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Senate Passes Internet Sales Tax

Mike

Well-known member
The US Senate on Monday passed a bill aimed at ending tax-free shopping on the internet but the move looks set to face fierce opposition before it becomes law.

The Marketplace Fairness Act, which has cross-party supporter and the backing of powerful retailers, would give states the power to require retailers with sales over $1m to collect state and local sales taxes for online purchases.

The bill has the support of president Barack Obama the majority of senators including Republican John McCain but Marco Rubio, seen a potential Republican presidential hopeful, and Rand Paul both voted against the bill.

The bill passed the Senate by 70 votes to 24 but faces a second test in the House of Representatives where internet retailers and conservatives are already lobbying against the tax. House leaders have yet to schedule hearings or votes on their version of the measure.

The legislation would overturn a 1992 supreme court ruling that said a state could not force a retailer to collect sales tax unless the retailer had a physical presence in the state.

The bill has aligned unlikely parties. Amazon, the largest online retailer, has joined its bricks-and-mortar rivals including Walmart to support the act. Amazon was once a staunch critic of the tax but as it has built more distribution centers it has become liable for sales tax in more states and is now a backer.

The largest online opponent is eBay, which has campaigned against the bill and organised a mass protest by its sellers. Other opponents include numerous conservative and antitax groups including Americans for Tax Reform, FreedomWorks and Heritage Action.

Ahead of the vote the National Retail Federation called for Congress to "level the playing field" and tax online retailers. "The Marketplace Fairness Act is a commonsense piece of legislation necessary to modernize and streamline our federal and state understanding of sales tax laws so that they can keep current with real world change in the marketplace," said NRF senior vice president David French.

"As the retail industry evolves and digital commerce becomes a more prominent portion of total retail sales, it is critical that the tax laws not discriminate between businesses based on how their products are distributed," French said.

"This collection disparity has tilted the competitive landscape against local stores, creating a crisis for brick-and-mortar retailers around the country and in your state," French said.
 

hypocritexposer

Well-known member
They're bound and determined to cause as much unemployment as they can, eh?

Look for these online retailers to cut full time staff, back to part-time hours, or lay them off, because of this and obamacare
 

lonewolvie

Well-known member
Sales taxes are the most complicated of the tax codes. First sales taxes on items vary from state to state along with multiple rates and to further complicate this issue are the counties and cities that impose sales taxes. This is the ultimate tax nightmare for an interstate business. Walmart has an advantage here, with physical stores across the nation, walmart can draw on thousands of stores in thousands of tax jurisdictions to set the appropriate rate. This is a very bad idea.
 

Whitewing

Well-known member
lonewolvie said:
Sales taxes are the most complicated of the tax codes. First sales taxes on items vary from state to state along with multiple rates and to further complicate this issue are the counties and cities that impose sales taxes. This is the ultimate tax nightmare for an interstate business. Walmart has an advantage here, with physical stores across the nation, walmart can draw on thousands of stores in thousands of tax jurisdictions to set the appropriate rate. This is a very bad idea.

Excellent observations LW, and reminds me of a tax collector from the State of Mississippi who showed up at my business door (in Louisiana) in the mid 1990's with a tax bill for work we'd done on wells located in his state. I guess he thought I'd just write him a check and send him on his way. Wrong thought.

I asked for a copy of the list of invoices, asked him some questions about how the taxes were calculated and then told him he could return the following month for a meeting to cover the issue and receive his check. His tax bill was something something on the order of $10,000. I consulted my company's CPA and then prepared for the meeting.

He showed up as promised and was in for a surprise. At the meeting I pointed out that our invoices covered such items as mileage charges, technician drive time and charges to collect the samples, meals, hotels where applicable, and the actual lab work performed on the samples.

Meals and hotels were a wash as these were billed to the client as charged to us. Since the meals and hotels stays were in Mississippi, the state had already collected taxes on those items.

Mileage charges and drive times I recalculated to reflect only those miles and hours that applied to the State of Mississippi. Afterall, we had to drive half-way across the State of Louisiana to arrive at the border. Drive time and mileage in the State of Louisiana applied to Louisiana, not Mississippi.

Finally, all of the lab work (the bulk of each invoice) was done in the State of Louisiana, not in the State of Mississippi so we didn't owe them squat for that either.

Some of the work done was also in offshore waters of the State of Mississippi and some beyond the 12 mile limit which meant these were actually federal waters, not state waters....ie, no taxes due the state.

Anyway, in the end I demonstrated his portion of the taxes was actually something on the order of $700, not $10,000 and that he could accept the $700 payment or we could go to arbitration. He left with the check for $700 and I never heard from the State of Mississippi again. :D
 

Big Muddy rancher

Well-known member
If I heard them right on the radio yesterday on Voices of Montana I think there is 9600 differing tax codes covering the US. So to sell something over the Internet out of Montana you would have to know the proper tax to collect for each state and municipal district.
 

Whitewing

Well-known member
Big Muddy rancher said:
If I heard them right on the radio yesterday on Voices of Montana I think there is 9600 differing tax codes covering the US. So to sell something over the Internet out of Montana you would have to know the proper tax to collect for each state and municipal district.

Maybe the solution will be to have a new federal department with its own czar? That's solved most other complicated problems.
 

Whitewing

Well-known member
Mike said:
Does this Bill mean a business could get audited by all 50 States?

I suspect so. But then, small business owners aren't very busy anyway so what's the big deal about a visit by tax collectors from 57 different states?
 

Mike

Well-known member
Whitewing said:
Mike said:
Does this Bill mean a business could get audited by all 50 States?

I suspect so. But then, small business owners aren't very busy anyway so what's the big deal about a visit by tax collectors from 57 different states?

What if the "Internet" is not involved? In other words, just a telephone transaction? Does the tax still apply?
 

Whitewing

Well-known member
Mike said:
Whitewing said:
Mike said:
Does this Bill mean a business could get audited by all 50 States?

I suspect so. But then, small business owners aren't very busy anyway so what's the big deal about a visit by tax collectors from 57 different states?

What if the "Internet" is not involved? In other words, just a telephone transaction? Does the tax still apply?

If not, that would certainly be a snazzy way around the tax, wouldn't it? See something on my website you'd like to buy? Just give me a call. :D
 

littlejoe

Well-known member
Big Muddy rancher said:
If I heard them right on the radio yesterday on Voices of Montana I think there is 9600 differing tax codes covering the US. So to sell something over the Internet out of Montana you would have to know the proper tax to collect for each state and municipal district.

Montana don't have sales tax. And i'm thinking alaska, oregon, n.h. and possibly delaware? don't either.

So, benefits them -0- to collect for anybody else. I'd like to see these states institute a 'service charge'----with a dandy 'minimum' per transaction that could come right off the top of total monies collected for other states--and make it big enuf that it'd discourage this b.s.
 

lonewolvie

Well-known member
Here's a question, did the people ask for this law or did state elected officials and government bureaucrats demand this. I don't remember anyone begging for more taxes? Who do our federal elected officials listen to, the voters or the political class. Just more government greed at its worst. Another thing, mail orders are NOT bankrupting states, it's wasteful spending that is, I guess they need more of our money to give to welfare.
 

Whitewing

Well-known member
As the saying goes, if you want more of something, subsidize it, if you less of something, tax it.

I wonder if the pols pushing this idea have thought through how this might impact the wonderfully profitable US Postal Service?
 
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