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U.S. Ecommerce To Be Broadly Taxed?

Zonk posted more than 8 years ago | from the the-end-of-the-world-as-we-know-it dept.

Businesses 639

fl!ptop writes "ZDnet has a story about U.S. Senators proposing sweeping changes to how Americans are taxed for online purchases. As proposed, businesses would be required to collect sales taxes and send them to the state the purchase was shipped to. As a small business owner that primarily sells via ecommerce, I am shuddering at the prospect of having to deal with government sales tax forms and coupon books for 30 or more states. Will I have to register with each state's tax department? As an ecommerce Web developer, I'm also wondering what implications this will have on maintaining code that calculates sales taxes, expecially in states like Ohio where they differ by county and municipality."

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Free startup idea (5, Funny)

winkydink (650484) | more than 8 years ago | (#14319587)

Start a company that acts as an intermediary and provides the taxation service for small businesses.

Throw in some mumble about Ajax and Web 2.0 and watch the VCs line up to throw money at you and beg you to have sex with their women-folk.

Re:Free startup idea (3, Insightful)

dfn5 (524972) | more than 8 years ago | (#14319642)

Start a company that acts as an intermediary and provides the taxation service for small businesses.
How about a company that sets up shop in a tax free state, like NH, to accept the deliveries of on-line purchases where the buyer can come and pick it up. Kind of like a mailboxes etc. Oh wait....

Too late (2, Informative)

dereference (875531) | more than 8 years ago | (#14319727)

They've [streamlinedsalestax.org] already been there and done that [slashdot.org] .

Re:Free startup idea (2, Funny)

Mantrid (250133) | more than 8 years ago | (#14319757)

Better yet patent the idea of doing that and let that stew for a few years then torpedo every website :)

The no tax conservatives (0)

Anonymous Coward | more than 8 years ago | (#14319606)

Who wants to bet the low/no tax conservatives will let this thing through?

Once again (1, Interesting)

COMON$ (806135) | more than 8 years ago | (#14319614)

Why is the Gov't taxing us for these items? What is the justification? Maybe I am off base here, but the gov't doesnt have much to do with e-commerce.

Re:Once again (2, Informative)

donnyspi (701349) | more than 8 years ago | (#14319623)

E-commerce sales take away from brick-and-mortar sales, which are taxed. The gov't feels they are losing money.

Re:Once again (2, Interesting)

COMON$ (806135) | more than 8 years ago | (#14319733)

Ok I am going to get flamed here, but the gov't is a non-profit. Not a money making machine. Or at least it is not intended to be one. If taxable items are reduced, and the gov't gets reduced revenues then the services that the taxes pay for get reduced. oversimplified sure, I know gov't spending is much more complex than that (work in gov't myself).

Maybe I am calling for reform here but tax for services rendered is the system I would like to see.

Re:Once again (2, Informative)

EvilSS (557649) | more than 8 years ago | (#14319705)

The reason is the states are loosing money on sales tax for online purchases. Now don't get me wrong, I like not having to pay taxes on my online purchases, but you have to understand the states point of view on it. They rely on taxes for revenue and a big part of it is sales tax for many states.

Re:Once again (4, Interesting)

Uhlek (71945) | more than 8 years ago | (#14319730)

The problem is tax revenue. Sales tax makes up a considerable percentage of revenue for many states, especially states like Texas that have no income tax.

Back in the day, most people bought almost everything they bought from local merchants, meaning that there was very little way to avoid sales tax. Catalog mail order and later, telephone orders, made up such a small percentage of commerce that the items remained untaxed. The smaller northeastern states, and even some municipalities (like in the Oklahoma City area) sometimes lower their tax rates to encourage people to come shop in their malls. Delaware makes a big stink about not having a sales tax, and there's a lot of outlet malls that advertise as such. Still, it wasn't much money.

Now, thanks to advances in shipping technology and Internet ordering, people are spending more and more money online, especially in the holiday season. This money isn't being taxed.

Some states have provisions to attempt to curb this. Virginia, for example, has a "use tax" where if you purchase any item and do not pay sales tax, you have you pay a "use tax" on it. Problem is, it's hard to track and almost no one reports anything, much less what they really spent.

The tax system is so convoluted and fucked up it should be changed, I agree, but this is totally legal. The sticky point comes in where states are trying to force e-merchants to collect their own sales taxes. Depending on how this is accomplished (i.e., not a federal law) if you've got a state that isn't part of this agreement you're going to see e-merchants move to those states to avoid having the additional burden of collecting those taxes.

Re:Once again (0)

Anonymous Coward | more than 8 years ago | (#14319745)

Why is the Gov't taxing us for these items? What is the justification?

The government (fed & local) have made promises that it can no longer afford to fund. State pensions especially ... ie the NYC transit strike.

Re:Once again (5, Insightful)

sirwired (27582) | more than 8 years ago | (#14319758)

The Federal Government isn't taxing you for the items, they are considering giving the states authority to do so. As the article explains, currently in states with a sales tax, you theoretically are supposed to pay sales tax on goods ordered from out of state. (There is usually a form for this that you are supposed to file w/ your State income tax.) Almost nobody actually does so. Court rulings mandate that one state cannot collect, or require to be collected, tax on behalf of another state without Federal law giving them that power.

