Congress Set to End Tax-Free Online Shopping

[Scot Standke]

Here it comes!

FOXNews.com - Report: Congress Set to End Tax-Free Online Shopping - Science News | Science & Technology | Technology News

If you think keeping track of sales etc was tough before, wait til you need to start charging sales tax

I think a couple states mandated this a while back, does anyone have experience with this yet?

I see a huge new area to make some money, be the first to design programs and software to ease the burden and you could be in for a huge payday soon.

Your thoughts?

Scot

[Dan C. Rinnert]

Originally Posted by Scot Standke

I think a couple states mandated this a while back, does anyone have experience with this yet?

Yes, they have it here in Ohio. It is a royal pain in the...! There are 88 counties, and some areas where cities and counties overlap and have yet another sales tax area to keep track of, so there are more than 88 different tax possibilities to keep track of. I think the only options are to integrate your website with the state to calculate the tax (which means you are relying on the speed of your state's webservers to hopefully still get the order) or to look it up manually and send the customer an invoice or something with the total.

If we are going to be required to collect and keep records of sales taxes throughout the country, that's going to be a logistical nightmare. Good way to kill small businesses, or burden them with additional costs and overhead to buy whatever software or services may be necessary for compliance.

There will be opportunities for people to make money creating software and services, but I bet you'll also see a lot of small businesses and home businesses just folding rather than go through the additional hassle. Myself, I've been hoping to build my business to the point where I can get out of Ohio, to a more business-friendly state but now it looks like a moot point if we'll end up having to keep track of this stuff no matter where we are.

[valerieSONORA]

I hate congress

[Scot Standke]

It's funny, just days after a nationwide "Tea Party" protest, this is the first action to come out of Congress.

The economy is in the dumps, do they really think a new tax is the answer at this critical juncture?

Sheesh!

Scot

[Tyson Faulkner]

I guess it was only a matter of time.

The U.S. is so far in debt, they're trying to squeeze every last penny that can out of it's citizens. It's too bad that doing this only makes thing worse and encourages poor economy.

[Dan C. Rinnert]

Originally Posted by Scot Standke

It's funny, just days after a nationwide "Tea Party" protest, this is the first action to come out of Congress.

The economy is in the dumps, do they really think a new tax is the answer at this critical juncture?

They always think new taxes are the answer. State revenues are falling, so why not add more taxes?

What they never think about is the money they collect in income taxes from small and home businesses. They introduce a sales tax, and they'll see a decrease in income taxes. Their solution to that will be to increase income taxes.

The intellectual capacity of Congress is the IQ of the dumbest member divided by the number of members of Congress. I think Barney Frank may have an IQ of 75. Divide that by 535, and Congress' collective IQ is 7.1333. Profound mental retardation is defined as an IQ under 20.

That explains a lot.

[Ron Killian]

Seems this has been talked about before, many times, yet to happen, wonder if it will now. On the other hand, I wonder if it will be just physical goods? If they ever tried it with digital goods, seems it would be hard to prove what was sold, ect.

Part of me is not totally surprised if it happens. What about brick and mortar stores, they have always been charging sales taxes, gotta be harder to compete, besides the price differences. I sold tv's for a short time and savy customers knew about places like Amazon, they are really hard to compete with when it comes to price.

[suesays]

It's a bummer! Would that mean additional fees charged on our shoppings online? That's pathetic! I wish they could allow it free altogether.

[Scot Standke]

Originally Posted by Ron Killian

Seems this has been talked about before, many times, yet to happen, wonder if it will now. On the other hand, I wonder if it will be just physical goods? If they ever tried it with digital goods, seems it would be hard to prove what was sold, ect.

Part of me is not totally surprised if it happens. What about brick and mortar stores, they have always been charging sales taxes, gotta be harder to compete, besides the price differences. I sold tv's for a short time and savy customers knew about places like Amazon, they are really hard to compete with when it comes to price.

