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End of the Internet's Tax-Free Ride?

kdawson posted about 6 years ago | from the pay-me-now-or-pay-me-later dept.

The Almighty Buck 426

News.com has a piece looking at renewed efforts by both state and federal lawmakers to subject Internet sales to state taxes. "Two bills are pending in Congress that would allow tax collectors to target out-of-state Internet and mail-order retailers, and their supporters are optimistic about their political prospects... Meanwhile, pro-tax states are trying their own ways to circumvent a long-standing rule saying a retailer must have physical presence before it can be forced to collect taxes. One effort came from New York state, where legislators recently approved a measure requiring Amazon and other online retailers (that lack a physical presence in the state) to collect sales tax on New Yorkers' purchases... This is not exactly a new debate... But now, with a Democratic Congress and a potentially Democratic administration next year, the arguments may gain more political traction."

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426 comments

Fantastic (5, Interesting)

Lost+Found (844289) | about 6 years ago | (#23083772)

More taxes... I'm sure everyone feels a lot of sympathy for them with it being tax season and everything. I'm sure it will be a lot of fun for small mom and pop retailers to deal with filing paperwork and collecting tax in 50 states just in order to sell trinkets off a small business website.

Re:Fantastic (2, Insightful)

Bryansix (761547) | about 6 years ago | (#23083808)

If you have a small mom and pop and operate on the Internet most likely you didn't design your shopping cart from the ground up. A popular free solution comes from Paypal. It isn't just for paypal accounts anymore. They allow you to accept credit cards as well. So the only company that would need to make the change is Paypal and I'm sure it won't be too burdensome for them.

Re:Fantastic (4, Informative)

pjl5602 (150416) | about 6 years ago | (#23084008)

I get the feeling you don't run a business that collects sales tax then. PayPal may collect the sales tax, but the business is still on the hook for sending the tax into the state.

Re:Fantastic (3, Insightful)

Garse Janacek (554329) | about 6 years ago | (#23084198)

The business may be on the hook, but that doesn't mean PayPal can't implement a simple automatic click-through system so you basically just need to print out and sign some automatically-generated forms at the end of the year. I'm sure other similar services will implement the same thing. One also suspects the states themselves will be on board to make it as easy as possible to send them money, so I don't see this being much more onerous or difficult than any other business tax.

The only real negative effect for internet businesses is that they've been evading sales tax for years, and now their customers will have to pay more. Which I find personally a little annoying, but I don't really oppose it, it was kind of inevitable -- the only reason this loophole existed in the first place is that online commerce became so big, so fast, that the tax system hadn't yet adjusted to the changing consumer behaviors. Effectively, we've been experiencing a decrease in tax during the past several years while it was easy to purchase anything online tax-free, which was not the case pre-amazon. And decreases are nice for the individual, but the balance had to come out somewhere...

Re:Fantastic (4, Interesting)

Anonymous Coward | about 6 years ago | (#23084290)

Yeah, but it's going to hurt online retailers. They will have to offer alot more free shipping. The only reason to shop online in my case was because it was cheaper to pay shipping than sales tax, which netted more money in my pocket. If I have to pay sales tax and shipping, then I'm just going to wal-mart to buy what I need. It's more convenient and cheaper in the long run. Plus I don't have to wait three days to play with my new toys. :)

Re:Fantastic (3, Interesting)

larry bagina (561269) | about 6 years ago | (#23084384)

some states have a "use tax" where you list the amount of tax-free out-of-state purchases you made and pay sales tax on them when you file your state income taxes. (Of course, most people don't). I am aware of some states nailing people over that, though.

Re:Fantastic (5, Insightful)

Grokmoo (1180039) | about 6 years ago | (#23084368)

This would not be possible without changes to the tax code. To pay state taxes, the business in question would need to open an account with the appropriate agency in each of the fifty states (assuming they had customers in each of the fifty states). Having gone through this process for Maryland, DC, and Virginia, I can tell you that the administrative burden this would put on small businesses would be very severe. This alone could probably keep an employee occupied full time for weeks.

Re:Fantastic (4, Insightful)

techno-vampire (666512) | about 6 years ago | (#23084414)

The only real negative effect for internet businesses is that they've been evading sales tax for years...


No, they haven't. Tax evasion is what happens when you fail to pay your taxes, or use phony deductions to lower your taxes. Internet businesses haven't been paying sales taxes to other states in the past because the law said that they didn't have to. If this law goes through, that will change until and unless the courts say the law is unconstitutional.

Re:Fantastic (0)

Anonymous Coward | about 6 years ago | (#23084208)

Paypal...I refuse to do business with those crooks.

Go to Google and type "Paypal Attorney general"

Judge for yourself.

Re:Fantastic (0)

omega_dk (1090143) | about 6 years ago | (#23084286)

So they process transactions for online gambling sites? Is that why?