This law isn't really an "e-commerce" law like the article title would have you believe. It would apply to old-fashioned mail-order also. It is just that mail-order has really become MUCH bigger with e-commerce, so it is a bigger problem that it was before.

The justification behind the law makes sense. There is no reason that customers of say, Amazon.com, should be mostly exempted from paying sales tax while customers of bestbuy.com or compusa.com have to do so for the exact same items.

I expect if this law gets passed, there will be:
1) Be cheap software available to help retailers work this out. The software already exists, since web sites like target.com already have to deal with it.
2) A single form you file with your own state taxing authority that you would then list how much tax was supposed to go to each state. I don't think they would require you to register with each state individually.

SirWired

Re:Once again (1)

jdigriz (676802) | more than 8 years ago | (#14319793)

Not sure, but I think I once heard that the government had something to do with the development of the internet. Or the maintenance of root dns servers. Or something like that. Who knows, they may even be able to regulate telecommunications....

Re:Once again (2, Informative)

COMON$ (806135) | more than 8 years ago | (#14319889)

Wow, you really need to restructure your understanding of the internet.

http://en.wikipedia.org/wiki/Dns_root_servers

Re:Once again (0)

Anonymous Coward | more than 8 years ago | (#14319821)

Why is the Gov't taxing us for these items? What is the justification?

They have guns. You (probably) don't.

Re:Once again (1)

avdp (22065) | more than 8 years ago | (#14319897)

There is nothing unfair about this. You'd be taxed the same thing wether you go buy something at the local brick and mortar store, or on the web from a company in another state. What's unfair about that? If something is unfair to begin with, it's the current system. Incredibly unfair to brick and mortar stores.

Right now online shopping is tax free basically because of a juridiction issue, not because it's the right thing to do. Sales taxes are levied by the states, and a state doesn't have any authority to enforce anything outside of its borders. Only the federal government can pass laws that would cross state borders.

As a side note - online shopping isn't technically tax free right now. At least in Pennsylvania you're suppose to mail in the sales taxes for purchases you've made "tax free" on the internet. Of course, nobody in their right mind does that. So from that perspective, it's not even a change at all. Just that the feds are stepping in to enforce it.

Re:Once again (2, Informative)

metternich (888601) | more than 8 years ago | (#14319972)

State Governemnets, (The ones that charge Sales taxes,) use the money to do things like fund schools, pave the roads, etc. It's not a user fee for the internet or e-commerce, but rather it's meant to pay for all government functions. Personally I think this is a good idea, (objections to Sales Taxes generally aside.) If you're going to tax sales as a way of funding public projects and programs, there's no reason to exempt ecommerce.

Sheesh... (5, Interesting)

armyofone (594988) | more than 8 years ago | (#14319618)

Why don't they just implement the fairtax [fairtax.org] and be done with all these other convoluted ideas?

Re:Sheesh... (0)

DeathFlame (839265) | more than 8 years ago | (#14319654)

Something seems wrong about that to me... In fact that'll tax the low income people more (since they can't afford to save) and tax the high income people less (depending on the amount they save compared to the amount the spend) Not a good idea.

Re:Sheesh... (5, Insightful)

deanj (519759) | more than 8 years ago | (#14319729)

In the fair tax plan, low income folks are protected [fairtaxvolunteer.org] .

Re:Sheesh... (1)

DeathFlame (839265) | more than 8 years ago | (#14319764)

I have to admit, I wrote that before reading the FAQ, and saw the error in my post. Looks intresting...

Re:Sheesh... (0)

Anonymous Coward | more than 8 years ago | (#14319737)

"Something seems wrong about that to me..."

Your vague uneasiness leads me to think that you may not have read up on the fairtax. Here, I'll make it easy for you...

Their FAQ [fairtaxvolunteer.org]

--

Re:Sheesh... (1)

IAAP (937607) | more than 8 years ago | (#14319779)

In fact that'll tax the low income people more (since they can't afford to save) and tax the high income people less (depending on the amount they save compared to the amount the spend) Not a good idea.

What?!? What about when the rich guy buys that $100,000 car? there would be $23,000 going into the Governmnt's coffers.
Anyway, tell me exactly WHY the Government has to redistribute wealth? This isn't the 1930s where people are ready to revolt. And a consumption based tax will boost the economy by increasing savings and investment which will end up creating more jobs for the poor. Because the people who create the jobs are the people with money with the hopes of making more. And it's not just the "rich" who'll benifit. It'll be everyone: you, me, the poor. Government is the most unqualified entity for wealth management.

Re:Sheesh... (1)

CosmeticLobotamy (155360) | more than 8 years ago | (#14319839)

Anyway, tell me exactly WHY the Government has to redistribute wealth? This isn't the 1930s where people are ready to revolt.

You answered your own question.

Re:Sheesh... (1)

sparkyman (197836) | more than 8 years ago | (#14319801)

I don't think you actually read the proposal. "basic necessities will be reimbursed". "Poor people" will take home 100% of their paycheck and get to decide when they pay taxes. Consume items that aren't basic necessities? Pay taxes. Don't buy them, don't pay taxes. Same applies to "rich" people. Each has an equal ability to save money by not buying stuff. Of course, people who make less can't save as much as someone making more, but at least the playing field is equal and not fraught with loopholes....

