Senate Approves Online Shopping Sales Tax Bill
from the fairness? dept
We have a variety of concerns with the so-called “Marketplace Fairness Act,” which will require companies selling things online to track, collect and distribute taxes based on where buyers are coming from. For small and medium-sized businesses, this is likely going to be a big burden online (and for buyers in many places, this will likely increase what you have to pay on checkout). Given the fact that the bill is mostly supported by brick and mortar stores and shopping centers, it’s not difficult to see how it’s an attack on online shopping (for what it’s worth, Amazon was initially against the bill, but eventually flipped when it realized that it could use the bill to hold back smaller competitors).
Unfortunately, the Senate passed the bill by a decent margin, 69-27. The bill will move to the House where it may be more difficult to pass. So it may die on the vine, even as the administration has said it will support it.
Filed Under: brick-and-mortar, ecommerce, marketplace fairness act, online shopping, retailers, sales tax
Comments on “Senate Approves Online Shopping Sales Tax Bill”
Well...
One of my senators lost my vote for good.
Sad, this is his first term as a Senator and he’s done NOTHING but vote horribly since being in office.
Re: Well...
And both of my Senators have sadly lost my vote with their vote on this bill.
Re: Re: Well...
Fortunately for me, Wyden very rarely disappoints.
Re: Re: Re: Well...
Thanks for rubbing our noses in that.
Re: Well...
c’mon, silvercat, you know better:
it is ONE DOLLAR, one vote
not
one person, one vote
guess what ?
you and me and the 99% don’t got the ducats, so our -you know- vote-votes don’t really count for much…
art guerrilla
aka ann archy
eof
Fairness?
What is fair about forcing a small business in Delaware to become California’s tax collector?
Re: Fairness?
‘fair’ and the law are not the same things, what is fair about letting ‘internet’ companies have different trading rules to anyone else ?
Do you expect because ‘internet’ is involved that, that means they are not bound by the same rules and laws as everyone else ?
If that business in Delaware is trading in California it is perfectly fair.
Or do you think it’s more fair for a Delaware business to change taxes on Delaware residents but let people from other places not pay any taxes ? is that fair ??
Re: Re: Fairness?
YES, if the law is rational and based in empiricism.
The problem is, this law isn’t based in empiricism.
Re: Re: Fairness?
Mainly; that the original intent of sales tax was to put the burden of maintaining the town / states infrastructure on those who used it. So the streets, cops, etc were at least partially paid for by the people out using them. The California shoppers in this example, aren’t using any of that, except perhaps if delivery is other than USPS who come to every house every day, then they might cause .01% of the burden they would impose on the shopping district compared to actually going out shopping.
Re: Re: Fairness?
So by your logic –
If I’m physically a resident of the state of California, and am visiting Delaware – I should pay local taxes on purchases for the state of Delaware (like normal) and the state of California??
If on-line businesses have to figure out where locality taxes apply, then brick and mortar businesses should also… after all its “ONLY FAIR”
Re: Re: Re: Fairness?
“If I’m physically a resident of the state of California, and am visiting Delaware – I should pay local taxes on purchases for the state of Delaware (like normal) and the state of California??”
It’s a tick complicated in the wording but the way Florida looks at it, for example for use tax, which is really what you’re looking at here:
* If you buy a taxable item in Florida and didn’t pay sales tax, you owe use tax.
* If you buy an item tax-exempt intending to resell it and then use the item in your business or for personal use, you owe use tax.
* If you buy a taxable item outside Florida and bring or have it delivered into this state and you didn’t pay sales tax on the item, you owe use tax.
What is never clear here is whether “pay sales tax” in the last bullet means “pay any sales tax” or “pay Florida sales tax” – how I have seen this described is that if you paid sales tax somewhere else, you’re good. If not, then Florida deserves use tax on the item. Or if you paid sales tax equal to or above Florida tax then you’re OK. But if you paid less then you owe the difference.
Your Delaware example is interesting…because at least here, if you say bought a car in Delaware (no sales tax there) then got yourself transferred to FL and brought the car down, when you try to register it, Florida will ask for the bill of sale to check not just for the ownership but for the tax paid. Oh no paid no tax, sorry Charlie, you owe me 6%. But if the car’s purchase is over 6 mos ago then no are good. So, how long do you think you’d wait to register that car? 🙂
Back a few years ago there was talk of Florida trying to tax home and business networks as “alternative communications systems”…yea.