I mean, I don't know the law they were breaking to do that, cause I could only find info on the settlement, but I don't think thats enough to call them crooks...(but I also didn't spend much time looking it up, which is why I want to know more about the case from someone who is obviously invested)

Re:Fantastic (3, Informative)

MadnessASAP (1052274) | about 6 years ago | (#23084462)

Paypal behaves in some ways like a bank (They maintain monetary accounts for customers and allow the transfer to and from these accounts) but they are not classified as a bank and as such do not need to follow banking laws. This has led to Paypal doing things like locking a person or organizations account citing "suspicious behaviour" and offering no further explanation or directions as to how to get there account unfrozen forcing people to spend months of time and effort to get often times significant amounts of money back from Paypal.

Re:Fantastic (1, Interesting)

Anonymous Coward | about 6 years ago | (#23084260)

Yeah, but what about those businesses that can't take paypal. Because Paypal is owned by ebay, paypal doesn't allow transactions for things not allowed by ebay.

Legitimate items... like say... oh, antique firearms. Should these and other such niche businesses have to bend over backward for every state/county/township in the US?

Having just done my taxes, I can say - please, no more taxes. I heard about the 1% rule - all transactions get taxed 1% with no exceptions (no other rules or taxes) -- please, please, please! Make this a reality! No more forms, and schedules, and loopholes. I just look at a tax form with checkmarks pertaining to the "Paperwork Reduction Act". I had to laugh at the irony.

I'm surprised they don't just make it federal (4, Insightful)

Reziac (43301) | about 6 years ago | (#23083820)

Not to put ideas in their pointed little heads, but I'm surprised that the feds don't just impose a uniform federal tax on internet, mail order, and all other non-local sales of goods or services, with some small percentage earmarked for the states based on where the federal tax dollars come from.

Of course, they'd never consider REDUCING SPENDING, not so long as there's any citizen's assets left untaxed at a rate lower than 100% :(

Tax and spend! (4, Insightful)

jmorris42 (1458) | about 6 years ago | (#23084062)

> not so long as there's any citizen's assets left untaxed at a rate lower than 100% :(

Oh of course not! And why should they when they consider it their money in the first place. How else to explain the mind set that calls every tax cut 'a giveaway to the rich', refers to how much a tax cut will 'cost' the government, how much it will 'cost' the government to implement a tax cut, etc. In their evil brains it is ALL theirs and they begrudge each and every cent they are forced to 'spend' when they allow a taxpayer to have a dollar with no strings attached.

And the summary is spot on folks. Since the Internet becane bigtime either Congress of the White House has been outside the control of Democrats so the net was safe. Divided government is usually the best kind. Something the Dem leaning slashdot users might want to keep in mind come November. Congress is almost a statistical certainty to remain in Dem hands so ask yourself, Is Maverick really THAT bad?

Re:I'm surprised they don't just make it federal (4, Interesting)

Ucklak (755284) | about 6 years ago | (#23084174)

Normally, brick and mortar taxes are supposed to pay for police, fire, and whatnot.
This internet tax doesn't use any of that. The fees we pay for shipping and handling cover the road fees required to bring the product to our door.

I already pay tax on my internet service.

Re:I'm surprised they don't just make it federal (1)

Reziac (43301) | about 6 years ago | (#23084338)

And I agree, we already pay more than plenty fees and taxes, not to mention the rapidly-inflating cost of goods of all sorts...

Allow me to rephrase your sig in context:

If you steal from one person, that is banditry; if you steal from many, well, that's just taxes.

Re:Fantastic (4, Insightful)

Tackhead (54550) | about 6 years ago | (#23083832)

I'm sure it will be a lot of fun for small mom and pop retailers to deal with filing paperwork and collecting tax in 50 states just in order to sell trinkets off a small business website.

Which, if you're a major retailer, is probably the point. With the stroke of a pen, all of your smaller competition can be eliminated.

It doesn't have to be that sinister, of course. It could be as simple as the fact that it's an election year, and what better way to raise money for Congressional campaigns (and make sure that retailers throw a few bucks for ex-Congressmen currently "working" as lobbyists) than to threaten to do something unpleasant between now and the election...

Gotta pay back the Chinese for Iraq somehow... (0, Offtopic)

FatSean (18753) | about 6 years ago | (#23083844)

We can't seem to cut spending...indeed 6 years of Republican Legislature and a Republican President increased spending to record heights.

Now this optional war on borrowed money is weighing on our economy. Time to start paying down our debts, and maybe world confidence in out economy will grow.

Who knows, I just know I hate that our nation is so deeply in debt to some nations with scumbag human rights laws.

Re:Fantastic (0, Troll)

omeomi (675045) | about 6 years ago | (#23083922)

If they need the money, why don't they just roll back the Bush tax cuts that don't benefit me because I'm not rich and keep the Internet tax free because it benefits everyone who buys or sells things online

Re:Fantastic (3, Informative)

doktor-hladnjak (650513) | about 6 years ago | (#23083998)

For starters, this is about state sales taxes, not federal income taxes. Lowering or raising federal income tax doesn't directly affect state tax revenues.