Re:Sheesh... (1)

afidel (530433) | more than 8 years ago | (#14319815)

Why? All purchases to the poverty level (or poverty level +15% depending on who's pitching the idea) are tax free, so poor people pay no taxes, which is less than what they pay now in most instances (sales taxes are collected on all purchases save food in many states). If rich people save their money then they are helping indirectly to lower the national debt, and when they finally do spend their money they get taxed on it then. The only major drawback that I have seen to the fairtax is that people who are now goaded into giving donations to charity by the current tax system might not be so generous under fairtax.

Re:Sheesh... (1)

DeathFlame (839265) | more than 8 years ago | (#14319879)

As I replied to the first guy, I was slow and didn't read the FAQ at first before posting. I read it before all these replies, but I already saw my error. I do understand better now, and it seems like a good system.

Re:Sheesh... (0)

slughead (592713) | more than 8 years ago | (#14319916)

Why don't they just implement the fairtax and be done with all these other convoluted ideas?

Thank you, captain regressive.

The "fair tax" (for those who don't want to click the link) is a national sales tax. All sales taxes are regressive, unless they're taxes on silly luxury goods (which is so scatterbrained and idiotic it hurts my head).

I also have no idea how this is supposed to solve the problems of state taxes being variable and whatnot. I'm a libertarian but I think if we're going to have taxes, they should be based on income. All things being equal with corporate taxes, this works alright.

Of course, I think we should switch to a better method of income tax like The Flat Tax [tenthousandpercent.com] (full disclosure: this was written half-hazardly by me over the course of a month).

It's progressive, simple, and will make you more attractive to the opposite sex.

It'd be beneficial to just tack on state income taxes to a federal flat [income] tax to both simplify things and not add many secondary effects. The problem is, it'd require most places to not implement their own silly and awkward taxes on things.

The problem with any tax is that it ALWAYS reduces the amount of that item sold (see conceptual supply + demand + taxes graph [tenthousandpercent.com] ). Therefore, a tax on "income" for people who labor to receive that income will raise wages and decrease employment.

The beauty of a flat tax is that it wouldn't affect half of Americans (see above article)--the higher demand your services are, the more taxed you are. Sales taxes hurt everybody unequally (people with less money pay more out of their income). A flat tax is, to stretch the term, price discriminatory in that it squeezes what it can out of people in the fairest and most equitable way possible.

theyre at it again (1)

boscogne (933270) | more than 8 years ago | (#14319620)

they have no shame

Nightmare (4, Insightful)

mysqlrocks (783488) | more than 8 years ago | (#14319624)

This is going to be a nightmare for small business owners to implement. Most states make you pay to register with their sales tax department. Multiply that by every state that you have customers in. No wonder big companies like WalMart are supporting it.

Re:Nightmare (3, Insightful)

mysqlrocks (783488) | more than 8 years ago | (#14319653)

Oops, I missed this part:
The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.

You now it's just a matter of time before this number gets lower and lower though.

Re:Nightmare (2, Informative)

AllahsAvatar (887555) | more than 8 years ago | (#14319678)

It depends on how small they are.

FTFA: The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.

Re:Nightmare (1)

Cheeze (12756) | more than 8 years ago | (#14319682)

The government doesn't care about small business!

Find me a small business with lobbying cash.

Re:Nightmare (1)

homer_ca (144738) | more than 8 years ago | (#14319692)

If this does pass, they'll probably include provisions to simplify sales tax, like have one unified rate for each entire state. Or so you'd hope.

Re:Nightmare (1)

deejer (833001) | more than 8 years ago | (#14319859)

From the article:

The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.

So it wouldn't be to bad for smallest businesses.

I hate overly complicated taxes though. It would take a bunch of money just to implement this system. I doubt this gets out of committee.

Re:Nightmare (3, Interesting)

ortholattice (175065) | more than 8 years ago | (#14319873)

A few years ago when I dealt with ERP systems, I had to specify one of the commercial sales tax databases. Some of them are customized, or have customization modules, that adapt to particular ERP or order processing systems. They are broken down not just by county or zip code, but sometimes even street; there are places in the US where a given zip code will span two counties or municipalities. Given the huge number of municipalities, the tax database changes almost daily, and there are companies specializing in collecting this information - there is no national central repository. In addition to location, in many cases the tax is based on one of several classifications that a product falls into. By the time you add up all variations of laws you end up with dozens or hundreds of categories, and you need to hire specialist consultants to correctly classify the products in your inventory. These databases are huge and you'll just have to bite the bullet and pay the several thousand dollar subscriptions fees for the continual updates. There is no way you could do this yourself; a lot of these laws are on paper only in local government offices, and you have to have the right contacts to make sure that you haven't missed one.

If this does come to pass, I would hope that the law would also provide for a publicly accessible database funded by the government. The subscription fees charged by some of these commercial database companies would break a small business, and possibly even one at the $5million level proposed depending on the nature and margin of the business.

Re:Nightmare (1)

ranton (36917) | more than 8 years ago | (#14319933)

The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.

As you can see, small businesses do not have to worry about this new legislation. Once you make this amount of money, you are no longer a small business as far as the SBA is concerned. And since you can probably pay an accountant around $40k - $50k a year, that is not very much for a 5 million dollar company.

