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90 comments:
We are living in the golden age of bustlines.
And that's a beautiful thing.
Meade:
A bit OT but should we push a boycott of Amazon [everywhere not just at Althouse] since they are behind the Senate bill requiring state and local taxes be paid by every internet seller?
"Need to pushy up those tata's as they droop w/ age. Fuckn' gravity!"
The breasts and gravity myth has been disproven.
You shouldn't wear a bra for the purpose of preventing sagging. Not wearing a bra keeps the ligaments from losing their normal springiness. It's all about ligaments.
Why should on-line sales be a way to avoid sales taxes?
I don't like sales taxes, but what's the argument for the local stores having to collect and the on-line places being free of the tax-collector role?
AJ: I don't like boycotts.
You have a point Ann. But the compliance costs (and audit risk) for any merchant that sells outside of its home state via the net would be enormous. There's a reason why Amazon is OK with this. It will snuff out all the little guyes that may want to sell on-line.
Onerous regulatory burden Althouse. 57 states and hundreds maybe thousands of local taxing authorities. The bill, at worst, shoudl have just charged the state sales tax rate in the seller's state and the tax should go to the seller's state to KEEP IT SIMPLE.
In contrast, eBay is opposed.
"Onerous regulatory burden Althouse. 57 states and hundreds maybe thousands of local taxing authorities. The bill, at worst, shoudl have just charged the state sales tax rate in the seller's state and the tax should go to the seller's state to KEEP IT SIMPLE."
There are over 9,000 taxing jurisdictions, which does make it sound impossible, but there are already services (competing with each other) that you can sign up for that will do all the calculation and other burdensome things that you are imagining.
That is, you are buying into an argument that would have been significant at some point in the past, but can only be used now out of ignorance or deliberate manipulation.
Don't fall for it.
Got another argument?
"There are a number of companies that will manage and streamline the process, like Avalara or TaxCloud. And you have to believe that if the bill gets passed, there will be a cottage industry of companies that will offer services to collect the tax, including eBay, which has made a reputation trying to streamline the selling process for merchants."
http://dealbook.nytimes.com/2013/04/22/in-tax-fight-amazon-hands-baton-to-ebay/
Merchants. Not that there's anything wrong with that!
"In contrast, eBay is opposed."
Amazon was opposed originally too, and its shift is based on its own commercial interest (mainly because it's got all these warehouses in various states now, so it can deliver quickly, and once it has that, it will have to comply with the tax collection requirements that are already there).
Any given business -- eBay or Amazon or whatever -- will follow its own interests here, but my question is, looking at it from the position of what powers of tax collection states should have, why should some sellers have to collect sales tax and others not?
I don't like income taxes either. But I pay mine, and I feel ripped off by the people who evade taxes.
Sales taxes are different because of interstate commerce and constitutional limitation the Supreme Court came up with a long time ago, pre-internet, that said the states couldn't tax these out-of-state mail order places that had no connection with the state other than that they solicited customers and sent products.
The technology is so different now. It's hard to justify having the sellers that have to collect sales tax and the ones that don't.
(The genuinely small sellers on line are not covered by the proposed law. I think you have to sell $1 million a year... or maybe it's $10 million.)
Ann Althouse said...
Why should on-line sales be a way to avoid sales taxes? ... , but what's the argument for the local stores having to collect and the on-line places being free of the tax-collector role?
That issue is already settled by the rule where if a seller has a bricks and mortar store in a state they charge tax in that state. If not bricks and mortar store, what state resources is the seller utilizing beyond transportation, which is already taxed separately and undeclared on your bill in any instance.
I believe this effort now to make 9,600 tax collecting agencies all eligible is nothing but another way to raise taxes...AND a predecessor to a *national sales tax.*
I recently bought a mint condition 25 year old Breitling Watch that sells new for $3500 today and used for about $2100...but I bought it via eBay for $988 and paid no tax to the seller. I will declare and pay my sales & use tax on it next April as the law requires me to do.
Oh, wait...I get it .... the idea really isn't requiring taxes be paid (they already are)it is all about demanding a 3rd party take it off the top and service your agency by remitting it directly to all 9600 of all y'all.
OMG...and I thought it was about new tax liability when it is only about enforced collection because taxpayers are unreliable.
It's my understanding that Amazon resisted until it became inevitable, then changed their tack and shouldered into it. I hear they're going to be opening more local distribution / fulfillment centers to compete with local businesses in metro areas w / same day shipping. Sort of a "be careful what you wish for" kind of tale.
Maybe I'm remembering wrong. Will have to Google up when I've got some time. Working, presently.
Oh, and FlashBang! for your underwire bra :)
Althouse said ...
The technology is so different now.
Yes, but the fundamental transaction is not is it?
Communication improvements justify more tax collections, by confiscation, of taxes already owed, due, and payable by citizens of various states.
I suspect that State Sales & Use Tax Law isn't something you deal with very much. Just a guess, correct me if I am wrong. The state has the means to audit you and determine if you are evading taxes, but they'd prefer the federal government just mandate confiscation up front and let you, the taxpayer, argue to merits of an exemption if you can afford to do so.