Re:Fantastic (2, Insightful)

Z34107 (925136) | about 6 years ago | (#23084356)

How about the fact that federal receipts went up after the Bush tax cuts? It's called the Laffer curve.

Now, if you subscribe to Keynesian economics, you could argue that an increase in government spending by the same amount would have been more effective than cutting taxes because that multiplier is higher than the tax multiplier.

But, it's really time for the "tax cuts for the rich" propaganda to stop. Small businesses (LLC-types) are taxed as if they were individuals. If you want economic growth to happen from small business, you have to stop taxing the $200k income bracket to death. A lot of the "people" who fall in there are mom and pop shops.

Besides, nobody's moving the Alternative Minimum Tax. With any luck and present inflation, soon nearly everyone will be taxed under the AMT. This means that we'll have a de facto flat tax on income.

Re:Fantastic (2, Interesting)

theeddie55 (982783) | about 6 years ago | (#23084486)

Do mom and pop annually take over $10,000 from New York State alone. If not then this doesn't apply.

Use Tax (4, Insightful)

Bryansix (761547) | about 6 years ago | (#23083784)

It is important to note that anytime sales tax isn't collected for you by the company you buy from you still have to pay that tax when it comes to April 15th. This is called Use Tax. The only problem is it operated on the honor system so I'm sure only a small percentage of this tax is ever collected.

I can't believe use tax hasn't been shot down (1)

Tanman (90298) | about 6 years ago | (#23083830)

I mean, use tax is just sales tax that hasn't been collected by anyone else. It's such a load of crock.

"Hi, my name is California. If you set foot in my state, then you must pay sal... er, 'use tax' on each and every item you used in california if you didn't already pay use... er, 'sales tax' on it in another state."

Re:I can't believe use tax hasn't been shot down (3, Informative)

geekoid (135745) | about 6 years ago | (#23084018)

not quite.

It's intent is for mail order items to residence.

So if I am living in Ca, and buy 10.00 widget from acme widget co, located in BFE, mid-west I pay my 7%(whatever) to the state at the end of the year.

Re:Use Tax (1, Insightful)

Anonymous Coward | about 6 years ago | (#23083870)

1) It depends on which state you live in. Some states don't have a sales tax or use tax.

2) Use taxes are just a means to apply a tax without the transaction being considered "interstate commerce".

Standing (2, Interesting)

HaeMaker (221642) | about 6 years ago | (#23083786)

It will be interesting because they probably don't have standing to collect. They would either have to collect from the customer or setup a customs system when the goods enter (are imported?) to the state.

Re:Standing (2, Insightful)

PunkOfLinux (870955) | about 6 years ago | (#23083834)

Isn't this illegal, since only the feds can regulate interstate commerce?

Re:Standing (1)

jmorris42 (1458) | about 6 years ago | (#23084086)

> Isn't this illegal, since only the feds can regulate interstate commerce?

Which is why Congress is trying to pass a law. You are right that the antics of NY are obviously illegal but they probably aren't dumb enough to think it will actually pass or not get shot dwon in court. But as a PR stunt it will help get Congress to make it legal.

Re:Standing (2, Insightful)

PunkOfLinux (870955) | about 6 years ago | (#23084106)

I thought that was in the constitution... nothing supersedes constitutional law.

Re:Standing (1)

jmorris42 (1458) | about 6 years ago | (#23084182)

> I thought that was in the constitution... nothing supersedes constitutional law.

1. Ah the joy of watching a young idealist's faith dashed. Our rulers ain't been bound by that old yellowed parchment for at least a century. Me, I say it was Lincoln who first really and truly wiped his arse with it, others put the exact point +/- fifty years from him depending how cynical they are But it is worse these days, if a day goes by now without a Congresscritter, Federal Judge or POTUS violating his Oath it means the bastard is on vacation.

2. But they usually pay at least lip service to the Constituition if they can, and it actually gives Congress the power to regulate commerce between the several states and even I'd say that so long as it is equally applied they can indeed tax it. And unless every block grant is struck down they would have the power to give the money to the States. So they could probably save a step and just let the states collect it through some big federal clearing house.. after giving Congress a taste.

Re:Standing (1)

Bobb9000 (796960) | about 6 years ago | (#23084428)

I thought that was in the constitution... nothing supersedes constitutional law.

It is in the Constitution, but what the Constitution actually says is the states can't lay taxes on imports, and generally can't burden interstate commerce, without the consent of Congress. The idea is to prevent the states from having little economic wars with one another, but still allow taxes if they can convince the national Congress that it's necessary.

Is this April 1st again? (0)

Itninja (937614) | about 6 years ago | (#23083814)

Seriously I thought this was another joke post. Taxing out-of-state sales will likely never happen. And if it does, expect a massive increase in the number of hosted servers & PO boxes being used in Alaska, Oregon, Montana, or any of the other 0% sales tax states.

Re:Is this April 1st again? (1)

geekoid (135745) | about 6 years ago | (#23083918)

You misunderstand.