If it does, buy stock in these companies (2, Interesting)

shodson (179450) | more than 8 years ago | (#14319638)

First Data Corp [yahoo.com] , which owns Taxware [taxware.com] and handles taxation in multiple states and coutines nicely, even in jurisdictions that have different tax rates within the same zip code.

The other big e-commerce tax product is Vertex [vertexinc.com] which has a bigger Fortune 500 footprint, but they are not publicly traded nor are they owned by a publicly traded company. Good acquisition target.

Re:If it does, buy stock in these companies (1)

axjdo (698085) | more than 8 years ago | (#14319708)

can you exlpain how you have diffrent tax rates in ONE zip code ????

Re:If it does, buy stock in these companies (1)

bsd4me (759597) | more than 8 years ago | (#14319765)

I forget the exact term, but some cities set up business advantage zones where the sales taxes is reduced. I believe they clear this with the state, and it is an effort to revitilize run down areas.

Re:If it does, buy stock in these companies (1)

bladesjester (774793) | more than 8 years ago | (#14319784)

It is possible for a town/city to be in more than one county and, in some states (like Ohio), counties can have different sales tax rates.

You would think that the counties in question would come to an agreement on how to handle taxes, but you never know.

New form 1040-EZ . . . (1)

mmell (832646) | more than 8 years ago | (#14319639)

What was your gross income for 2005?. . . . . . .___________

Send it in.

Should be reversed (4, Insightful)

the_skywise (189793) | more than 8 years ago | (#14319640)

If your eCommerce business is run in, say California, then it should charge California sales taxes.

It makes no sense for a company in California to try to figure out the sales tax for an order from New Hampshire.

Re:Should be reversed (4, Informative)

donnyspi (701349) | more than 8 years ago | (#14319680)

NH has no sales tax :-)

Re:Should be reversed (1)

eht (8912) | more than 8 years ago | (#14319694)

Yeah, because there is no sales tax in New Hampshire.

But I understand what you meant to mean.

Now SEE!?!? (2, Funny)

the_skywise (189793) | more than 8 years ago | (#14319709)

That's what I'm talking about!

How's somebody in California supposed to keep track of all that! :)

Re:Should be reversed (0)

Anonymous Coward | more than 8 years ago | (#14319805)

I can see one of the following scenarios if someone tried that method..

1- Localities and states that do not have many ecommerce sites contained within, start a program to give ecommerce startups a tax break to open up shop in their state. End result? Less the company pays in corporate/business taxes and more the local people pay in other taxes in order to make up the difference which results in a total tax take that may be less or more then before?

2- Companies move or register with a state that does not have an income tax or has a much lower income tax rate then average.

     

Re:Should be reversed (2, Interesting)

DynamoJoe (879038) | more than 8 years ago | (#14319818)

Why should I, as a resident of another state, be forced to subsidize your state's government? You wouldn't want to pay my 7% sales tax (6.5% for the state, .5% county) instead of your own, where you get none of it applied to your local infrastructure....

If your idea took hold, Oregon, NH, and other no-tax states would get lots of new fedex depots.....

tax (2, Interesting)

mdman (846276) | more than 8 years ago | (#14319646)

What they really should do is eliminate the sales tax system and the fedral tax system and come up with a Flat Tax on what you buy.. no loop holes or BS IRS This way the poor pays less and the rich pay more.. its a fair system

Welcome to the big boy world (1)

abenton (899893) | more than 8 years ago | (#14319647)

This actually surprises you? This was coming regardless. God forbid it sends all the shady ass people to the waist-side. You wanna run a business online? Do it right and hire people who can handle your financials, it will probably actually make you more legitimate and trustworthy, and hell with having to deal with this you will probably be better off. Im all for this.

30 states? (4, Funny)

Andrewkov (140579) | more than 8 years ago | (#14319658)

Last time I checked there were a lot more than 30 states .. I'm not even American, and I know that.

Re:30 states? (1)

Billosaur (927319) | more than 8 years ago | (#14319738)

Not every state has a sales tax; Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming [yahoo.com] do not, according to Sales Tax Clearinghouse [thestc.com] .

Re:30 states? (1)

armyofone (594988) | more than 8 years ago | (#14319807)

"Not every state has a sales tax; Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not...

Ummm... Washington has a sales tax. Perhaps they are confusing us with Oregon? Although our friends to the south have a state income tax while we do not.

Also, 50-7 is still quite a few more than 30 - unless I woke up on Bizarro World this morning. In case which, above statements all wrong by me!

Re:30 states? (1)

Billosaur (927319) | more than 8 years ago | (#14319927)

Ummm... Washington has a sales tax. Perhaps they are confusing us with Oregon?

Faux pas on my previous post; the Yahoo article has it wrong, but the Saes Tax Clearinghouse has it as Oregon and not Washington.

Re:30 states? (1)

Alex P Keaton in da (882660) | more than 8 years ago | (#14319855)

Yes, but we (ohio) make up for it. Each of our 88 counties has its own sales tax. Mine (Summit County) is 6 3/4, Cuyahoga is 7 3/4 and so on....
Ecommerce sites that collect taxes ask which county you are in and charge the appropriate tax. (For example, movies by mail, that fine Ohio based perveyor of adult erotic products)

Re:30 states? (0)

Anonymous Coward | more than 8 years ago | (#14319884)

That's the list of states without income tax. I think you meant Alaska, Delaware, Montana, New Hampshire, and Oregon.