Yes, but brick and mortar does not have to worry about the shipping and handling fees to the customers so it all evened out in the end.

Scot

[Dan C. Rinnert]

Originally Posted by Ron Killian

What about brick and mortar stores, they have always been charging sales taxes, gotta be harder to compete, besides the price differences.

Typically, they've only had to charge one sales tax rate. And, the B&M store may have had sales tax, but no shipping. A lot of times, that balances things out.

If the concern is competition, the solution would be a flat sales tax rate. All online merchants charge one rate, and send it to one place and that's the end of it.

But, competition isn't the concern. Politicians may throw that out there to give the impression they are worried about competition, but that's not the truth. What they want is money. They don't care about fairness. They don't care about making it easy on merchants. They only care about money.

With a messy sales tax system, the big merchants will be able to deal with it. So, Amazon is still going to be competing against local merchants. The ones that won't be able to compete are the small businesses that may have shipped around the country to supplement or expand upon their local sales.

Of course, maybe PayPal will figure out a system, which will make smaller businesses more dependent on them, and then we'll hear even more complaints about people being locked out of their PayPal accounts...

[metafever]

I think this is going to open up a whole new market for offshore low risk processing.

With that said, can I throw in that Socialism is a economic philosophy, not a government control philosophy.

The EU countries that we think of as "Socialist" are taxed around 47%+ on their income.

It seems I read somewhere the USA is around 43% on average?

Doesnt matter if Obama or Bush is in there, I think overall America is heading toward Socialism fast.

[DonDavis]

...faster than I ever imagined possible. It's a very sad state of affairs.

[GarrieWilson]

I already collect sales tax on orders for people in my state. Ben doing so for years. I calculate it based on my county though not the persons.

I'll goto jail before I collect and pay sales taxes for a different county or state. Unless they want to pay me for my time. After all, I don't receive any tax benefit for another state.

I do have no problem collecting for all my orders based on my county and paid to my county though.

[Dan C. Rinnert]

Originally Posted by GarrieWilson

I already collect sales tax on orders for people in my state. Ben doing so for years. I calculate it based on my county though not the persons.

That's how it used to be done in Ohio. Then, they switched to destination-based taxation. On top of that, they further cut the "discount" that merchants get for acting as a tax collector.

A lot of times, that means merchants don't even earn the state minimum wage for the time spent handling sales tax collection.

[GarrieWilson]

Originally Posted by Dan C. Rinnert

That's how it used to be done in Ohio. Then, they switched to destination-based taxation. On top of that, they further cut the "discount" that merchants get for acting as a tax collector.

A lot of times, that means merchants don't even earn the state minimum wage for the time spent handling sales tax collection.

So you had to add in all the different county and city taxes for PayPal payments? I think my state has over 200 different ones.

[Dan C. Rinnert]

Originally Posted by GarrieWilson

So you had to add in all the different county and city taxes for PayPal payments? I think my state has over 200 different ones.

Yep. Now, multiply that by 50 states.

[GarrieWilson]

Originally Posted by Dan C. Rinnert

Yep. Now, multiply that by 50 states.

I see a WSO coming for data entry.

[Guitarnut]

Hmmmm....If the opposite of pro is con, does this mean that the opposite of progress is congress?

The really sad part about it all is that there isn't a blasted thing we can do about it. Just take it on the chin and be a good little social...I mean citizen.

[Zeus66]

Princeton's Wordnet defines Socialism as "a political theory advocating state ownership of industry."

Statism is what this issue is about, actually, not really Socialism. Statism refers to "specific instances of state intervention in personal, social or economic matters."

We're well down the slippery slope. And we've no one to blame but ourselves. We elect and re-elect the people who makes laws like this. To quote Thomas Jefferson: "The government you elect is government you deserve."

Maybe it's time to start over.

John

[GarrieWilson]

Originally Posted by Guitarnut

The really sad part about it all is that there isn't a blasted thing we can do about it. Just take it on the chin and be a good little social...I mean citizen.