The consumer will pay the tax based on their location. How many are going to go through the hassles and costs of having a pretend PO box, and then have it shipped to their actual address to save a few bucks on a tax?

New your is trying to get tax money Amazon, yet amazon has no physical presence in New York. New York is basically saying 'Hey, it's not are fault you didn't collect the taxes for us, pay up.'

Re:Is this April 1st again? (1)

Maxo-Texas (864189) | about 6 years ago | (#23084162)

Hmmmm.

Do you pay sales tax on shipping fees?

First Run DVD! 19.99 in stores.. buy here for only 2.99! (+$17.00 shipping & handling)

Please... (0)

Anonymous Coward | about 6 years ago | (#23083816)

I'd rather not pay more to the man : (

Re:Please... (0)

Anonymous Coward | about 6 years ago | (#23084410)

Say what you will about government wastage, but tax is the price that you pay for civilisation. Would you prefer that every road, including the one you live on, be a toll road owned by a different operator, each requiring a different-denomination coin every time you drive on it? Or that firefighters don't save your house if you haven't paid into the correct FMO?

In related news ... (1, Flamebait)

PPH (736903) | about 6 years ago | (#23083824)

...Internet businesses move offshore.

Re:In related news ... (1)

roubles (716740) | about 6 years ago | (#23084172)

Shipping from off shore would be more expensive.

Not to mention the fact that the shipments would need to go through customs.

In most cases it would be quicker and cheaper to just pay the taxes.

Re:In related news ... (1)

PPH (736903) | about 6 years ago | (#23084478)

Offshore shipping won't be required. The (foreign) retail web sites will subcontract order fulfillment to local firms.

Unless its consumer goods. All that stuff comes from China anyway.

No They Won't (1)

Senjutsu (614542) | about 6 years ago | (#23084416)

Why would they? What would that accomplish?

a) It's a sales tax; it costs them nothing.

b) In most countries online sales are subject to tax and the companies have been required to collect the taxes all along, and guess what? Those countries still have plenty of locally-based companies selling online. The free-ride US shoppers have been getting is not the norm, and is in no way a precondition to having high internet sales.

c) Moving offshort wouldn't accomplish a damn thing anyways. Instead of a sales tax, your customers would now be paying duties on import, which are more of a hassle. You'd have your lunch eaten by the companies who aren't run by cretins.

Election year agitprop (2, Insightful)

MacDork (560499) | about 6 years ago | (#23083848)

But now, with a Democratic Congress and a potentially Democratic administration next year, the arguments may gain more political traction.

You had me up until you got to that last sentence. More election year tripe. Woooo, the evil Democrats are going to tax my intarnets!!

Re:Election year agitprop (-1, Troll)

Anonymous Coward | about 6 years ago | (#23084048)

Well just look at left leaning states like New York, one of the Armpits of Amerika.
Please, it is what these people do, it is in their blood.

Re:Election year agitprop (0)

Anonymous Coward | about 6 years ago | (#23084390)

I agree completely! When it comes to the Federal Government it's totally the Democrats that seem to have a love affair with spending lots of money.</sarcasm>

Re:Election year agitprop (-1, Troll)

Anonymous Coward | about 6 years ago | (#23084138)

Well, coming with kdawson blessing what you should expect? At least he is not talking about Ron Paul saving AmeriKKKa from the evil illegal immigrants that are "tkin orr jerbs"...

Old news, please move along... (0)

Anonymous Coward | about 6 years ago | (#23083854)

Newsflash: If you've made a purchase on the internet, you've always been responsible for paying the appropriate taxes on that purchase.

The law is to make retailers responsible for paying the tax, on your behalf, even if the retailer doesn't have a local presence.

There never has been an "Internet Tax-Free Ride", only individuals that have decided to evade state and local taxes.

I'm not voting for him, but... (5, Informative)

xLittleP (987772) | about 6 years ago | (#23083858)

I think John McCain wants to ban internet taxes. From his website [johnmccain.com] (about halfway down the page):

John McCain Will Ban Internet Taxes. John McCain has been a leader in keeping the Internet free of taxes. As President, he will seek a permanent ban on taxes that threaten this engine of economic growth and prosperity.
Proceed to mod as flamebait...

Re:I'm not voting for him, but... (1)

geekoid (135745) | about 6 years ago | (#23083978)

Yes, ye claims he wants to ban all kinds of taxes...but doesn't bother to say what programs he will cut.
Stupid and irresponsible. It's not the taxes, it's the programs.

Not to mention any talk about banning taxes is pretty much irresponsible considering the debt we are incurring.

Re:I'm not voting for him, but... (1)

Khaed (544779) | about 6 years ago | (#23084484)

He said today he'd order a look at every federal program and stop spending increases dead. So there is that. I don't really like McCain all that much, but there's no way I'm voting for either of the two Democrat frontrunners... The last thing we need is a triangulation between Pelosi, Reid, and (Obama or Hillary) on taxes.