I've been through a half dozen Sales & Use Tax audits. Trust me, the problem is NOT capability to collect, it's merely a preference for up front confiscation.
"I will declare and pay my sales & use tax on it next April as the law requires me to do."
According to the NYT at the link in my earlier posts no one pays the tax. It's not being collected. Billions in taxes that are owed are not collected because people don't volunteer it.
There is now a way to collect it easily, so why not do it?
"That issue is already settled by the rule where if a seller has a bricks and mortar store in a state they charge tax in that state. If not bricks and mortar store, what state resources is the seller utilizing beyond transportation, which is already taxed separately and undeclared on your bill in any instance."
The issue is "settled" in the sense that there's a constitutional law interpretation of the dormant commerce clause that leaves things in that condition until Congress acts. Part of what is settled is that Congress has the power to require the tax to be collected by the out-of-state sellers.
Is there some grand principle of taxation that said you should be taxed in proportion to how much you use the services that are paid for with tax money? Obviously not.
It's just sales tax, and the buyers are in the state. Why shouldn't the tax be uniform regardless of whether the seller has a warehouse in the state or not?
I don't hear you stating some persuasive principle of justice here. I do hear the idea that it's nice to buy and not pay sales tax, but the tax is OWED by the buyer. It's overwhelmingly evaded.
Now, why are you FOR that?
LOL! I made a bet with my husband that this would be a purchase of the day!
FWIW, these bras are terrific! Perfect fit, excellent support and last forever.
Lets see..I order an item from a company based in WA, they ship it from a warehouse in TN to my brother in OH and I pay the state of NC sales tax?
"I've been through a half dozen Sales & Use Tax audits. Trust me, the problem is NOT capability to collect, it's merely a preference for up front confiscation."
So you think pursuing the buyers is a good option? It's not happening, and the number of violators is, at this point, so high, that the states can't mount this kind of enforcement. It's lost revenue. I don't know why you think up front collection is so outrageous unless you like the evasion at the buyer level. You can't seriously be wishing for millions of people to be audited for this. The ones who pay are people like me who are punctilious about law (or afraid of the authorities).
The only reason to be opposed to this is if you think collection is unreasonably burdensome because there are so many taxing jurisdictions, but this is an objection that has been conquered by technology.
I really can't understand what serious argument there is.
Taxes are bad, but if we are to have them, make them fair and actually enforce them effectively!
From the NYT article: "A note to readers, and to self: If you live in a state with a sales tax, you are supposed to submit uncollected taxes on Internet purchases at the end of the year, even if the merchant doesn’t seek it at the time of the sale. Of course, nobody does that."
Nobody! I feel like a chump! I am ripped off by my own rule-following. This breeds disrespect for the law.
SC has a use tax on internet purchases. A person is supposed to self report and pay. It is equal to the state sales tax. My wife used to be a state official, so she always reported and paid the tax to avoid conflict of interest issues. She still does. She is one of the most honest people I know.
Ann Althouse said...
"The breasts and gravity myth has been disproven.
You shouldn't wear a bra for the purpose of preventing sagging. Not wearing a bra keeps the ligaments from losing their normal springiness. It's all about ligaments."
I remember the study that you linked, but I would hardly say it's been disproven. There were many examples cited in that thread that contradicted that study. I ended up not convinced.
Every breast a loved and wanted breast.
I think somebody in the Clinton administration said that.
why should I collect sales tax for governments who provide no services or representation to me? I'm not in their jurisdiction and it's really none of their business.
Ann Althouse said...
what's the argument for the local stores having to collect and the on-line places being free of the tax-collector role?
Without a nexus the state lacks jurisdiction/authority to compel sellers to be their surrogate tax collectors.
Althouse said ...
According to the NYT at the link in my earlier posts no one pays the tax.
Then the NYT is a frigging liar. No surprise. My state has a line on the state 1040 for reporting and paying sales & use taxes otherwise not collected...you have two choices, detailed schedule of purchases and calculated tax at 6%, OR you can opt for a lower pro rata fee if your purchases total less than $1000.
Unless you are just terminally stupid here, you pay the tax in option 1 or 2. Period. You want to guarantee a State audit, just skip both options for that line. The state makes the IRS look like Mary Poppins. A quick life style review and demand for your purchase records will quickly indict you...and evasion is a crime, not civil like avoidance....you did sign your return as wholly truthful, right.
This is just another attempt to have 3rd parties enforce a law by confiscation. One of these days they will just bill sales and use tax pro-rata to every wholesaler, as they do now with fuel excise taxes, and let the wholesaler collect reimbursement in his charges to the retailer...and you will NOT even see the tax on your receipt.
The only reason to be opposed to this is if you think collection is unreasonably burdensome because there are so many taxing jurisdictions, but this is an objection that has been conquered by technology.
Conquered by technology? How much added cost does this conquerring technology add to each transaction for an internet business?
What are the margins that these internet businesses are already working with? The increased cost to a small business is not something to just shrug off saying that it has been conquered. The increased transaction costs are easily absorbed by Amazon, but not so by smaller outfits.
The forced collection of taxes for 9600 different agencies up front is another brick in the wall of barrier to entry.
That is what it costs.
Ann,
I don't like sales taxes, but what's the argument for the local stores having to collect and the on-line places being free of the tax-collector role?
