @ 9:38pm

      Re:

      Personally, I think corps shouldn't pay taxes. That's what we call "double taxation."

      link to this | view in chronology ]

      • icon
        John Fenderson (profile), 20 Apr 2013 @ 10:29am

        Re: Re:

        I disagree. Corporations should not get a different tax deal than citizens. "Double taxation" is a red herring here, for two reasons: First, I don't see where it happens, wince money paid in salaries and to buy stuff is all deductible, and second -- so what? Not only is there no prohibition against "double taxation," we are already taxed multiple times (more than twice) on the same money as a matter of course.

        link to this | view in chronology ]

      • identicon
        Anonymous Coward, 20 Apr 2013 @ 1:32pm

        Re: Re:

        "Personally, I think corps shouldn't pay taxes. That's what we call "double taxation."

        How would corpses pay taxes?
        They're dead!

        link to this | view in chronology ]

    • icon
      BearGriz72 (profile), 20 Apr 2013 @ 6:44am

      Re: "Because this was easier than just removing tax breaks giant corporations enjoy?"

      How about they fix the broken tax laws that allow major corporations to pay tax rates lower than people who make under the poverty line before demanding more people pony up cash for the coffers.
      THIS!

      link to this | view in chronology ]

  • icon
    special-interesting (profile), 20 Apr 2013 @ 12:11am

    There are two angles of approach that one might take.

    One is to call your local senator/legislator who supports this stupid idea (or any stupid idea) telling them they are making a mistake in your opinion. Make them invest their time and recourses on your legitimate claims as a real constituent.

    The more time they spend on listening to legitimate constituent concerns the less time and resources they have at their disposal to actually articulate such bad legislation. Of course no donation will be made to this person.

    Two. Send a few bucks with a SHORT note of appreciation and support about the issue of concern to any local/state/national legislator. Money speaks its own language.

    A politically active person would easily spend a few hundred of their precious dollars a year. Sending 5-20 dollars to several different candidates/legislators might be a good way to divide up the pot.

    On the obvious level taxation is complicated enough. Why make it worse and why involve ordinary mom and pop stores in pointless jurisdictional battles with the usually intractable IRS? �Tracking out of state purchases� Most ordinary people don't even �track� anything at all let alone the drinks purchased at a bar visited on vacation in another state!

    Such a nightmare of legal tax violations would potentially curtail any foreign travel. It would just be to dangerous.

    If remembering correctly it was SUPPOSED to be an incentive for each state to keep its taxes low or purchases would naturally go out of state. Free market values have slipped a lot.

    There is no legal basis for your local towns sales tax to apply to anything one purchases outside of it. None. This includes state taxes also. If one wants to purchase a camera in a duty free store inside an airport so what? Its a viable business strategy. Sales tax is a locally derived compensation for the local infrastructure.

    If one wants to purchase cigarettes from another state that does not have ruinous vice taxes so high it encourages a black market then kudos to them for still obeying the law and purchasing from a legitimate store.

    Stupid taxation policies only help to tear apart society along various social boundaries.

    Reactionary.

    �law abiding citizen� is an becoming an oxymoron. Since everyday eating, breathing and gossiping at the back fence is quickly becoming a felony offense there is no basis in 'fair and just' application of the law. Current law seems definitely un-abiding.

    ZIP codes will not be enough to exactly identify a tax as many straddle several town and county boundaries depending on population.

    link to this | view in chronology ]

  • icon
    BentFranklin (profile), 20 Apr 2013 @ 7:12am

    It's obvious that a clearinghouse for sales taxes would solve all these problems. Jurisdictions register their sales taxes with the clearinghouse. It provides your store with a table of sales tax by zip code, and you send one payment along with a computer file that shows the distribution by zip code. Pretty simple if you ask me.

    link to this | view in chronology ]

  • icon
    Gene Cavanaugh (profile), 20 Apr 2013 @ 10:08am

    Internet taxation

    Okay, I was on your side until you took the cheap shot: "other than the fact states who misused existing revenue are now hungry for more".
    Making unsupported (and unsupportable - the current Reagan-era madness about "needing better bridges, better roads, safer foods and water, but not paying for them" is stupid on its face (as the elder Bush pointed out, initially) statements like that kills your whole argument. I am reversing my first decision - I want internet taxes!

    link to this | view in chronology ]

    • icon
      John Fenderson (profile), 20 Apr 2013 @ 10:31am

      Re: Internet taxation

      So you base your opinions on emotions rather than facts?

      link to this | view in chronology ]

    • identicon
      Anonymous Coward, 20 Apr 2013 @ 1:31pm

      Re: Internet taxation

      "...the current Reagan-era madness about "needing better bridges, better roads, safer foods and water, but not paying for them" is stupid on its face..."

      Please explain that to the Republicans who refuse to raise taxes on the undertaxed corporations to pay for the infrastructure that bolsters their wealth.

      link to this | view in chronology ]

    • icon
      nasch (profile), 21 Apr 2013 @ 6:01pm

      Re: Internet taxation

      You're saying it's unsupportable that some states have misused their revenue, or that those are the states asking for this tax?

      link to this | view in chronology ]

  • identicon
    Anonymous, 20 Apr 2013 @ 6:27pm

    It sounds like senator Harry Reid can suck it.

    link to this | view in chronology ]

  • identicon
    Anonymous Coward, 29 Apr 2013 @ 7:33am

    um, so the bill says that e-tailers have to charge you sales tax on the internet. NEWSFLASH! this is NOT NEW! e-tailers already DO this for other countries. If you are in the UK, amazon charges you VAT. It would take a vanishingly small amount of effort to collect sales tax online, while allowing states revenue they are currently cheated of. (yes, the recipient is supposed to pay. How many actually do?)

    basically, currently e-tailers are at an unfair competitive advantage (I'm not talking about the advantage of not needing to pay for a physical store, that's a legitimate competitive advanatge, I'm talking things like taxes)

    link to this | view in chronology ]


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