Re:30 states? (1)

Billosaur (927319) | more than 8 years ago | (#14319951)

Ok, faux pas, part deux. Never post to /. with a fever.

Re:30 states? (4, Funny)

sglane81 (230749) | more than 8 years ago | (#14319767)

Last time I checked there were a lot more than 30 states .. I'm not even American, and I know that.

States like Alaska, Hawaii, and Europe don't count. Go learn some geography.

Re:30 states? (1)

xanadu113 (657977) | more than 8 years ago | (#14319834)

Yeah, there's 52 states: Counting Alaska & Hawaii right? =)

Re:30 states? (1)

breckinshire (891764) | more than 8 years ago | (#14319838)

You'd be surprised - a lot of Americans DON'T know that. Still, this law only applies to businesses making more than 5 million a year. I'm not so sure that that qualifies as a small business, unless it's a business that sells one thing a year that costs $5 million. Like the plans to the evil genius' volcano lair/underwater dome/moon base.

Re:30 states? (0)

Anonymous Coward | more than 8 years ago | (#14319871)

Not all states have sales tax...

Re:30 states? (0)

Anonymous Coward | more than 8 years ago | (#14319965)

However, there is about seven people in Wyoming, The Dakotas, Idaho, and Utah (5 states) combined. Those in Missouri, Pennsylvania, Kentucky, Tennessee, and Arkansas (5 States) do not have "The Digital Superhighway" yet, so online sales are not a concern matter from them. Ohio, Texas, Florida, Mississippi, Louisiana, Georgia, Oklahoma, New Mexico, and Iowa (9 States) are now officially known as Jesusland (Kansas is just too crazy, even for Jesusland.) As for Kansas, we've severed their internet backbone until they decide that Pastafariaism can be taught in science class.

Therefore, online stores only need to deal with 30 states.

Mail order? (3, Interesting)

kbahey (102895) | more than 8 years ago | (#14319659)

I understand that mail order in the USA is not taxed, unless the purchaser is from the same state that the mail order house is in.

So far, ecommerce had the same rule (or similar).

If this gets implemented, then will it apply to mail order as well, or will it be for ecommerce only?

What about if an American buys from a Canadian business via the internet? Will the Canadian business be required to collect US state taxes too?

Re:Mail order? (0)

Anonymous Coward | more than 8 years ago | (#14319981)

you have a mistake, all purchases in michigan, catalog or online should have takes applied. Same with CA. Order from large online presence places and you will notice that there are taxes applied for some states, airline tickets are another example. The orignal poster is asking to meet with the state sales tax person, not only from their own state but from many states!!

I assume that the $10 they make from online sales a year is not enough to trigger an audit. Any decent sized place that uses real software (not quickbooks) to manage their business will not have a problem implementing this.

but doesn't the constitution forbid the taxing (1)

bremstrong (523910) | more than 8 years ago | (#14319666)

of interstate commerce?

Constitution!? That old thing still around? (1)

woodsrunner (746751) | more than 8 years ago | (#14319957)

Minnesota, and other states, have required businesses to pay sales tax on all mail order items for years before ecommerce even existed. Recently many states have been trying to force people who buy smokes online from tax havens to "cough up" the state taxes by subpoenaing sales records of these sites and billing the customers for back taxes.

This "feels" unconstitutional somehow (2, Insightful)

erroneus (253617) | more than 8 years ago | (#14319669)

I am by no means an expert on the subject, but my feeling is that this is somehow against the constitution. And for this to be trackble and enforcable, the states would have to collect their tax money with the federal government as the intermediary. Just on the surface, this idea seems unworkable due to the complexity.

And how about taxes for the local state? Do you get taxed twice or does one take precedent? I speak of situations where you buy from a company online and they have presense in your state as well as others. At present, if the company has presense in my state then I also have to pay local state tax. But what if the transaction is with a company in, say, N.Carolina (just pulled that from a hat) but they also have a presence in Texas where I am at now. Current practices say I have to pay tax to Texas. But with this, am I paying double tax?

Re:This "feels" unconstitutional somehow (1)

Alex P Keaton in da (882660) | more than 8 years ago | (#14319752)

Something called the necessary and proper clause pretty much makes whatever the Fed Gov't decides to do "constitutional."
BTW- come to Ohio where each of our 88 counties has its own sales tax!!!

Re:This "feels" unconstitutional somehow (1)

mshmgi (710435) | more than 8 years ago | (#14319890)

While I don't agree with the proposed tax regulations, this is definitely NOT unconstitutional. The Federal Government is constitutionally charged with "regulating interstate commerce". This is much more in line with the constitutional authority of the federal goverment than social security, anti-gun laws, the federal income tax, and about a million other intrusions ... but don't get me started.