Re:I'm not voting for him, but... (2, Informative)

doktor-hladnjak (650513) | about 6 years ago | (#23084050)

Federal internet taxes are not the same thing as paying state sales tax on purchases made over the internet. Internet taxes would be taxes on either personal/business connections or services or other infrastructure, similar to the federal taxes that currently show up on cell phone, landline and cable bills already.

Great thinking guys (0, Troll)

Dunbal (464142) | about 6 years ago | (#23083860)

Every economist will tell you that a recession/economic downturn is the BEST time to bring out a new tax (yes it's called sarcasm). Hey, ask Maggie Thatcher - it sure helped to put a lot of British out of work in the 80's. Recession? RAISE tax and reduce the people's disposable income even further. Joe Sixpack is struggling to pay his gas, credit cards and probably can't afford to keep/refinance his mortgage. Let's make him give the government some of his internet moneh.

Another great idea from the people you idiots keep voting for. And I'm not your guy, friend.

If the Democrats were economically progressive (1)

my $anity 0 (917519) | about 6 years ago | (#23083868)

If the Democrats were really economically progressive, they would be opposed to the sales tax. It's one of the best examples of a regressive tax out there. The income tax is a lot better at taking from those who can afford it.

However, as I'm sure others will note, Democrats tend to support sales taxes. New York is highly Democrat, and you see 8.75% sales tax. I still don't see the purpose of this.

Tax the money once, when people earn it. Tax it well.

Re:If the Democrats were economically progressive (1)

PunkOfLinux (870955) | about 6 years ago | (#23083914)

Holy shit, I never thought about the fact that a sales is a 'double tax'.

Re:If the Democrats were economically progressive (-1, Flamebait)

Anonymous Coward | about 6 years ago | (#23083982)

Holy shit, I never thought about the fact that a sales is a 'double tax'.
Really? You're pretty stupid.

Re:If the Democrats were economically progressive (1)

PunkOfLinux (870955) | about 6 years ago | (#23084028)

Not stupid, just never thought about it. Literally. NEVER gave a thought to it.

Re:If the Democrats were economically progressive (1, Insightful)

omega_dk (1090143) | about 6 years ago | (#23084442)

You may also be surprised to learn that it also disproportionately taxes the poor, because when you are making just enough to live and eat, that 8% can make a huge difference. When you have enough money to live comfortably, that 8% will basically eat into the amount you put into the bank, not the amount you put into your mouth.

Income taxes are written to be more like Robin Hood; take from the rich, give to the poor (well, in theory... but as the saying goes, the difference between theory and practice is greater in practice than it is in theory).

Re:If the Democrats were economically progressive (2, Informative)

Bassman59 (519820) | about 6 years ago | (#23084042)

However, as I'm sure others will note, Democrats tend to support sales taxes. New York is highly Democrat, and you see 8.75% sales tax. I still don't see the purpose of this.
Highly Republican Arizona isn't far behind, at 8.1%.

Re:If the Democrats were economically progressive (0)

Anonymous Coward | about 6 years ago | (#23084264)

New York is highly Democrat, and you see 8.75% sales tax.
Nope. New York is highly Democrat(ic) in federal elections. The state legislature has been highly Republican for the last 40 or so years. There was talk about the Dems taking the NYS legislature back, but Gov. Spitzer's blunders have probably hampered that. :P

Re:If the Democrats were economically progressive (0, Flamebait)

kahrytan (913147) | about 6 years ago | (#23084320)

If the Democrats were really economically progressive, they would be opposed to the sales tax. It's one of the best examples of a regressive tax out there. The income tax is a lot better at taking from those who can afford it.

However, as I'm sure others will note, Democrats tend to support sales taxes. New York is highly Democrat, and you see 8.75% sales tax. I still don't see the purpose of this.

Tax the money once, when people earn it. Tax it well.

Income tax is dumbest idea since the invention of fire. Fair tax, republican invention, is the best tax idea.

Politicians unable to think. (0)

Anonymous Coward | about 6 years ago | (#23083876)

I've made a living developing and selling niche software products over the internet. I'm a simple one man operation (registered as an LLC).

Do these politicians honestly expect me to track the tax requirements and laws for 50 different states? Worse yet, each city/county has its own taxes and licenses too.

A whole new breed of middle-men would have to pop-up, existing solely for the purpose of figuring out who I have to collect sales taxes for.

Quite frankly, if this nightmare passes I'm calling it quits and shutting down my business. Emigration would be a serious option.

Re:Politicians unable to think. (3, Funny)

moderatorrater (1095745) | about 6 years ago | (#23084334)

A whole new breed of middle-men would have to pop-up, existing solely for the purpose of figuring out who I have to collect sales taxes for.
Perfect! They're creating jobs! This'll be great for the economy!