Well, one argument would be that the local store needs to know only the tax rate for its own location, not the lax rate of every jurisdiction in the whole country.
No skin off my nose, as my state doesn't have a sales tax. And, obviously, no biggie for Amazon, which needed to fold on this in order to roll out its next-day/same-day delivery project, which would require physical presence in most or all states. But a major, expensive nightmare for a small business.
Althouse said ...
... but this is an objection that has been conquered by technology.
Okay, did I miss it or have you cited just what technology will do this efficiently?
In a similar vein, just how much does this technology cost and who pays for it? The seller...e.g., the buyer in added cost, plus the tax?
Is it similar to how fuel excise taxes and state sales & use taxes are collected for inter-state trucking transport? Once upon a time I was writing checks to a dozen states quarterly that our trucks traveled through but never bought a drop of fuel in, based upon mileage logged in those states (one reason for log books)...the logic being that they used the roadways, and the fuel taxes supported said roadways. Fair enough. Did any customer ever see that added cost of sale on their receipt? Nope. Technology has made calculation of this highway tax bit easier, no doubt, but payment is none the less complex.
why should I collect sales tax for governments who provide no services or representation to me?
It's taxation without representation and benefit. Physical stores get things like police and fire protection from their local governments. Remote online stores get only liabilities. They may sign up for an online service to manage the collection, reporting and payment of sales taxes to those 9000 districts, but in the end the store owner is liable if the online service fails to do the job properly.
Althouse said ...
So you think pursuing the buyers is a good option? It's not happening, and the number of violators is, at this point, so high, that the states can't mount this kind of enforcement
Funny that...a few high profile cases in each state would alleviate that resistance to paying the taxes voluntarily. I don't think it, I know it.
I pay my taxes, and you do yours, because we know that *evasion* is a criminal offense, rather the a civil infraction for misinterpreting some deduction, etc...we are NOT paying our taxes out of the goodness of our hearts.
Of course, law unenforced is no law at all...and that is where we are due to lack of enforcement. So now we demand further confiscation to relieve government malfeasance in enforcement. Something is bass akwards I'd say.
By the way...you have not yet illuminated just what transaction features justify sales or use tax collection by a out of state seller.
I am about to give up on what is plainly a lazy government option to cure its own failures to enforce.
What Aridog 5/6 11:31 said.
Ann, if the states want their use tax, they can enforce their own tax law, as some do. If the cost of doing that isn't worth the bother to them relative to the effort -- if CA (say) can't be bothered to go after its tax cheats, which according to the NYT piece you for some reason believe, comprise the entire population of the state, they must not want the money very much. (Or are just too lazy to go after it; after 25 years living in CA, I could believe almost anything of that state government.)
But think: If collecting use tax is too cumbersome for states to do it, how nasty is it going to be for a smallish business? Reports of the software and services that make this all easy-peasy from those who've actually tried them, I find, are not exactly glowing.
I think it would be a much better idea for each state with a use tax just to make a few prominent examples and scare its population of flagrant tax cheats into complying with the law. Much easier for the states' point of view, though, to fob the enforcement part off on businesses in other states.
Ann asked: I don't like sales taxes, but what's the argument for the local stores having to collect and the on-line places being free of the tax-collector role?
The fact that they are located outside the state in question - they already have to do that for the state they're in, if applicable.
(Interestingly, if I go to Another State and buy something in person, I pay *local* sales tax, not My State's sales tax. Why should that be so? Level that playing field!
Make local retailers collect out-of-state sales tax for out-of-state customers!
I suggest that the States that try to depend on a sales tax [which per Rothbard ends up being an income tax in effect anyway] stop doing so, instead.
Just make an income tax and get rid of the sales tax, if you must have one or the other to fund your bloated bureaucracies.)
"A note to readers, and to self: If you live in a state with a sales tax, you are supposed to submit uncollected taxes on Internet purchases at the end of the year, even if the merchant doesn’t seek it at the time of the sale. Of course, nobody does that."
Nobody! I feel like a chump! I am ripped off by my own rule-following. This breeds disrespect for the law.
How chumpie do you feel about paying welfare, food stamps, SSI benefits, section 8 housing subsidies etc etc etc to illegal aliens? Talk about disrespect for the law.
All those who think that it is just no big deal to collect sales tax and then remit it to 9600 and rising locations has never ever been in business. Not only is this going to be costly and time consuming.....do you really think that those costs in addition to the sales tax are not going to be passed onto the consumer. REALLY? you think this?
Make local retailers collect out-of-state sales tax for out-of-state customers!
How about Oregon, where they don't have a state sales tax? Should the little hardware store guy or the mom and pop drug store collect sales tax, record it, put it into a separate account and quarterly remit to California, Washington, Nevada, Idaho, Montana and so on. What a freaking nightmare. We have enough bookwork in our business to try to distinguish between retail sales that require sales tax and contract installations where the parts are permanent parts of the installation (non taxable) and parts of the contract that are not permanent parts/removable (taxable). Also reporting which items we have paid sales tax on when purchased and which items we have not and are used for resale where we collect taxes. If we had to do this for 9600 locations, I would just shoot myself.
do you really think that those costs in addition to the sales tax are not going to be passed onto the consumer. REALLY? you think this?