Yes there is but I dont want this to turn into a political topic.

[RB]

Meta, the funny thing is, socialism has never worked in any attempt through history - period.

I'm in Ohio too. The county commissioner just MANDATED a 1/2% increase in sales tax for our county. We didn't even get to vote on it!

Their response to the April 15 tea party tax day gatherings - "a bunch of rabble rousers" and attendance to the rally is being downplayed, but they had photographers on the rooftops so they knew who the rabble rousers were.

All the while, the president can't fill his cabinet because those selected haven't paid their taxes.

Earn money fast - buy gold and gun powder.

What a world!

[RB]

or, keep your money but buy a wheel barrow so you can haul your money to the grocery to buy a loaf of bread.

[higakun]

Originally Posted by Scot Standke

It's funny, just days after a nationwide "Tea Party" protest, this is the first action to come out of Congress.

The economy is in the dumps, do they really think a new tax is the answer at this critical juncture?

Sheesh!

Scot

Yeah, I was at one of those tea parties, great fun. But it burns me that they think Taxes WITHOUT a competent economic plan is going to do any good. Its just going to make life for us small business people harder.

[Chase Beach]

Be careful......what you say.....

...someone might be listening...

I liked the off-shore idea. I know when you get a tax increase in a brick and mortar, you pass it on to buyer, so we will need to do the same.

Chase

[Traffic-Bug]

Then they will simply sell from Canada and Mexico hosted servers, avoiding the tax

[Tyrus Antas]

Originally Posted by Traffic-Bug

Then they will simply sell from Canada and Mexico hosted servers, avoiding the tax

You pay taxes based on your business location, not server location. Even then, think Canadians and Mexicans don't pay sales tax?

[Gene Pimentel]

Anyone have a big boat? I have some tea!

[bgmacaw]

Like I've been saying more and more often for the past year or so, "Who is John Galt?"

[LonNaylor]

Also, things like sin & special use taxes (tobacco, alcohol, gas, luxury, etc.) piss me off!

Let's see...what could be taxed that would be fair for everyone??

Toilet Paper!

[Rus Sells]

Can you say, foreign corporation? This is what it's coming down to because our government is so GREEDY they can't stop finding ways to tax us to pay for all their programs and salaries!

I just love the last line in that story, "One of the big things the states have learned in the recession is they have declining revenues," Peterson told CNet News. "We're very optimistic about Congress this year."

Yeah we are loosing money so lets just find a way to tax people to death. I love this country but as day after day goes by I am beginning to feel like a sojourner. <-- did I spell that right? lol

[Trader54]

Sounds like your well on your way to catching Canada as far as being taxed.

[JohnMcCabe]

The headline didn't match the story. Congress is not "set" to do anything along this line. A group of officials from a minority of the states are gearing up to try to get something going.

Even if they get something introduced, it's a long way from passing. The states with the biggest wallop aren't even playing. A few well-placed stories in the media about local businesses being endangered by proposed legislation would go a long way toward killing the proposal.

One thing to remember about Congress, as much as they love taxes, they love their jobs even more.

The same goes for the prez, whether blue or red. If the states with the biggest electoral vote aren't backing this, it will be really tough to sign...

Here's an analogy...

Here in this part of Florida, we have permanent residents, seasonal residents (snowbirds) and tourists. During the season, there is a lot more hassle with traffic, stores and restaurants are crowded, and so are the beaches.

There is a small but vocal contingent that bitches and moans about the snowbirds and the tourists. There's a much bigger contingent that recognizes that snowbirds and tourists bring money with them and leave it here when they go home. Which makes them a very desirable commodity.

Any of the proposals by the whiners geared to steering the part-timers somewhere else has no chance to pass. Officials like the outside money too much.

I think the same thing will happen with this.