Bad Summary (4, Insightful)

Gat0r30y (957941) | about 6 years ago | (#23083894)

But now, with a Democratic Congress and a potentially Democratic administration next year, the arguments may gain more political traction."
This is about states trying to collect state tax on goods crossing state lines, which are sold in their state. NY State is totally broke that is why they are pushing for this. (Despite the fact that even were they to be successful it would only bring in ~ 100 Million dollars compared to their 100 Billion budget).

Double taxation (5, Insightful)

tompaulco (629533) | about 6 years ago | (#23083900)

New Yorkers are already required to pay Use Tax, though most people probably don't do it. Are they going to get rid of the Use Tax when they implement this Out of State Sales Tax? I doubt it. Do they have jurisdiction to require an Out-of-State vendor to collect Sale Tax on their behalf? I doubt it. Do they have jurisdiction to demand payment from said Vendor? I doubt it.
What they are trying to do is shift the burden of collecting tax from themselves to somebody else, the vendors. They have already successfully done this for in-state Vendors via sales tax collection, and also shifted the burden of collecting income tax, Social Security and Medicare to employers. All they really have to do anymore is sit back and get paid.
The problem with requiring Out-of-State vendors to collect sales tax, is that there are approximately a half million tax districts in the United States. As a vendor, I know that there are over 15,000 in my state alone. They change constantly. I get notices in the mail every two to three days of a tax district instituting, increasing, occasionally decreasing or abolishing a sales tax rate. A brick and mortar can just plug in the tax rate for their current community into the desk calculator and they are good to go. A mom and pop internet outfit would have to spend probably 24 man-hours a day updating sales tax rates, or spend extra money to pay an outside outfit to calculate their sales tax for them.
I am sure new York just wants money without having to pursue it themselves, but the assumed unintentional side effect is that they are going to hurt small business on the internet by and large without effect on the large businesses.

Re:Double taxation (2, Insightful)

hal9000(jr) (316943) | about 6 years ago | (#23084150)

Do they have jurisdiction to require an Out-of-State vendor to collect Sale Tax on their behalf? I doubt it. Do they have jurisdiction to demand payment from said Vendor? I doubt it.

New York will sue and probably win. Do you forget that New York state will tax you [pcworld.com] if you telecommute to work for a company based on NY while you live outside NY. Enter the state on business and you own NY state tax for the YEAR.

Re:Double taxation (1)

alen (225700) | about 6 years ago | (#23084348)

there is a company called CCH that collects all kinds of tax info from around the US, organizes it and sells it to businesses so they can collect taxes. this has been the case with telephone service for decades now

The age old problem... (1)

The Ancients (626689) | about 6 years ago | (#23083908)

...of balancing fairness with ease of use.

If sales tax is a consumption tax (which it appears to be according to posts in the previous article re: New York State [slashdot.org]), then it is probably fair to expect to receive taxes on these purchases. However, to facilitate this, legislative bodies need to make it relatively simple for the parties involved to do so.

While it sounds relatively simple, this is a problem that has faced mankind since taxes came about (thousands of years ago), and the legislators still don't get it. If it was relatively easy to do, less people would be jumping up and down about it.

So instead of having a win/win situation with a simple, elegant system, which is inexpensive to administer and requires less tax to be paid, administrators make tax payers jump through (expensive) hoops, and spends yet more money chasing those who take issue with it.

Already taxed in Rhode Island (1)

DoofusOfDeath (636671) | about 6 years ago | (#23083932)

In RI, we pay a "use tax". If you buy something in-state, it's covered by the "sales tax" (7.5%). I suspect it's an un-Constitutional form of inter-state commerce taxation by RI, but there you have it.

Re:Already taxed in Rhode Island (0)

Anonymous Coward | about 6 years ago | (#23084262)

Every state (that has a sales tax), to the best of my knowledge, has this. It's not unconstitutional - but it's hard/impossible to enforce.

Re:Already taxed in Rhode Island (1)

pilgrim23 (716938) | about 6 years ago | (#23084328)

Here in Oregon we haev NO SALES TAX AT ALL. it has been brought up 8 times by our legislature and it has been voted out by citizen rferendum every single time. Yes we are loons in many respects but this one is a point of pride. I wonder how many companies will re-locate to this tax haven...

See (2, Interesting)

BigJClark (1226554) | about 6 years ago | (#23083934)


This doesn't bother me, not in the least. I can remember a day, when any use of the Internet to sell anything was abhorent. Advertising of any matter was viewed with disgust.

Now, due to the greedy bureaucratic fatcats who wish to tax the little guy to the bitter end, we might see a drop in pointless port 80 communication. (Present company excluded, of course).

I say bring it, lets clean the fat off the bone.

WE GOTS TO GET US SOME PORK! (2, Insightful)

Chas (5144) | about 6 years ago | (#23083966)

Maybe if some of these states (including my own) were actually more business-friendly, they wouldn't have to worry about taxing online venues. As it is, these states seem hell-bent on chasing jobs out and have to go looking for "free money" to funnel into their pockets.

