Amazon VP asks Congress to Set Online Tax Policy

[ergophobe]

Amazon’s Misener said technology has advanced enough so that all but the smallest sellers can manage sales tax collections.

“With today’s computing and communications technology, widespread collection no longer would be an unconstitutional burden on interstate commerce, and Congress feasibly can authorize the states to require all but the very smallest volume sellers to collect,” Misener said.

Business Week [businessweek.com]

[enigma1]

Is there also an amazon tax collection software service ready to launch?

[Marshall]

Misner is correct that collecting it should not be difficult. However, I see a huge expense involving distribution, especially if you sell in all 50 states, unless some electronic solution is implemented.

The other issue is that states with varying rates should be forced to pick one. If they can set rates for separate counties, or parishes depending where you are, they could consider the internet (internet sales) as it's own county, so to speak, for the purpose of collecting and setting tax rates.

I have to disagree though that internet companies have an advantage by not paying taxes. They do, after all, have to pay shipping. Their advantage lies in the fact they don't need a fancy brick-and-mortar retail location (stand alone or in a mall) and thus pay less in physical costs.

[Marshall]

And here's a prediction. If an Internet sales tax should go through, I bet Amazon will absorb it into the cost of the product and advertise that they will pay your sales tax. I've seen businesses do this as a marketing gimmick (which seems to work by the way) so what's to keep Amazon from doing it. All the Feds or States would care about is getting their money.

Marshall

[dpd1]

I think there may technically be laws against advertising that, based on the state. I looked into that because I was just paying the taxes for the state customers. I wasn't able to get the same answer twice. So like most tax issues, you get a different answer depending on who you talk to.

[Marshall]

I think there may technically be laws against advertising that, based on the state.

You may be right, but I have seen companies do this in ads, usually with the line "and we'll pay your sales tax." Also, friends of mine own a restaurant and the sales tax is included in the price. I'm in Pennsylvania if it matters. Still, for the states, the bottom line is that they get their revenue.

I'm just wondering if companies would have to get 51 tax identification numbers (including D.C.) thus, effectively, having to file 200 more quarterly sales tax returns annually, assuming they already file four now for whatever state they are in. That is a lot of paper work. On the really negative side, that could subject a company to 51 separate audits if the laws are not crafted well.

Marshall

[votrechien]

I'm just wondering if companies would have to get 51 tax identification numbers (including D.C.) thus, effectively, having to file 200 more quarterly sales tax returns annually, assuming they already file four now for whatever state they are in. That is a lot of paper work. On the really negative side, that could subject a company to 51 separate audits if the laws are not crafted well.

That's precisely what me, and I'm sure most smaller businesses, are worried about. For all the talk Washington is doing about simplifying tax codes (memories of Perry's palm sized tax return come to mind) this could possibly be one of the single biggest bureaucratic nightmares ever for small businesses.

On the really negative side, that could subject a company to 51 separate audits if the laws are not crafted well.

Exactly. Assuming 1% of businesses get randomly audited (a generous number albeit), that would mean an audit every other year. What a nightmare that would absolutely inhibit entrepreneurship.

Congress can do this right and create a situation that is a minimal burden to consumer and businesses. They can also do this completely wrong and make it a nightmare for everyone.

[dpd1]

You may be right, but I have seen companies do this in ads, usually with the line "and we'll pay your sales tax." Also, friends of mine own a restaurant and the sales tax is included in the price. I'm in Pennsylvania if it matters. Still, for the states, the bottom line is that they get their revenue.

You would think, but you know nothing is ever that easy. Orchard does it out here in CA on some weekends. But I've heard it's illegal to advertise paying customers taxes in CA. So I don't know.

[Marshall]

Congress can do this right and create a situation that is a minimal burden to consumer and businesses.

Since when has Congress done right by "small" businesses, or the consumer for that matter. Without trying or wanting to get into a political debate, Congress will cater to whomever "donates" more money, something which has gotten way out of hand in the past several years.

Of course, do they realize what a bureaucratic nightmare it will be for States if suddenly they have tens of thousands of businesses added to their books and having to process all that paperwork every quarter.

And lastly, what do they do about companies located outside the U.S. Just one more aspect to consider.

Marshall