I certainly don't. That's why I don't think that arguments against this proposal based on the fact that the taxes are unrelated to local public services provided to the seller are applicable. The buyer will pay this tax, and the revenue will pay for the government spending where the buyer lives.
Which seems pretty much the way it ought to be, don't you think?
Now, if the costs of collecting use taxes (including every taxpayer's record-keeping chores) are truly lower than the costs of paying sales taxes to 9600 jurisdictions, then of course use taxes are preferable. But it seems like a simpler alternative would be to simply make online sellers pay state sales taxes, and let the states figure out how to compensate their local governments. That way the complexity isn't all that great and individuals don't have to keep years' worth of records of every damn thing they buy online. (Which in itself would deter some internet purchases.)
Sigivald's right that one way for states and localities to avoid this collection problem is to substitute income taxes for sales taxes. That may be the best long-run solution, altho it does mean that state taxes will be less flat.
The only reason to be opposed to this is if you think collection is unreasonably burdensome because there are so many taxing jurisdictions, but this is an objection that has been conquered by technology.
With all due respect, this shows your naivete regarding the wonders of technology. Yes, technology can make it simpler. That is a very long way from cost free. You either need to hire someone who knows how to use complicated software or figure it out yourself. And if you get it wrong, the IRS is not at all forgiving unless you work for the administration.
Remind me to tell you how much I enjoyed being an unpaid tax collector for the State when we were running a business.
Yeah, I know - it's just a cost of doing business. It's still something the Gummit TAKES WITHOUT COMPENSATION.
Why should I, as the owner of an internet only business (just say) based in a state on the east coast have to become an agent of the government of the state of Illinois (just say)?
I have no say in how Illinois runs itself, but I'm part of the government now.
And, now there are a whole bunch more places that can audit my books. Not that I particularly care about that since I wouldn't intentionally do anything wrong, but cripes--instead of screwing a few people to make it more fair, how about we just stop screwing everyone to make it fair?
As a brick and mortar store, I'd be using services...police, fire, roads, whatever.
As an internet only business, what would I be using?
But yeah. On top of the fees the credit card processing companies take out, and the fees paypal takes out, now there's going to be about a 2.9% charge for some company to handle the sales tax for me--and I read the other day that amazon is all hot to jump into that boat.
Yeah. More taxes. We need to pay more taxes and more fees.
And everyone who says they don't mind paying taxes is nuts. Sorry Ann, but that's just crazy.
So Ann, do you suppose the state of Illinois or California will pay people for being tax collectors for them?
I mean, it's one thing if you live in the state of IL and collect the taxes. But if you live in Vermont or Texas, why should you be an agent of the government of another state?
You suppose every internet based business owner will get a little badge? I might be bought off with a little badge. If I could flip it open at restaurants and impress people. "Johnny Danger--State of Illinois Tax Enforcement Division!"
Yeah. I could see that being cool. Okay, if there's a badge in it, I'm down for it.
But there has to be one for every state I'm now acting as agent for.
EVERY SINGLE ONE!
Oh, and:
tits.
Amazon is in favor of it because they're going to sell the service where they profit from the paperwork.
They're also in favor of it because it means it'll be really, really hard for a company to become the new Amazon.
As an internet only business, what would I be using?
Nothing.
That's why you wouldn't be willing to sell to someone in a high-tax state w/o charging him the taxes you'll have to pay on his behalf. You could always sell the same item to someone in a low-tax state instead.
So the tax will fall on the buyer.
Not the extra overhead cost of calculating your payments to each jurisdiction, tho.
Sigivald said...
(Interestingly, if I go to Another State and buy something in person, I pay *local* sales tax, not My State's sales tax. Why should that be so? Level that playing field!
Make local retailers collect out-of-state sales tax for out-of-state customers!
Dang you! I was just about to suggest that all retailers collect sales & use taxes for all states of residence as shown on a driver's license or other photo ID.
No ID, no problem, just record as "N/R" and collect for the state they are located in physically.
Win win. Everybody; bricks and mortar *victims* and Internet *villians* all get to collect for each other, all 9,600 of them based upon residence.
Unheard of you say? Ever buy a car in state X and try to register it in state Y? Oh, my....
If collecting tax for 9600 jurisdictions is okay for Internet sellers, then it should be grand for bricks and mortar folks too.
Hooah! Cue teh Snoopy dance!
Chip S.,
Now, if the costs of collecting use taxes (including every taxpayer's record-keeping chores) are truly lower than the costs of paying sales taxes to 9600 jurisdictions, then of course use taxes are preferable. But it seems like a simpler alternative would be to simply make online sellers pay state sales taxes, and let the states figure out how to compensate their local governments. That way the complexity isn't all that great and individuals don't have to keep years' worth of records of every damn thing they buy online. (Which in itself would deter some internet purchases.)
But it's trivially easy to keep track of what you've bought online. Just dump all your confirmation emails (I have never made an online purchase without getting a confirmation email, with the total paid in it) into an email file folder, and add up the contents when you pay your use tax. Like saving receipts, only easier! Not that it would be a bad idea to save the physical receipts, too.