THIS IS ASININE! (5, Interesting)

Jane Q. Public (1010737) | about 6 years ago | (#23083968)

There are ALREADY laws and taxes in place! A state does not have legal authority to impose taxes on a sale made in another state. That is, it cannot force an Oklahoma retailer to collect California sales taxes for a sale made to a Californian.

However, as far as I am aware ALL 50 STATES have "use taxes" in place, that are supposed to be paid for out-of-state purchases. In most cases the amount of use tax is identical to what the sales tax would have been if the sale had been local. The difference is that the purchaser, not the seller, is responsible for paying the tax. This is the way it MUST be... neither the individual States nor the Federal government have the Constitutional authority to force a business to collect taxes for the other 49 states. And even if they could, it would be an excessive burden... trying to keep track of tax rates for different kinds of products in 50 individual states is beyond the reasonable capabilities of most small businesses, which even today are still the backbone of our economy. Further, the Federal government also does not have the authority to collect State taxes on their behalf.

The taxes are already there. The laws are already in place. If they don't like the way that works... too bad. They just do not have the Constitutional authority to do this. And there is nothing new here, either... people have been buying by mail-order for at least a couple of centuries now, and this debate has been going on all that time. DO NOT let them try to tell you that eBay is forcing their hands. Hogwash.

Re:THIS IS ASININE! (0)

Anonymous Coward | about 6 years ago | (#23084096)

Forget the other 49 states. How many counties are their in the US. In GA each county can have a different rate so would you have to collect tax based on that counties rate?

GA has a thing called "SPLOST", Specail Purpose Local Option Sales Tax. Everytime there is a vote for a new president we vote on to add 1% tax to the state sales tax. This is used for county projects.
What sucks is that the law is written so that if you leave the county to make large purchases like a car you pay the rate in the county you live in not the county you make the purchase. WTF?

Re:THIS IS ASININE! (1)

John_Sauter (595980) | about 6 years ago | (#23084284)

However, as far as I am aware ALL 50 STATES have "use taxes" in place, that are supposed to be paid for out-of-state purchases.

Not quite true, though close. New Hampshire does not have a use tax. New Hampshire does tax purchases typically made by tourists, such as restaurant meals and lodging, but it doesn't call those "sales taxes". Things you could reasonably buy over the Internet are not taxed.

Maybe New Hampshire will become the address of convenience for Internet retailers. That would be a wonderful way to improve broadband connectivity in the rural parts of the state.

Re:THIS IS ASININE! (1)

gurudyne (126096) | about 6 years ago | (#23084396)

Upgrade your awareness on "ALL 50 STATES"

I live in Oregon. We don't have a "use tax", "sales tax" or any other kind of tariff extracted on purchases.

Their claim: It's Not Your Money (5, Insightful)

DaSpudMan (671160) | about 6 years ago | (#23083980)

Comments in the article say it all:

"...money has been unfairly left in taxpayers' pocketbooks. "

"Verenda Smith, government affairs associate for the Federation of Tax Administrators, framed the decision as a moral one of sorts: "Do you want to be a good American, or do you want to be an American who wants to cheat your government deliberately?"

It's not your money. You are cheating the government out of funds to spend on their favorite pork project.

Holy fuck (1, Troll)

aztektum (170569) | about 6 years ago | (#23084134)

Best comments ever

It occurs to me that our economy may be in a bit better shape if, you know, we paid less in taxes and had that money spend on frivolous shit. I suppose either way it ends up in some fat cats pockets (via government contracts or purchase of goods, what's the diff how they get it, so long as they get it!)

Re:Their claim: It's Not Your Money (1)

Hijacked Public (999535) | about 6 years ago | (#23084426)

And they are right.

And to expand on it, much of the stuff you think of as 'yours' is not, it is theirs.

If you decide not to pay your income tax, or your property tax if you live in a state with one, you will find our very quickly how right they are. They will come for their money and if they have to sell your shit to get they'll be happy to do it. If they have to bring along someone with a rifle they'll do that as well.

Most state governments and certainly the IRS can levy a tax against a person for any reason, or no reason at all. Options for addressing a wrongful levy are limited and require strict attention to narrow windows of time. In the case of the IRS there are 2 courts in the land that can lift a wrongfully levied tax and if you happen to miss a 90 day period to request that the only way they will even hear your case is if you first pay the full amount of the tax along with any penalties and interest.

You could have the most airtight case against the IRS that anyone has ever seen and until you pay them, no one can do anything. And the penalty against the IRS for a completely invented levy? Absolutely nothing.

Non-USA Retailers (1)

foxcob (1036478) | about 6 years ago | (#23084024)

How would this work for out of USA sales? If I were to buy a product from a European retailer, how can my state charge taxes on that product? How can my state even be aware of my purchase?

those wars have to be paid for somehow (0)

Anonymous Coward | about 6 years ago | (#23084032)


seeing as USA is currently the most indebted nation on the planet [cia.gov] its only prudent that someone take the reigns and start paying back whats owed, and that will be with the only tool the government have; taxes.
remember the Iraq war is costing you currently approx $43500 per household per year [nationalpriorities.org], where do you think thats gonna come from ?

this sales tax is only the beginning of a very long,very steep road.