Re:This "feels" unconstitutional somehow (1)

keraneuology (760918) | more than 8 years ago | (#14319949)

"No Tax or Duty shall be laid on Articles exported from any State."
Article I, section 9

Snowball's chance... (1)

IAAP (937607) | more than 8 years ago | (#14319672)

But the states participating in the so-called Streamlined Sales Tax Project hope that if they pledge to simplify their tax systems, they can persuade Congress to make collection mandatory.

Yeah, that'll happen. We don't have to worry.

Will Not Happen (hopefully) (1)

ranton (36917) | more than 8 years ago | (#14319677)

I dont see how this could ever actually happen. This would make starting your own company so difficult that it would hinder the economic growth that the government wants. I am working at a small online startup right now, and it would be a terrible burden to file taxes in 50 states.

If they want to do this, then at least make a single flat tax rate that the federal government can then distribute to each state. But having each company deal with the taxes of all 50 states just sounds rediculous to me.

Re:Will Not Happen (hopefully) (1)

ranton (36917) | more than 8 years ago | (#14319883)

Wow, I guess I shouldnt have posted before I RTFA.

The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.

This takes small businesses out of the picture. A business with that amount in sales would have no problem having an in house accountant to deal with all the tax issues.

Complexity Costs (1)

canuck57 (662392) | more than 8 years ago | (#14319683)

Since all levels of government is greedy for taxes, would it not be more cost effective to say tax all purchases a flat rate of 3% and not force a million web sites to code in the complexity? And let the state, county, city fight over the 3%.

And if expensive tax states don't like it... touch $h1t.

Mail order (2, Interesting)

deanj (519759) | more than 8 years ago | (#14319693)

The thing the ticks me off about this is that the mail order lobby was the group that started all this crap back in the 90s, because they saw their revenue going down. Back then, it was "oh, tax the internet, but leave us alone".

Personally though, I don't think either of them should be taxed, but if they do pass this, the better make all the regular mail order companies comply with it too.

Re:Mail order (1)

jratcliffe (208809) | more than 8 years ago | (#14319812)

Actually, the mail order industry was the primary opponent of taxing out of state sales. The Supreme Court has ruled (ND vs. Quill) that companies are only required to collect sales tax from a sale to a customer in state X, if the company has "nexus" in state X (i.e. some physical presence, be it offices, a warehouse, whatever).

Interestingly, this situation actually divides the mail order industry (and ecommerce, for that matter). Before ecommerce became big, there was a schism between companies like LL Bean (which only has a physical presence in Maine, and hence doesn't charge taxes for customers outside of Maine), and Sears or JC Penney (both used to have huge catalog operations, as well as stores in every state, so the companies had nexus in every state, and had to charge sales tax for every state). The law put Sears/Penney at a competitive disadvantage to Bean.

Today, you'll see a significant divide in WalMart's position on ecommerce taxation vs Amazon's, since Amazon only charges for Washington (and maybe Delaware), while WalMart has to charge in all 50 states.

Note also that the question here is just whether the companies can be forced to _bill_ you for your local sales taxes, not whether you _owe_ those taxes. Technically, you're (in most states) required to pay those taxes as a "use tax" on your annual income tax form. Nobody does, but that's the law. The issue for the courts has been whether it's reasonable to ask retailers to collect the tax, or such a nightmare logistically that it's just not fair.

Nothing creates business opps like (2, Funny)

Alex P Keaton in da (882660) | more than 8 years ago | (#14319697)

Nothing creates business opportunities like gov't regulations. You will see clearing house companies spring up to process taxes for you. Funny about Ohio- when you buy someting in a county with lower taxes, and take it home, you are supposed to send the state the difference.
btw- Counties in Ohio have different tax rates. It has nothing to do with municipalities, so you only need to know the tax rates for each of our 88 counties... (Mine is Summit county, 6 3/4 percent)

Re:Nothing creates business opps like (1)

Chang (2714) | more than 8 years ago | (#14319975)

Actually the sales tax rate in Summit county is 6 1/4 percent.

However, It may soon rise to 6 3/4 percent.

http://www.ohio.com/mld/ohio/news/13440622.htm [ohio.com] (annoying registration required)

Cut taxes for the rich raise taxes everywhere else (2, Insightful)

digitaldc (879047) | more than 8 years ago | (#14319702)

http://www.boston.com/news/nation/washington/artic les/2005/12/09/house_approves_561b_cut_in_taxes/ [boston.com]

From the above article: "They cut vital programs and services that benefit hard-working lower- and middle-income Americans, and with the money saved, are giving more tax cuts to the wealthiest of the wealthy."

From the ZDNet article:
"...Sen. Mike Enzi, a Wyoming Republican. "This is costing states and localities billions in lost revenue."

So the Senators think they shouldn't tax the rich, but its okay when it is everyone else.
Anyone think that this is unfair? Or is this okay with you?

Re:Cut taxes for the rich raise taxes everywhere e (1)

Buelldozer (713671) | more than 8 years ago | (#14319796)

:::blink blink:::

My Senator said THAT??? :::blink blink:::

I'll have to swing by the Enzi's place later tonight and have a talk with him.

Re:Cut taxes for the rich raise taxes everywhere e (1)

deanj (519759) | more than 8 years ago | (#14319909)

Here's some data about what people pay now (don't get me wrong, I think the Internet tax shouldn't happen). I'm posting the following to show how much those "rich" people really DO pay.