What, you'd rather the retailers did your tax homework for you? Or were you planning to blow this particular bit off anyway?
Aridog,
Dang you! I was just about to suggest that all retailers collect sales & use taxes for all states of residence as shown on a driver's license or other photo ID.
That'd be a start. But really, the B&M retailer ought to have to know the local tax rate for each specific item in the ZIP code of the customer as shown on the photo ID. That's what online sellers are going to have to know. And, as Ann makes clear, this is totally cheap and easy. No hassle, right?
A A said: Got another argument?
Megan McArdle does, and I'd value her opinion about this over Althouse's:
Why they shouldn't pass it
And:
The real problem with internet sales tax
No, Michelle, I hate doing taxes--especially if it involves tedious data entry. And much more than that I hate audits. It seems like use taxes have to be heavily audited if there's going to be compliance.
And btw, as I'd mentioned in that earlier discussion, my wife was a DD to DDD from the age of 14. The 'no bra' - gravity thing never applied in her case.
Gravity would have exerted its inexorable pull until they hung down to her knees.
Not the extra overhead cost of calculating your payments to each jurisdiction, tho.
That's my point. I incur extra costs, extra liability AND get no benefit from it.
Dust Bunny Queen said ...
All those who think that it is just no big deal to collect sales tax and then remit it to 9600 and rising locations has never ever been in business.
I have and I do recall the hassle. I also recall the audits, when our de rigueur default unpaid tax we intentionally left to be found was around $4500 ... we usually left printed materials from out of state unreported as to value .... which made the auditors happy and kept them from digging ever deeper. They "needed" between $4000 and $5000 from each audit stop to justify the time. Fair? No. Unavoidable? Yep.
Truth is it pissed me off far far less than the "Single Business Tax"...which was a VAT without pass-through features that made labor cost, both administrative and direct, NOT deductible. Wrote checks to the blood suckers in loss years out of equity or my hip pocket.
Next you say ....
We have enough bookwork in our business to try to distinguish between retail sales that require sales tax and contract installations where the parts are permanent parts of the installation (non taxable) and parts of the contract that are not permanent parts/removable (taxable).
Now that feature is the exact opposite of Michigan where any permanent installation is taxable, as is all real estate installations. Portable equipment is non-taxable. The line is drawn on a term called "Industrial Processing" where if the item you install is portable and contributes to making your end product from raw materials, it is Industrial Processing...e.g. like an asphalt plant...notice how most are portable even if not necessary to be portable?
The Catch 22 is that no matter the processing, if a permanent installation, bolted down, cemented in, etc...it ISA taxable. period. Where disputes arise ...you have 90 days to rectify or pay up. Period. Our state has been known to show up with chains and padlocks on the 91st day.
Trying to federalize all this is a perfect example of the cliche'...
A vast project founded on half vast ideas.
Now I have to quit commenting on this topic...as almost nothing infuriates me more than this whole sales & use tax thing, especially with a few folks who have never ever actually done the work (however eminently qualified otherwise)....unless you get in to "personal property taxes" for equipment you rent out or lease....no matter where it is...Aaagggghhhh !!
Cue Rabel's previous crazy lady avatar for me.
PS: Here's a sale/use tax question for you all...in states where sales & use taxes apply:
Are DoD civilian personnel exempt from use tax for overnight stays in hotels and motels on TDY travel?
The answer, per the IRS, and various State Treasuries, is the opposite of what you might think. The key word is "civilian" working under NLRB auspices. What do you think?
CEO, I think we all agree that a key issue is the magnitude of the compliance cost.
But brick-and-mortar stores aren't simply paying taxes equal to the gov services they receive. They pay for those via property and sales and income taxes they pay both as businesses and as individuals.
PS: I should not that my relatively short lived venture in to capitalism had more pain than pleasure in a state where labor was not exempt for VAT purposes. What stunned me was that upon arriving back in the Army I found even more ignorance of tax laws as it applied to federals. I mean outright-dumb-lack-of-knowledge from accountants to contracting officers.
Answer to my question about TDY motel charges for civilian personnel is NO they are not exempt from use tax if the jurisdiction has such a tax. You sleepy time as a civilian is NOT paid time, it IS personal time off and therefore taxable.
Some DoD or other "fed" somewhere may pop up here to say I'm wrong...if he/she has the guts I will, at my expense, join them at the IRS offices and Treasury offices of their state for that discussion....if they can't listen to what'd I inform them of over a good dinner, also at my expense.
I spent two years in my last office convincing Contracting Officials, with IRS and state treasury revenue officers by my side, that they do NOT have omnibus tax exemption just because they are federal. Wen stopped dozens of people from signing and handling out bogus exemption certificates (even DoD sites have state ID numbers...vis a vis payroll usually)which did nothing but put trusting retailers and hotel keeps at risk when audited.
Dang it....I said I'd quit earlier. I shall now mug myself....mmbppftt.
Is it possible that whatever new law that Congress might pass allowing interstate collection of sales tax would apply to the participants in the affiliate program?
Why, yes. Yes it is.
So Althouse could wind up having to pay on whatever people who use her portal buy? So not only would Amazon pay but she could pay too?