[Scot Standke]

John,

It appears that they are more than "Set", here is a quote from the article,

"We will have the bill ready for introduction by next Monday," a spokesman for the National Conference of State Legislatures told CNet News in a story posted Wednesday. "We finalized the language and now we're working out the remaining issues and adding some new provisions at the request of various stakeholders."
It's not clear what exactly the bill would do, but it's expected to be introduced in the House by Rep. Bill Delahunt, D-Mass., and in the Senate by Sen. Mike Enzi, R-Wyo.


It remains to be seen if it actually gains any traction or if detractors start lining up, but it appears that they are well on their way to at least try and pass something.


Scot

[Michael Oksa]

I think it's inevitable, but the longer it takes, the better.

Companies like PayPal will be the answer, because it's much easier for them to do the programming once for everybody (and then maintain based on any tax changes). And, as much as I dislike saying this, it would be fine if they charged a little more if they would take care of the sales taxes.

Wouldn't we then have to get everyone's full address? That could stop a lot of people from making the purchse. I suppose PayPal could just collect that info anyway.

So, it's not a question of if it will, but when. It's up to us to have some idea of what we'll do when it finally happens.

All the best,
Michael

[Janus]

[quote=JohnMcCabe;706837]The headline didn't match the story. Congress is not "set" to do anything along this line. A group of officials from a minority of the states are gearing up to try to get something going.

Even if they get something introduced, it's a long way from passing. The states with the biggest wallop aren't even playing. A few well-placed stories in the media about local businesses being endangered by proposed legislation would go a long way toward killing the proposal.

quote]

I agree. However many states are becoming more aggressive in their collection efforts. Some states have moved to collect "use" taxes from individuals by charging a percent of AGI into their state income tax returns. Nexus issues are always important, so be careful.
(Nexus is the right of a state to tax someone - residents are always taxable, so are brick & mortar facilities, as are having employees in the state but the rest can get complicated in a hurry)

Pat

[JustVisiting]

I think Clickbank already have the capability to do this.

Local country sales taxes are automatically added to purchase price of downloads.

I can see online marketers moving away from PayPal towards selling digital products through processors such as Clickbank.

[Scot Standke]

I would think that PayPal would be quick to implement a tool to help collect state taxes since their parent company eBay is centered mostly around selling and shipping of mostly physical products.

Scot

[JohnMcCabe]

Originally Posted by Scot Standke

John,

It appears that they are more than "Set", here is a quote from the article,

"We will have the bill ready for introduction by next Monday," a spokesman for the National Conference of State Legislatures told CNet News in a story posted Wednesday. "We finalized the language and now we're working out the remaining issues and adding some new provisions at the request of various stakeholders."
It's not clear what exactly the bill would do, but it's expected to be introduced in the House by Rep. Bill Delahunt, D-Mass., and in the Senate by Sen. Mike Enzi, R-Wyo.


It remains to be seen if it actually gains any traction or if detractors start lining up, but it appears that they are well on their way to at least try and pass something.


Scot

Having a bill ready to introduce and having Congress set to pass it are two totally different animals.

Most of the bills introduced never make it out of committee. Given this:

The real thinking behind it comes from the Streamlined Sales Tax Project (SSTP), a slow-but-steady effort to get states and municipalities to simplify and unify their sales-tax regimes so that online sales tax can reasonably be collected.

Nineteen states, most smaller ones from the Midwest and upper South, are full members, meaning they've already achieved that goal as defined by the SSTP. Three more are "associate members" who will comply by July 1 of this year.

Notably missing are the four monster-population states of California, Florida, Illinois and New York, or any of the five Deep South states. Of other states with large high-technology sectors, Utah and Washington are represented; Texas and Massachusetts are absent.

I think this bill, if introduced, is headed for that fate.

I will agree, though, that this seems to be a more serious effort than in the past.

[JustVisiting]

Originally Posted by Scot Standke

I would think that PayPal would be quick to implement a tool to help collect state taxes since their parent company eBay is centered mostly around selling and shipping of mostly physical products.

