Online retailers and Sales Tax

7 replies
Did you see this news on Google today. It looks like almost all states in US are putting tax on internet shopping!! They have said that the online retailers have cost them millions of dollars in tax money so far and they want to put an end to it. :confused: What I have to say is that instead of costing them millions of dollars in tax, online marketers have saved these states from a lot of trouble. With so much of crowd and traffic on the streets these day, internet shopping has made many people stay home and shop from their computer. Most people buy things online because it is cheaper there. So, many people do their Christmas shopping online these day. Imagine all these people adding to the crowd that's already in stores.

This is preposterous. How do you think it will affect this industry?
#online #retailers #sales #tax
  • Profile picture of the author write-stuff
    If we sell to customers within our own states, most of us (in the US) should already be collecting sales tax on those sales.

    - Russ
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  • Profile picture of the author rontoski
    When this idea/action has been tested in the courts, the courts have come down on the side of the consumer. It seems that the states interested in extracting tax monies from Internet marketers are not providing any services for this taxing. No firemen; no police; no health; nothing! The courts wonder why a state should have their hand out when they are providing no services. Let's protect this last bastion of freedom from taxes. Do you get up in the morning thinking, "I am not paying enought taxes. I wish the states would start taxing each sale I make via the Internet."?
    It's not just paying a tax--but becoming the tax agent for all 50 states and then for each city and county within each of those 50 states.
    The Supreme Court has ruled that states and local governments cannot require out-of-state companies to collect taxes for them, since this would interfere with interstate commerce. States and localities may only require companies with a "substantial physical presence" or "nexus" in their state to collect sales taxes.

    Imagine what collection chaos would ensue if even a small portion of the 87,453 units of government in America were to adopt sales taxes and then try to apply them to Internet sales--up to 3,043 counties, 19,372 cities, 16,628 townships, 13,726 school districts, and 34,683 special districts, each with its own rate and exemptions! To prevent such chaos and allow for time to think about the issue of Internet taxation, Congress in 1998 instituted a national moratorium on any new taxes directed at electronic commerce.

    We are at risk now that a new president is taking office. He has a congress that has never seen a taxing opportunity they didn't like.
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    Rontoski
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  • Profile picture of the author IMChick
    Can you post a link to the item you saw on Google? Thanks.
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  • Profile picture of the author Nonny
    This looks like the news report:
    NY judge tosses Amazon.com lawsuit over sales tax | Deals | Regulatory News | Reuters
    A New York judge has tossed out a lawsuit brought by Amazon.com Inc (AMZN.O) that challenged the state's right to collect sales tax from out-of-state Internet retailers.
    [snip]
    Through Amazon's "Associates Program," the company pays unaffiliated Web site operators across the country a commission if they advertise Amazon on their sites. Those ads often allow consumers to click through from the advertiser's Web site to Amazon.com. Under New York law, that amounted to solicitation of business in the state.
    [snip]
    In the order filed on Monday, Judge Bransten wrote that the Seattle-based retailer failed in its claim that its associates based in New York do not solicit business from customers in that state. She wrote that the law was "carefully crafted" and did not broadly tax all Internet sales, nor did it unfairly target Amazon.
    It remains to be seen what the implications of the ruling will be, or whether it will affect internet businesses or affiliates outside of New York State.
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  • Profile picture of the author Anna Johnson
    Here's another article on the subject: Amazon Required To Pay New York State Tax... Who's Next?

    The implications of this for Internet marketers are quite worrying. Can you imagine having to collect tax for multiple jurisdictions just because you have affiliates in that jurisdiction? Some say that's the cost of doing business... but what a cost...
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  • Profile picture of the author Tsnyder
    You might also take a look at your state retail sales
    tax rules. In my state educational materials are exempt.

    I also feel no obligation to collect and remit sales tax
    for any other state. If they want to sue me, and feel they
    can overcome their jurisdictional limitations, I'm more than
    willing to discuss it with them in court.

    Tsnyder
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    • Profile picture of the author Kay King
      This is likely to become a big deal this year. The economy continues to fail and States are looking for more money. Very few state legislatures seem to have considered a bad economy or lowered tax revenue when planning their spending from year to year. In my state, there is a mandated "rainy day fund" that legislators must allocate funds to - but as they can vote to use those funds, it is perpetually "low" in funding.

      The State I live in has had a tremendous increase in tax dollars to state coffers in the past 10 years. The legislators have spent it as fast as it came in, creating expensive (often useless) programs, paying huge amounts for "studies" of one thing after another (and then ignoring the recommendations of the completed studies).

      Last year state revenue went down for the first time since 1992 - and there is talk of major additional cutbacks to medicare, unemployment benefits are running out, sales taxes are down considerably because people don't have the money to spend, business taxes are down because sales are down.

      These states will look anywhere for more revenue - and we should be prepared for some of them to try to get the money from online sales. Trying to enforce such taxes would create a whole new bureaucracy - and cost us a lot!

      Could this eventually mean we will need to incorporate in states that do not pass rules such as New York has done? That's how credit card companies make money - by locating headquarters in the few states that allow high interest rates (weak usury laws).

      kay
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