Oddly enough, I can see that happening, even though it seems really far fetched.
So Althouse could wind up having to pay on whatever people who use her portal buy? So not only would Amazon pay but she could pay too?
As an Amazon portal, who is responsible for collecting and remitting the sales tax. Right now? No one.
With this new law I imagine it will be Althouse and Meade who will have to collect, categorize, record and remit all such taxes.
Wanna bet, she won't be so cavalier about it THEN.
"But it's trivially easy to keep track of what you've bought online."
Amazon tells me each year what I bought and reminds me that I am supposed to pay tax on it. So it's no problem at all.
The paperwork issue for small retailers is a real one, but it's also a real one if you sell within your own state. I just had to help my wife through a state sales tax audit for her small business. It was painful, but mostly could have been avoided had she kept better records in the first place.
The Senate bill exempts businesses with gross reciepts of less that $1 million from the law. There is talk that the House will raise this to $10 million.
Other than the issue of cost impositions on very small businesses, i have yet to see a principled argument as to why the avoidance of these taxes should be continued when it's quite easy to collect.
If the tax is a bad idea, repeal the tax. Don't make a joke of compliance, which is what we have now.
of course anyone making less than $250k will be exempt. Obama wouldn't lie about a core promise.
"'So Althouse could wind up having to pay on whatever people who use her portal buy? So not only would Amazon pay but she could pay too?' As an Amazon portal, who is responsible for collecting and remitting the sales tax. Right now? No one. With this new law I imagine it will be Althouse and Meade who will have to collect, categorize, record and remit all such taxes."
Of course not. The transaction is entirely handled by Amazon, including any relevant taxes (some of which are now collected, in states where Amazon has bricks and mortar).
And again, the portrayal of the tax collection as arduous is ignoring the current technology (explained above). There are services that mechanize all of this.
It's like you're trying to imagine auctioning off your second hand goods on line without knowing about eBay and PayPal.
Sure, you don't pay the same tax when you buy online but you pay shipping. So, by adding an equal tax as well as shipping to online shopping this law will give the bricks and mortar businesses a significant price advantage.
"Then the NYT is a frigging liar. No surprise. My state has a line on the state 1040 for reporting and paying sales & use taxes otherwise not collected...you have two choices, detailed schedule of purchases and calculated tax at 6%, OR you can opt for a lower pro rata fee if your purchases total less than $1000."
So in your state (mine's not like that), you either go to a lot of trouble or you're stuck overpaying. I don't know why you oppose the change then. It would be easier and more accurate.
You moved your goods to market on roads the rest of us paid for.
No you didn't. You're not from Texas.
You hired workers the rest of us paid to educate.
No you didn't. You're not from Texas.
You were safe in your factory because of police forces and fire forces that the rest of us paid for.
No you didn't. You're not from Texas.
You didn't have to worry that marauding bands would come and seize everything at your factory.
Yes I do. But you ain't invisible.
if anything, to level the playing field, the tax should go to the jurisdiction where the business is located, just like a brick and mortar store.
ricpic, unless you're buying stuff at the point of production, it's gotta be shipped to the store.
One of the differences b/w online retail sales and b&m stores is the logistics of getting the goods from the producer's inventory to the consumer's door.
In one system, shipping is done to each individual customer. In the other, bulk shipments go to a much smaller number of retail stores, then each customer travels to and from the store.
The policy issue (idealiy) is choosing the tax policy that minimizes the combination of shipping costs and tax collection costs (including enforcement) for a given set of retail transactions.
If collection costs were trivial, then equal tax treatment of online and b&m sales would result in the cost-minimizing method of selling for every type of product-customer pair.
Here's a principled argument against the imposition of state sales taxes on interstate commerce.
It's from Felix Frankfurter and has since been overturned, but the argument is there.
And the principle is that those taxes impose an undue burden on interstate commerce and that the intent of the founders was to prevent such burdens.
But it's kinda complicated, so I could be wrong.
I don't understand how this is taxation without representation. But IANAL.
Would it be possible to start a business in some near-shore country. Say, the Bahamas, or the Caymans. Or Canada. Ship to this location -- what tax would be collected? -- and then immediately reship the gift to the US location.
Or have the company in Oregon. No sales tax. And then the company can ship things to you from the tax-free state. The sale is to a tax-free state, ergo no tax is collected. Then you ship a gift to the taxing state.
I agree that the fairest thing would be to charge the tax in all B&M stores for the state where the person lives.
I do wonder, though: Minnesota (for example) has tax holidays before school starts, so you can buy clothes tax-free. Should you have a clothing sale to someone in MN on that day from out of state, do you get to ignore any potential sales tax?
1: Local store benefit from the sales taxes being paid, online stores don't.
2: The amount of revenue with will be collected is small. The amount of pain that will be inflicted on small businesses having to deal with hundreds to thousands of different sales tax jurisdictions will be immense. The internet sales tax bill is a "big guy crush teh little guy" bill.
"There are over 9,000 taxing jurisdictions, which does make it sound impossible, but there are already services (competing with each other) that you can sign up for that will do all the calculation and other burdensome things that you are imagining."
How much will those services cost? When those services screw up, will the tax man go after the service, or the business?
