Until/unless the B&M merchants are also required to charge sales tax based on the buyer's residence, this is nothing more than an unfair burden placed on Internet retailers and completely goes against the spirit (if not the law) of sales tax, which is based on point of sale.
The government is shifting the burden of tax collection onto out-of-state merchants. If the states decide to pay those merchants for the extra time and effort that they will have to spend to perform tax collection, that would be a different story.
I would much rather see a reporting solution that could use the exact same infrastructure that would have to be setup for the actual collection of taxes and keep the actual burden of collecting taxes on the states, where it belongs.
If you look at it CCH is one 2 providers listed. CCH is all about money. Customer service is poor and fees just climb. A few years back there were many tax software packages but CCH was one of the ones that came in and bought up a bunch of the competition. Fees increase all the time and you are bombarded with emails trying to sell other features. Yet if you try to contact customers service you get an automated response saying to look up on the web or you can get an email response within 48 hours. Problem is the response is more like 10 days. The whole customer service is staffed by temps who are nice but not overly knowledgeable. Don't buy this smoke screen. If the states need money so bad all they need to do is eliminate Medicaid to people who put money into a trust so they don't have to pay nursing home costs. That right there is the single larger expense for Medicaid.
This is where it kinda started:
This is really going to be interesting considering some items are 'tax-free' depending on the state.
Currently there is no state sales tax on clothing in Minnesota. But there IS a sales tax on other items commonly sold over the Internet.
This means that not only will the taxes vary by state, but by 'use'. It will really get confusing after that...
Is a Halloween costume 'clothing'? If so, can your accessories FOR that costume be considered clothing? If so, can I claim I'm exempt from paying sales tax on my new digital camera because I'm dressing up as a paparazzi?
Will bed sheets be exempt if one attends a toga party?
Now imagine the angry phone calls the online retailer will be getting:
"You charged me tax on my socks! Socks and clothing are tax-free in Minnesota! I want a refund NOW!"
|@Life inAsia: The government is shifting the burden of tax collection onto out-of-state merchants. |
Yes. This will be a burden and there won't be any compensation.
|@Awarn: If the states need money so bad... |
See, that is the thing. It isn't as though the money they will receive is going to waste right now, it is (most likely) being spent on everyday things in the local economy.
That $100.00 tent you bought (online) will now be $107.00. That extra 7 dollars will go to the state rather than you using it to buy charcoal at the local Walmart. I just don't understand why some would think the state would have a better use for that $7 than you would?
Of course I understand that the law states that a person is supposed to report (and pay) that tax, but I am against those laws and would vote against them if they ever came up for a vote.
What I am against, here, is adding more laws and putting a burden (no matter how small) upon another for failing to enforce the existing law.
Here is my analogy of this proposed law:
|My next-door neighbor has a young daughter who sneaks out at night to go to parties, and then sneaks back in before anyone wakes up. Her dad hates it, and mommy isn't too thrilled about it either. She sneaks out by opening her window and going out through their backyard and across into MY backyard and out through my open gate. |
Now, rather than daddy and mommy finding a way to deal with their own daughter, they go to the city council and get them to pass a law that says that I must keep my gate locked at all times (under penalty of a large fine). This requires me to buy a lock, and causes me to have to lock/unlock my gate every time I need to go out/come in.
Daughter is now mad at ME for locking the gate.
Another thing: If the amount of uncollected $$$ is so large, then why can't the state enforce it's own law? Wouldn't local enforcement pay for itself?
Instead, it appears this whole bill is being fueled by imaginary lost sales by the local TV dealer. And the local wedding dress retailer.
It is the small B&M retailer who is screaming for a 'level playing field', so it isn't about taxes at all, it is about the B&M not being able to compete.
If this bill passes, I wonder how long before the same B&M retailers demand new federal laws to further level the playing field?
Will they demand Internet retailers charge a higher price for their goods?
|"You charged me tax on my socks! Socks and clothing are tax-free in Minnesota! I want a refund NOW!" |
You joke, but you know this is going to happen. I get people hassling me about stuff like lowering values on international shipments all the time, and I'm not even required to do that. Imagine the BS customers are going to come up with over this nonsense.
|imaginary lost sales by the local TV dealer. And the local wedding dress retailer. |
The losses are not imaginary, not in the sector I monitor most closely.