This was taken from another site, but it's good data:

Check this out [ustreas.gov] .

It shows that the top one percent of taxpayers paid 34.3 percent of all federal income taxes in 2003, although they earned just 16.8 percent of the adjusted gross income. The top five percent of taxpayers paid more than half of all federal income taxes, the top 10 percent paid two-thirds, and the top half of taxpayers paid 96.5 percent, meaning that the bottom half paid just 3.5 percent.

And this [ustreas.gov] .

The top one percent and found that the top ten percent of the top one percent (the top 0.1 percent) increased their share of all federal income taxes from seven percent in 1980 to 15.3 percent in 2003. These 129,000 tax filers earned 7.6 percent of the income and paid an average tax rate of 23.6 percent. This came to $114.6 billion--four times more than all the taxes paid by the 64 million taxpayers in the bottom 50 percent--who paid an average tax rate of 2.9 percent.

The "rich" pay a helluva lot of money. The data is there from the IRS itself for you to check the facts.

Death sentence for many online retailers? (0)

Anonymous Coward | more than 8 years ago | (#14319710)

With tax plus shipping charges what advantage will shopping online have for anything other than hard to find niche items? The main advantage to shopping online has been cost savings for customers. Will online retailers be able to maintain this advantage when operating costs increase?

A Republican? How shocking (-1, Flamebait)

Anonymous Coward | more than 8 years ago | (#14319712)

Why would anyone be surprised at the thought of a Republican doing something that fucks over everyone except big businesses like Walmart?

Good job, Wyoming. You sure picked a winner.

Re:A Republican? How shocking (1, Informative)

Anonymous Coward | more than 8 years ago | (#14319798)

From TFA:

A related bill has been introduced by Sen. Byron Dorgan, a North Dakota Democrat

Good job reading the article, idiot.

Us Taxation (1)

TheUncleD (940548) | more than 8 years ago | (#14319723)

All of thi sis tricky due to the difficulty to accurately monitor online transactions. A lot of trust is put in vendors to properly report the actual sales/dealings/account records they have occuring. Digital Law & Taxation are intimately discussed at this site eBizLaw [webpractices.com] where the reader can more accurately learn about the actual laws regarding it. I personally am in favour of some parties properly being assigned taxes they should be paying, but taking certain things too far into the hands of the government definetely begins to seem like "overstepping of bounds."

We have to be careful not to let lawmakers simply take whatever they want, and not simply what is justified and best for the economy.

Poster didnt read the article either. (3, Insightful)

Ween (13381) | more than 8 years ago | (#14319747)

Poster: As a small business owner that primarily sells via ecommerce, I am shuddering at the prospect of having to deal with government sales tax forms and coupon books for 30 or more states

Article: The legislation would apply only to businesses with more than $5 million in "gross remote taxable sales" each year.

Of course, maybe my definition of small business is different than the posters.

Y2K all over again... (4, Interesting)

woodsrunner (746751) | more than 8 years ago | (#14319748)

Right now, I am working on an app that calculates tax by county. What fun. There are roughly 3200 counties, parishes and independant cities in the US and every one has different rules on what is taxed and how much.

Something like this is really going offer employment opportunities for programmers. It will be a bigger boon than Y2K! Because if the states are getting their tax money, the counties will want theirs too. Of course it will crush commerce for the small guy and most everyone. Just think of the cost of tracking and sending these funds out on a regular basis. So it will be like a bigger bubble and a bigger crush. The nineties all over again.

Yow, Where's my aereon chair and foosball table?

Barter (1)

killmenow (184444) | more than 8 years ago | (#14319780)

Screw all this crap, man! I'm going back to the barter system and avoiding money and taxes altogether. Anybody farmers out there on slashdot? Wanna trade some chickens and vegetables for some IT work? Anyone? Bueller?

Re:Barter (0)

Anonymous Coward | more than 8 years ago | (#14319840)

It wouldn't work -- too many slashdot readers willing to trade anything for sex.

Re:Barter (1)

IAAP (937607) | more than 8 years ago | (#14319902)

I wish! You know the shitty thing is? IIRC, under the US Federal tax system, you're supposed to put a dollar value on the "earnings" and then pay the tax - with money. So, if you earn a chicken, you'll have pay Uncle Sam the tax on the equivilent value of the chicken: $6 Chicken, 10% bracket - $0.60 tax.

Which really sucks because if you're bartering, you don't have any money to pay the tax. In effect, you're being forced to use money. Of course, I'd like to see them enforce it. :)

Times are a-changin' (1)

FuryG3 (113706) | more than 8 years ago | (#14319794)

While I sympathize with the painful idea of dealing with 50+ tax codes, I think we all have to admit that the tax code (at some point), has to be adapted to include online purchases.

I hate taxes as much as the next guy, and I've certainly enjoyed nearly tax-free internet shopping for the past decade, but as more and more purchases are made online they begin to seriously cut into state and local government's revenues. Internet shopping has yet to eliminate my usage of roads, and someone has to fund them...

If companies only pay sales tax in their home states then I'd speculate that we'd see a rush on states like Oregon and New Hampshire by some dot-coms, so I think that sending taxes to the customer's state of residence may be the only good solution. I just hope we don't end up paying sales tax twice...