Which address do you charge the sales tax for? The billing address of the credit card? Where it's delivered? Does that change if it's sent to a PO Box? How about to a forwarding address?
When I buy something in a store, I pay the sales tax in the store's jurisdiction, it doesn't matter where I live.
Why should online sales be any different?
David,
Amazon tells me each year what I bought and reminds me that I am supposed to pay tax on it. So it's no problem at all.
Well, for some of us it isn't quite all Amazon. I order online from the likes of classical CD retailers, used book sellers, and ishopindian.com (there appears to be no retail source for curry leaves in this whole state, which is irksome). So were I in a state with sales/use tax, I'd need to keep those receipts on file as well.
Althouse said ...
And again, the portrayal of the tax collection as arduous is ignoring the current technology (explained above).
No, you have not explained except to allege there are 3rd party services without so much as an iota of detail on how they work. I know how they work, but I suspect you do not except in very general terms.
There are services that mechanize all of this.
Even with the odd use of the term *mechanize*...go for it, one practical method is called Turbo Tax...albeit for honest law abiding taxpayers, which the NYT says no one is...it is so tiring.
States are too lazy to enforce their own tax lawsx so it requires federal legislation to force a 3rd part to do it for them by confiscation.
Let's give this a try, 0kay....say you open a packaging plant for juices and you choose to purchase mixers from another state. Do you even know what is required to do so and retain a processing ex-emption? How to claim one if taxes are charged in error?
I'm embarrassed to even be saying this to you, seriously. I've been down the road you propose everyone travel and I know where the complexity lies as does dust Bunny Queen. Here's another questions, out of our 50 states, there are another 9550 other jurisdictions, all of whom provide exemption or deductions for various portions or all of tax remitted elsewhere...will this 3rd party wonder processor for tax collections & remissions keep track of all that and who will retain fiduciary agency for settlement?
As I said earlier, as proposed at whatever level, this a classic vast project based on half vast ideas.
If you just have to confiscate taxes on the Internet, let each seller do it for their state of residence/operation...and then you, the taxpayer settle up with your state at tax time by claiming credits.
I broke my vow of further silence again...I'll try to better in the future. Just don't say a process has been explained when it has not been...Database is what I did for several years and I know how to do the collection record keeping and distribution, in accord with GAAP, and it is an immense undertaking.
It is an unwarranted cost...just each collect for their location or ,locations, and comply with current law.
And with this comment, I again give up...really. I will try hard.
Ari, except for the part where you seem to automatically give cops the benefit of the doubt, you're a brilliant poster. I'm a fan.
Well said.
I can't believe how some of you (Ann) have been so conditioned. "Let's tax more people in a more convoluted confusing way!"
ANd the chorus yells "YES! YES! GUBMINT NEEDS MORE MONEY!"
Man.
So this is what Federalism has now been reduced to? The Feds becoming the muscle to collect taxes for state and local governments so the states and their sub-divisions can more easily finance unfunded federal mandates all the while helping out their best buds crony capitalist? I do hope the House kicks this to the curb where it belongs.
As for tata's, do bras help woman's tata's from sagging or not? Especially when they older?
cubanbob said...
So this is what Federalism has now been reduced to? The Feds becoming the muscle to collect taxes for state and local governments so the states and their sub-divisions can more easily finance unfunded federal mandates all the while helping out their best buds crony capitalist? I do hope the House kicks this to the curb where it belongs.
Thread winnah!!
Ari if the republicans really wanted to put a turd in the punch bowl they could put in to the bill a provision that the costs of the merchants compliance would be offset by a federal tax credit. Afterall what business is of the Feds to deputized a WA firm for example as a tax collector for 9000 taxing jurisdictions they have no legal presence in?
CEO-MMP ... thanks for the compliment. I suspect the brilliant part is over stated, but I'll take it in the spirit of being wrong only 22 hours of most days. :-)
PS: I'll work on that cop thing, but it really isn't as omnibus as it might seem. There are also people who will tell you that I have an extreme anti-authoritarian problem.
"There are over 9,000 taxing jurisdictions, which does make it sound impossible, but there are already services (competing with each other) that you can sign up for that will do all the calculation and other burdensome things that you are imagining."
So, those services will examine every single product you sell, and correctly tell you its taxable status in every single one of those 9000+ jurisdictions? Is that food (not taxed in many states) or "prepared food" (much more taxable)? Is that clothing (not taxable in some states)? Is it a "luxury" good, and subject to the tax anyway?
A normal business has to figure that out for ONE jurisdiction. Not 9,000.
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Ann, The real problem is applying for and paying for hte 9600 sellers permits. You cannot remit sales tax without a retail sales permit. By making small ($1MM gross is not that large) retailers get sellers permits in all 50 states and DC you are also giving the local authorities the ability to demand that the owners show up in any or all of those states at the regulators office for any "discussion" some official wants to have without compensation and make them subject to local courts in all of those states with no possibility of claiming lack of juristidtion.
If we're going to be all "let's be fair to local businesses", it's worth noting that this will kill quite a few local businesses. Why? Because many of them survive and thrive due to supplementing their in-person sales with online sales. (Yarn shops, used bookstores, many others.)