A concern of mine is even the 1 million dollar baseline. What will stop someone in any location from looking at your company and thinking you earn good money. So they ask for some information, maybe audit you. You could spend days, even more, proving that you make $25,000 or even $990,000. Where does this magic number appear that would stop all the possible hassle in showing it various authorities. Can I just put on my website that I am a 99%er and no one will bug me? Doubtful. Or should we take a beautiful looks-like-a-million-dollar-website but only makes $50,000 and turn it into a uglier less professional website. (Which in turn would probably make more money if it used Adsense or such.)
And how many days does it take to become a scam system where anyone can fake like they are an authority and ask for information they shouldn't be able to get. We'll be sending personal company information out every day to someone in the country asking for it.
It's a mess. There needs to be one clearing house system for dealing with this instead of a business trying to deal with all states or 9600 locales.
If not, it may be time to retire early.
(And people aren't going to start buying from Canada or other countries with the ridiculously higher shipping fees.)
|The government is shifting the burden of tax collection onto out-of-state merchants. If the states decide to pay those merchants for the extra time and effort that they will have to spend to perform tax collection, that would be a different story. |
The federal bill allows the states to cooperate in the SSUTA, the Fed govt itself isn't collecting this tax, which is why the bill is only 11 pages long. The states want this tax, it is owed to them, they want the Fed govt to allow them to set up a nationwide system to let it be easy for them (and for easy for stores). States can participate, the Feds aren't making it mandatory for the states to do so.
|(And people aren't going to start buying from Canada or other countries with the ridiculously higher shipping fees.) |
We are a Canadian company, and our shipping costs are competitive. If you do volume, you can get good rates, for shipping to the USA.
Another option is to setup in a Canadian Border city, consolidate the shipment for customs purposes,and truck it a few miles to the US FedEx Depot.
Depending on the type of item and the math, I do think it could be advantageous for Canadian businesses in some situations. Another reason to think long and hard about this. Nothing against the Canadians.
Bottom line, why are we once again dumping more responsibility at the feet of businesses? I'm in CA, and this place is already one of the most un-business friendly places in the country. And the gov here has proven time and time again that, no matter how much money they get, it's never enough. I doubt internet sales tax will change anything.
It is a very simple matter to incorporate offshore. Our software products can be sold and delivered from anywhere in the world. We're seriously looking into this.
It's not the voo-doo you probably think it is. I'd still pay all of my U.S. income taxes as an employee, but by domiciling the corporation that owns our web properties in a foreign country we can side-step this ridiculous sales tax collection.
I'd much rather do this than have to "partner" with a platform like Amazon who will make all of our sales and collect tax, while taking a huge cut of our business.
Nice one Voltage I hope ya can work it out and move away from the quicksand those that chose to remain are going to find themselves in.
He talks about software. But any tangible being shipped from USA cannot run away.
Pretty good run down of the folks on differing sides of this issue:
I find their emphasis on "free software" amusing.
Will this "free software" work with my checkout flow?
On my Shopping Cart page, will it display taxable shipping for those states that tax shipping, and vice versa?
If I integrate with PayPal Express or Google Checkout, will their "free software" record the tax correctly in my accounting backend?
If certain items in the shopping cart have different tax rates than others, will the "free software" display all of that correctly on my website?
With all the emphasis on "getting the correct percentage", I view that as the easy part. The costly part is all of the website and backend work that needs to happen.
I think that the exemption for companies with gross sales of $1 million or less is either too small or it's too large.
I think it's too small (or based on a bad metric) because a business doesn't have to be very large to hit that amount of sales. And they may be making little or no profit on those sales.
On the other hand, if this bill actually places little burden on businesses (as the sponsors suggest), then I'd have ask why the exemption is so high.
My wife and I run a small direct-mail business. We have far less than $1 million a year in gross sales, so we won't be affected by this bill when it passes (though, I'd expect the exemption to be lowered over time).
A small percentage of our sales are in-state and what we have to do to handle collecting and reporting sales tax seems silly in comparison to the small amount that we collect for the state. The idea of having to do the same thing for sales to other states is scary.
I'm not confident that the bill would really make the states simplify things in a way that wouldn't make it very expensive to manage (and wouldn't offer unfair advantages to in-state competitors.)
Based on what we have to do now for in-state sales, the software described in the bill is going to have to be able to determine the proper tax rate for each product that you sell. It's going to have to determine the customer's location and the tax rate for that location (it can vary within a state). It's going to have to know if the customer is exempt from paying sales taxes and if the exemption applies to the products being purchased.
Most of the products we sell don't have a standard identifier, such as a UPC. If we were subject to this bill, we'd probably be required to categorize or id every product so that the software could do its magic. That would be expensive and time-consuming even with our small inventory.
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