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Sales tax pact between several states and e-com firms

The companies will collect sales tax for "past amnesty" status



5:49 pm on Feb 6, 2003 (gmt 0)

10+ Year Member

Here's the article on this:




8:25 pm on Feb 6, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

If I am not mistaken, this seems to only affect business that have "brick and mortar" operations and then do e-commerce as well.

So for those that are purely e-commerce, they should not be affected in not charging sales tax to other states where the origin point of shipping doesn't reside. At least I hope I am right about that.

It's gonna really be bad if for example paypal starts enforcing sales tax to all the states at some point, hard to explain to buyers why they see that price jump on checkout.

hmmm, also see: [internetnews.com...]


12:44 am on Feb 7, 2003 (gmt 0)

10+ Year Member

"brick and mortar" establishments already have to pay sales tax (within their state, the states the operate in), this seems to be going in the direction of forcing mail order and internet sites that are only located in one state to collect sales taxes for the other agreeable states. Based on where the customer is located, both state and city sales taxes. So you will need to know what additional taxes are charged in say San Diego county and what items are subject to the tax.

Although it looks like walmart and some other national retailers like the idea.


2:57 am on Feb 7, 2003 (gmt 0)

10+ Year Member

Of course Walmart and other big retailers like this idea.

First, a business wasnt previously allowed to charge tax in a state it didnt have taxation jurisdiction in (one they have an office in and are registered with that state). Now these states (currently) in agreement are acting like, following the law previously and only taxing in states where you had the right to do so was a criminal act - "but that's ok - start now and we will forgive you".

As for Walmart and gang... how many of you collect taxes? This is an easy one. Let's say you pay quarterly (like in my state), and you do $10,000 in business a month. That means you are sitting on (at lets say 5%) somwhere around $500-$1,500 in your account earning interest or raising your credit for any bank checks. Now that might not be much to earn anything off of, or to float for other purposes... but let's say you are Walmart with 58 billion in sales in a quarter ( walmart sales []) - then that tax you are sitting on amounts to as much as 2.9 BILLION dollars.

Still wonder why "reallybig" business is going to keep pushing for this?

- Rob

[edited by: NFFC at 11:58 am (utc) on Feb. 8, 2003]
[edit reason] Fixed side scroll [/edit]


5:00 am on Feb 8, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

Looks like Arizona is refusing to "come on board", which is either good news to slow this down, or bad news to make it really confusing for online stores to track and collect different amounts from different states (or none at all)


Arizona has refused to join a deal involving 37 other states and the District of Columbia that this week allowed some major retailers to begin charging online sales taxes.

What's with the word "allowed"? Like they ASKED to add this charge to their customers?

It's interesting to note that even in 2003, Alaska, Delaware, Montana, New Hampshire, and Oregon do not collect sales tax. In Florida we had a "no sales tax week" for a few years, for the week before back-to-school, and consumers loved it (regardless of the fact it barely added up to anything for one week). They got rid of it last year as the state said it cost them too much revenue.


7:31 am on Feb 8, 2003 (gmt 0)

10+ Year Member

As for the "allowed" part, it could be directed at companies like WalMart - or just be poor wording to indicate the fact that currently companies are not allowed to collect sales tax except in states they operate in where they also have a valid Resale Certificate or Tax Certificate.

My question is, can they require it? My guess is my state would have to pass a law (not make some general agreement with a bunch of other states) that requires me to collect tax for other states - and then provide me the method of disbursing that money - or they'd have to take care of that part for me.

- Rob


12:30 pm on Feb 8, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

What about city sales taxes in those allowed states? Why leave them out?


5:08 pm on Feb 8, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

What about city sales taxes in those allowed states? Why leave them out?

exactly... this all can get insanely complex and comes down to the limited ability
and power of each government to track and sue for such revenues...

Companies like PayPal could make it easier for sellers to track all the variables,
but merchants should always have the option of doing it themselves...

there has even been talk from time to time of a national (federal) sales tax
but that would be going too far in consumer's minds, even though it would be easiler to regulate and collect for merchants...