They are already set up to pay sales tax... in ONE jurisdiction, or perhaps as many as two or three if their city and county both charge separate sales tax. But now it will be ten thousand, because their online business must pay sales tax in each jurisdiction.
They already have an account to remit sales tax... ONE check per quarter (or per month). Now it will be ten thousand.
They are already legally vulnerable if they screw up something in the paperwork... to ONE jurisdiction. Now it will be ten thousand sets of paperwork, with legal danger for each one.
They can already be subjected to an audit, typically taking multiple days from their business, from ONE jurisdiction. (Which is local to them.) Now it will be ten thousand. (Most of which require serious travel to get to.)
Quite a few local brick and mortar businesses will go under. So will a lot of online-only businesses. (This is at a time, mind you, when the unemployment statistics are frightening and about to get worse.)
Amazon won't go under, but Ebay might if enough sellers do. Wally World won't go under, but a lot of used bookstores will.
CEO-MMP and gregq are right. And Aridog. This bill needs to die a quick death.
Ann, if you think you are getting screwed for reporting online purchases where others purportedly are not, I'd say that's small potatoes compared to the charitable giving deduction which most folks overstate.
This is another layer of burden that hurts business and doesn't add much to state coffers after accounting for the regulatory staff needed to administer and enforce it.
If Amazon really does see it as a barrier to entry for competitors, I hope they are also prepared to lose sales should the law go into effect. I won't buy from them anymore. Maybe they'll secure their fiefdom, but it will be a shrinking one.
Ann Althouse said...
And again, the portrayal of the tax collection as arduous is ignoring the current technology (explained above). There are services that mechanize all of this.
This type of thinking is how we end up with horrible legislation like Obamacare. Those writing and supporting the bills have no real understanding of how much work or effort is involved, so they blithely accept imposing a massive work requirement by saying "oh, there's software for that".
Let's say a small but active business needs to file in 200jurisdictions, all 9600 being unlikely. If you could file a return faster than 30 minutes I'd be surprised. You have to run the internal report, validate the data, match the forms, upload or enter the data into the website, initiate a payment, file and retain the forms. 30 Minutes per form works out to 12.5 workdays, and most sales tax is reported per quarter. So for 2.5 weeks a quarter (or ten weeks a year, or 2.5 months a year) either you or one of your employees isn't doing anything but sales tax compliance.
All of this is with the software. And since this magic software has to apply all 9,600 sets of rules to every product available and track how those facts change over time it isn't going to be cheap. Further the setup for such detailed software is going to take substantial time.
Acting as if this legislation isn't imposing much of a burden is total crap. Waving our hands and saying there's software is a complete abdication of responsibility.
Marshal said...
This type of thinking is how we end up with horrible legislation like Obamacare
Amen...as I have said, vast project based upon half vast ideas. Not to mention actual ignorance of the processes involved.
All of this is with the software. And since this magic software has to apply all 9,600 sets of rules to every product available and track how those facts change over time it isn't going to be cheap. Further the setup for such detailed software is going to take substantial time.
And you are merely scratching the surface of the problem with that comments...NOW consider that all of those 9600 +/- jurisdictions do NOT have their regulations uniformly on the same Database formats...so vast ODBC work will be necessary to generate software capable of handling it all.
It is alleged here that this work has been done already....but I do NOT believe it. Someone please furnish me a link so I can verify the veracity of the claim and the technological potential of the software over 9600 jurisdictions.
Acting as if this legislation isn't imposing much of a burden is total crap. Waving our hands and saying there's software is a complete abdication of responsibility.
Actually, it is an outright lie. Intentional by government and, at the least, inadvertent by proponent citizens.
PS: My *conspiracy theory* opinion about this push now is that this is the opening salvo of a push for an *equitable* [yo' fair share] national sales tax and/or a VAT tax. You know, Uncle Fed collects it all to simplify things and then distributes pro-rata shares (wink-wink) to states, who then must do the same for their sundry jurisdictions.
Or more likely, just a new national sales tax and a VAT tax with no sharing except through federal *programs*.
It is all good, right? Nothing, nothing at all is more *regressive* than sales tax and value added taxes, where the poorest among us pay the largest percentage of their incomes in taxes. There...that'll fix that 47% out there, eh! And value added taxes are special [politicians' wet dreams]...they are due and payable even if their is no income per se for a firm, and consumers pay it without credits in the price of commodities. This ain't Canada...no pass through for you. :-))
Aw shit...forgive me Father, for I have sinned [again]...and commented further on this unholy thread. :-(
Simple solution:
Businesses offering items for sale via Internet (or mail) collect sales tax for the state where they do business.
Do the 50 states need Congress to allow them do to this? Please explain. As far as I can tell, each state legislature is competent to assess this tax requirement, right now.
So why don't they? Because they don't want to have a big company (like Amazon) relocate to a state without sales tax.
Well, too bad.
Fr Martin Fox said...
Whoa. That was quick. Coincidence? I think not :)
Fr. Martin Fox,
Businesses offering items for sale via Internet (or mail) collect sales tax for the state where they do business.
But in which state are they doing business? The state in which the business is registered, or the one from which the goods are shipped?
As long as it's the latter, and Amazon has a shipping center in OR, I'm fine with that.
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