Free market stiflers (0)

Anonymous Coward | more than 8 years ago | (#14319813)

The government. The only "organization" that demands money from working people without being accountable for it. Of course, they say they do it to for the benefit of the community, but if the same reasoning is used by a bank withholding money from their clients for the benefit of the community (read bank), then, all of a sudden, it's theft.

Controversial Thought... (2, Insightful)

tenchiken (22661) | more than 8 years ago | (#14319842)

I think it is well past time to ditch the different taxation systems (income, property, inheritence, sales, capital) and replace them all with a single sales tax. That gets rid of this problem and also alliviates the massive problem with a competly wacked tax system that actually increases the difficulty of moving between the different classes.

I don't know much about the so called "FAIR Tax" although I have heard people say that it is similar to this idea. I dislike the flat tax because it unfairly impacts larger families (although I am sure the population nazis would love that).

But in general, why on earth do we maintain this system? It's not efficent, not effective, and benefits no one except politicans wanting to play social engineering!

Hoo boy, here we go again. (1)

Caspian (99221) | more than 8 years ago | (#14319863)

Cue angry rants from reactionary libertarians about how all taxes are tyranny.

How come I can get moderated (-1, Flamebait) for making relatively innocuous comments, but we can't moderate stories (-1, Flamebait)?

We're dealing with... (1)

Billosaur (927319) | more than 8 years ago | (#14319872)

...reciprocity [webster.com] , the legal tenet that says each state, being part of the United States, is obliged to respect the rights and laws espoused by the other states in The Republic. Which is why your driver's license is valid in all 50 states and the territories. This includes taxation for the purposes of interstate commerce - exemptions can (and have been) made in the past, but it requires the agreement of all 50 states. And it is also possible to recoup these sales taxes in certain cases [salestaxadvisors.com] .

A Simpler Method (2, Interesting)

InterGuru (50986) | more than 8 years ago | (#14319901)

All interstate commerce should be subject to a 5% sales tax collected by the federal government. At the end of the year the feds would distribute the collected taxes to the states in proportion to their own sales tax collection from in-state purchases. That is if state X's collected sales taxs were 3% of the sum of all the 50 state's collections, it would get 3% of the federal collected taxes.

All of us, including me, love to evade sales tax, but we all want the roads, schools and police services that it pays for.

The Big Chill (1)

Belseth (835595) | more than 8 years ago | (#14319922)

Unfortunately Congress is just ignorant enough about how the internet works to pass a bill that will have a devastating affect on Ecommerce. They'll figure it out eventually but only after the damage is done. Most small businesses will have to ignore the law or simply go out of business. Many of the businesses are working on tight margins and given shipping costs are often offset by the lack of a sales tax they simply won't be viable. The convience is nice but there's always risk ordering off-line. If the costs are the same or higher than a local store I might as well buy locally. In some cases the States may see this as a win win but it'll harm the consumer and businesses. The internet is Federal so any tax has to be Federal in origin. It would be like each State setting up it's own import tariffs. The money would have to be pooled and paid out based on percentage of sales each state had. It's too complex to administer any other way.

The government should act as an intermediary here (1)

samael (12612) | more than 8 years ago | (#14319931)

Set up a nice simple webpage/web service that you can enter your values into and it'll tell you what you owe, and distribute it to the right people. That way, rather than you having to pay to every state you ship to, you only have one point of contact...

I mean, if they're going to take more of your cash, they can at least make it easy for you...

This will be near impossible (1)

jackb_guppy (204733) | more than 8 years ago | (#14319935)

I work for a company that has offices in all 50 states plus DC, and the hassel to collect the correct tax location is nearly impossible. We can get it right for about 97-98% but after that you hope the agents that have local knowledge or the default will be close (IE you "eat" a liitle on every transactions)

First you need is good address validation software, so the county can be determined. Then you need tax software on top of that, that understands the where the tax lines are drawn.

Example: There are "special" zipcodes that act as PostOffices. Banks, Clearing Houses, and State IRS all use them. The problem is that the number is 1 digit or 2 digits reversed from normal zipcodes. With address validation software, these normal are overrides making what every address that is enter valid. And the tax will be charged for wrong location. These zipcode exist is NYC, Colombus, Chicago to name a few.

Example: In a town in AR, there is section of land that is NOT incorporated into the town. Address Validation places the land in the town... but NOT for tax, the extra 1% for the town is not charged on that land. The same can go for Fed and State lands wrapped inside of city.

Example: Mobile AL. Every address is what we call MULTI-TAX. There is more than one tax that could apply, if you could get the tax software that define the sub-sub-distracting. Same goes for Dallas, Ft Worth, alot of MD, a good part of WA (follows Elemenary School Boundaries)...

The tax software we are getting only defines the US into 400,000 tax "districts" but they can not get closer than State, Zip(5), County, City. This does not help when you talk about multiple MTA or other agencies.

This will be mess.

Sounds like a good idea to me (1)

cyberspittle (519754) | more than 8 years ago | (#14319940)

If the states want to collect taxes, that's fine. However, we should be able to subtract the cost of shipping and related expenses (registered/certified mail, etc.)! I'm sure that shipping expenses and insurance for loss/damage would far exceed any meager taxation attempt. Let the mud fly!
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