5:29 pm on Feb 8, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

I'll just move the business out of the US. As we all know it will take about three days to move a company to locations where the taxmen cannot get to the business. I will also have the web site run by a company based off-shore with no presence in the US, and them paying me a "salary". I have to pay income tax anyway.

Then where will they collect the sales taxes?


6:37 pm on Feb 8, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

Note that you'd have to PHYSICALLY move the business out of the USA and not have any physical locations for resale anywhere in the USA.

This site seems to have the whole "game plan" for the powers that are behind all this.


It's definitely all about money. The 45 states currently collecting sales tax estimate
they will lose more than $45 billion in sales tax revenue by 2006 without some kind of enforcement.


10:45 pm on Feb 8, 2003 (gmt 0)

10+ Year Member

>> I'll just move the business out of the US

Jonathan livingston seagull, tried that. They (IRS) took everything.

He went to Mexico ... they (irs) grapped income from US sales. He needed friends to make it.

<edited>you were born here, you pay taxes (period)</edited>


1:58 am on Feb 9, 2003 (gmt 0)

10+ Year Member

Jonathan livingston seagull, tried that. They (IRS) took everything.


I thought it was a book.


3:11 am on Feb 9, 2003 (gmt 0)

10+ Year Member

Several books, the IRS took the copyright royalties even though he did not live (for several years) in the US, he was a citizen of the US and US citizens can not escape taxes.


3:12 am on Feb 9, 2003 (gmt 0)

10+ Year Member

I cannot see the states agreeing on a tax in my lifetime. First main issue will be mail order. Forget online sales. Mail order is much larger. Will they now pay sales tax in all states? I am sure what ever is eventually passed will get hammered at the court level. The only one that can charge a tax will be the feds, unless of course you have some connection in other states. Why should Wal-Mart and B&N Bookseller get out of online taxes, they have operations in all states and should pay the state taxes just like any other brick & mortar. Actually, I think they let Wal-Mart off easy, I think they owe the back taxes as do any stores that have in-state operations, representation or employee’s. Simply incorporating the online sales differently should be considered nothing more then tax avoidance by these retail behemoths.
As for the States whining about lost revenue from the Internet, they must be smoking dope. Services are not taxable, out of the country sales are not taxable, taxes are already paid within ones own state and good luck collecting from the zillions on the E-bay flee market. In the end the states will probably pay $1.20 in bureaucratic fees for every $1 they collect.


4:06 am on Feb 9, 2003 (gmt 0)

10+ Year Member

just fyi dope may be subject to tax



8:53 pm on Feb 9, 2003 (gmt 0)

Some of the nation's largest retailers this week started voluntarily collecting taxes on all of their online sales.

I don't understand how a retailer can just 'decide' to collect taxes on sales in states where they do not have a brick and mortor presence. I didn't think it was the retailer's decision to make, and it seems those that are doing this are going against the local laws.

Wasmith: the KS stamp tax has been around forever.


9:35 pm on Feb 9, 2003 (gmt 0)

10+ Year Member

Check out this one line in the article:
For example, Wal-Mart has 1,500 stores scattered across all 50 states, but WalMart.com, a separate subsidiary, has a physical presence in only nine states.

I think that explains the whole thing, they just got caught only collecting sales tax in nine states.


2:59 am on Feb 10, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

I think some of you might have miss-understood my suggestions.

I would NOT try to evade income taxes. Income tax on my income, ie, checks that I get from a foreign company would be properly taxed by the federal government, and the state I live in for income taxes.

Sales taxes on the other hand is a different issue. Sales tax is collected aat each and every time you "sell" something. Since nothing is sold in my home state - or any of the 47 pact states, there is no sales tax collected. It's like buying liquor in Canada and bringing it over the border. Does your local state have the right to collect tax on that? Clearly no.

Jonathan livingston seagull tried to evade income tax.

Of course, there is a hitch to all this... tarrifs. Of course, if you are lucky then you can set up shop in a NAFTA country and your state cannot touch you. You are an employee of a foreing company which has no physical presence in the US.

For those in the know... diamonds come to my mind...


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