Scot

I would hope so.
Clickbank introduced this facility four or five years ago. They collect the taxes and pay 'em to the various authorities.
I don't know why (or indeed how) PayPal have avoided it for so long.

[Taylor French]

Originally Posted by JustVisiting

I would hope so.
Clickbank introduced this facility four or five years ago. They collect the taxes and pay 'em to the various authorities.
I don't know why (or indeed how) PayPal have avoided it for so long.

How do you know the programming isn't already done, but they are just waiting to roll it out if/when the time comes? I say it's a distinct possibility that a company as large as PayPal has already thought of this possibility and at least taken steps to begin preparing for this possibility. (Although their intelligence, as well as eBay's, has always been questionable!)

[Janus]

Originally Posted by JustVisiting

I would hope so.
Clickbank introduced this facility four or five years ago. They collect the taxes and pay 'em to the various authorities.
I don't know why (or indeed how) PayPal have avoided it for so long.

Though not a clickbank vendor, I would be surprised that they actually file with the states. Processors may collect taxes but they remit to the seller/vendor. The seller/vendor has the legal liability with the taxing authorities.

Little known fact, it is not illegal to charge sales tax when there is no sales tax liability owed but it is illegal to not remit the tax collected to the state if you do.

Pat

[Gene Pimentel]

The group "Ten Years After" said it best...

"tell me where is sanity... Tax the rich, feed the poor, 'till there are no rich no more..."

YouTube - Ten Years After - A Space In Time - 03...

[Janus]

Well done Gene. Can you give us some Dylan next?

[Steve Mount]

Well hopefully the people that voted these clowns into congress lose their businesses first. Oh but wait, maybe they'll just get a bailout!

[JustVisiting]

Originally Posted by Taylor French

How do you know the programming isn't already done, but they are just waiting to roll it out if/when the time comes? I say it's a distinct possibility that a company as large as PayPal has already thought of this possibility and at least taken steps to begin preparing for this possibility. (Although their intelligence, as well as eBay's, has always been questionable!)

I doubt it very, very, very, very, very, very much.
Large companies are very slow to change unless they absolutely have to.
They get very complacent until competition arrives in the market...or legislation is introduced.

[valerieSONORA]

How about forming a lobby group and dumping tea on every Congress member every time they go outside until they promise "no new taxes"!!! I think we're all taxed enough as it is And those countries with super high taxes get free health care, we don't get that. Like I have to pay my car tax every single year to get new tags and registration. The gov finds ways to squeeze every penny out of you, no wonder if people aren't spending much in this economy. New taxes=people will buy even less. Won't help the economy at all.

[Jon Alexander]

take it offshore, guys...

[bgmacaw]

Originally Posted by Gene Pimentel

The group "Ten Years After" said it best...

"tell me where is sanity... Tax the rich, feed the poor, 'till there are no rich no more..."

It's all fun and games in your armchair but it gets messy when implemented in real life.

YouTube - Khmer Rouge video

[Halifax]

I think ClickBank added sales tax processing because a state (New York?) passed a law making all affiliate sales to persons living in that state subject to that state's sales tax. Or maybe it was affiliate sales by persons living in that state.

PayPal isn't an affiliate system like ClickBank, so they're not subject to it.

If this bill gets introduced, makes it through committee, gets voted into a pending law, makes it past presidential approval, and finally becomes a law, then I have no doubt that large companies like PayPal will just go to their programming teams and say, "Here's the tax data for states, counties, etc. for the whole country. When can you have this integrated into our shopping carts so we can charge taxes based on the location of the buyer and/or seller?" and the response will be something like, "By the end ot the day today." It's really not that big a deal to do if you have the staff to do it.


Scott

[Ron Killian]

If it did pass, that might be ideal, if processors like Paypal did the taxes for you. Course then you have to wonder, will the taxes be on products and services and how will paypal figure out which is which.