Re:those wars have to be paid for somehow (1)

PunkOfLinux (870955) | about 6 years ago | (#23084046)

And why, exactly, are WE paying for something WE opposed? Why are we paying for things to make the rich richer? That's WRONG. I don't care who you are; if you have a soul, you know that that's wrong!

Re:those wars have to be paid for somehow (2, Informative)

seriesrover (867969) | about 6 years ago | (#23084298)

Then you may want to read this :
http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes/ [american.com]


Its pretty well established that "the Rich" pay an overwhelming proportion of the tax bill - the top 10% of people pay about 70%....so in response to your statement, how exactly are you making the rich richer ?

If you want to say that those with a soul must agree with you, you may want to get some facts straight first.

Not a Dem/Rep Issue, it is a supreme court ruling. (2)

barfy (256323) | about 6 years ago | (#23084114)

This is not a dem/rep issue, or a congressional issue at all. It is a supreme court ruling. Simply the Nexus issue means that a state cannot force citizens of another state to collect their sales taxes. There really isn't anything the congress can do about this.

Now there could be a federal sales tax, and that could be appropriated to the states somehow. But I don't think there is a snowball's chance this would pass. People will scream and hop around, but you are simply not going to get around this.

However, just because Amazon doesn't COLLECT the sales tax, does NOT mean that it is not owed. A sales tax is less commonly, but more correctly called a USE tax. And it is supposed to be paid, even if it is not collected by the merchant. This means there could be a reporting agreement made with major retailers at least, and they could send you a bill for the tax that you are required to pay.

Re:Not a Dem/Rep Issue, it is a supreme court ruli (0)

Anonymous Coward | about 6 years ago | (#23084470)

"congressional issue at all. It is a supreme court ruling"

In what part of the constitution? If it is not the the federal government can pass a law to allow or forbid it.

yawn (1)

DanWS6 (1248650) | about 6 years ago | (#23084122)

sales tax, income tax, property tax... blah blah blah I understand the government needs money in order to function but I for one would rather just pay a flat tax and be allowed to portion out where it gets sent. Our government can't seem to balance the budget so at least I could choose how and where they blow my money.

Can somebody explain to me... (1)

mark-t (151149) | about 6 years ago | (#23084148)

What the heck is the point of a consumer sales tax anyways? Why can't the price you see the product for, plus perhaps shipping and handling charges, if they are applicable, just be what you pay?

Re:Can somebody explain to me... (1)

QuantumG (50515) | about 6 years ago | (#23084464)

Here in Australia we fought for years to not have a general sales tax.. then the biggest nay-sayer of GST got power and he immediately flip-flopped and introduced a GST. He got away with it by requiring sellers to put the GST inclusive into the price.. so the customer never has to add the 10%, it's already added. At the end of your receipt the total GST for the transaction is listed, so if you think you have a right to claim it back, you don't have to do the math to extract it from the total. Of course, if you buy something that is exempt from GST (like basic/unprocessed foods) then your receipt will be out and you'll have to do some math to figure it out.

For some products in Australia you will pay import taxes, luxury taxes, sales tax and, let's not forget, income tax. This can quickly become the dominate factor in the price. For example, computers.

I thought this was a news site. (1)

Fear the Clam (230933) | about 6 years ago | (#23084274)

I live in NYC and not only does just about every place I buy online from already have a store somewhere in the state so I have to pay state tax and postage, I also have to pay a NY state "use tax"--the amount due based on my income--under the assumption that I'll buy something from another state.

$10,000 per person is enough? (2, Insightful)

BinBoy (164798) | about 6 years ago | (#23084288)

The US budget calls for spending the equivalent of $10,000 for every man woman and child (3 trillion / 300 million pop.). When is it enough? Isn't there some point where we can say that the people are taxed enough?

Democrats (0)

Anonymous Coward | about 6 years ago | (#23084360)

Damn, tax-hungry democrats.

No taxation without representation. (1)

Boap (559344) | about 6 years ago | (#23084394)

It is wrong for any government to tax people that have no say in how much or how they are taxed. Last time this happened in America we went to war and kicked out the Brits.

Biggest Reason to not Vote Democrat (1)

kahrytan (913147) | about 6 years ago | (#23084400)

Because they have this obsessive need to balance the budget, get a surplus (government has no right to make a profit), cut services to civil services (like healthcare and welfare), raise taxes, and cut military funding. Don't take my word for it, look at Clinton's record.

Great for economic recovery, too (0)

Anonymous Coward | about 6 years ago | (#23084412)

So, in order to encourage more commerce, we're going to increase taxes on ... commerce. That's sure to get the economy going again and keep the recession short and shallow.

Oh, I forgot - the point is actually to make sure that, whatever pathetic remnant of commerce exists, all the money goes to the government so that they, not we, can decide who should get it. Makes sense, I guess, if you presuppose Communism.
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