Locality taxes, or what FL calls a “surtax” is even more interesting. For a small business to figure that out is going to be crazy, but it’ll open a whole load of new software ventures to deal with it. 🙂 So for Miami-Dade, the sales tax is 7% instead of the regular Florida 6%.
The big difference is that all the local retailers, the big shops…they deal with all of this locally anyway. The store’s going to figure this stuff out and report to corporate, etc. There’s a lot more resources that can be thrown at it.
But I think really the issue of overall impact on b&m retail is based a lot less on tax being paid and a lot more about item price before tax. Most people don’t compare prices with tax included, they just look at the price itself. I’d rather buy my new BT headset local if A. I could actually find the damn thing locally and B. I couldn’t save $60 on it by going to Amazon. If price and availability were equal I’d probably buy local, and I think a lot of other folks feel the same way.
Re: Re: Fairness?
Re: Re: Fairness?
When I cross the CA state line to shop in OR, the stores in OR ALWAYS check my ID and collect CA state tax to send to them.
Oh, wait. THEY DON’T check my ID.
Fairness would include ID checks at all stores in Sales Tax-free States so they can make sure to send all that tax money back on out-of-state purchases.
Re: Re: Fairness?
What do you mean ‘bound by the same rules and laws as everyone else?’ If it were the case that they were not following the law they would be sued or arrested. That is not the case. What they were doing was following the same rules and laws as everyone else. What this bill is doing is creating new rules and laws that only apply to them.
What do you mean ‘let people from other places not pay any taxes?’ If there’s a sales tax in Delaware and I buy something in Delaware then I pay sales tax even if I’m not from there.
Given that
For small and medium-sized businesses, this is likely going to be a big burden online
Given that the trigger level appears to be about 1 million in sales in a given state, it’s unlikely that small business will face much of a burden. The bigger concern will be small businesses charging an extra tax that they are not required to remit unless they hit that target level in a year.
Corporations should be used as tax collectors.
As was done of old with high corporate rates. It’s just the cost of doing business; if those fictional entities are left with ANY money after taxes, then it’s generous enough of the public.
For instance. Google has a pot of effectively unearned money and has paid less taxes on it than any reader pays on wages.
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html
http://www.guardian.co.uk/technology/2011/oct/14/us-investigates-google-tax-strategies
http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html
http://www.dailymail.co.uk/news/article-2255850/Google-6billion-Bermuda-tax-shelter-Web-giants-haven-revealed-Cameron-urges-global-crackdown.html
http://www.reuters.com/article/2013/05/01/us-tax-uk-google-specialreport-idUSBRE94005P20130501
Re: Corporations should be used as tax collectors.
^^^ Whoops. Not explicit that means DON’T have on-line sales taxes as such, basically too complicated. Just grab whatever they come up with and put it to general revenues, maybe with some “sharing” formula for states.
Re: Corporations should be used as tax collectors.
“if those fictional entities are left with ANY money after taxes, then it’s generous enough of the public.”
Uhh…you do know what the word fictional means, don’t you? Methinks you don’t.
Re: Corporations should be used as tax collectors.
More classist drivel from baby blue. Must be Tuesday.
The Government dips it’s hand deeper into the people’s wallets and purses act.
Oh wait that’s been done already.
One good thing...
When I buy things online for my business, the lack of sales tax really doesn’t factor into it.
If I can get it at the same price but get it local, i.e. faster then that’s a route I’ll go.
The overall price of the item and speed of acquisition as well as buying the item online because I simply cannot locate it locally are the bigger factors.
At least if this tripe passes I don’t have to worry with “use tax” anymore – which nearly no one pays anyway.
Having said that, I do find it distasteful that a company will have to collect tax (and register in that state of course, and remit the forms whether they have any sales there or not for that quarter/month/year) on behalf of a state they don’t have physical presence in.
Re: One good thing...
“on behalf of a state they don’t have physical presence in.”
if you buy a product from another state, when you get that product, then that product is the PHYSICAL PRESENCE you are talking about.
The product you purchased in now in your state, and the money you used to purchase is not OUT of your state.
The physical presence is the product you purchased, your physical presence in the other state is the money you paid for that product.
Re: Re: ...
… if you hear a loud Smack, that was me facepalming hard enough that I’ll probably have a palm-shaped imprint visible for days.
The product of the company is the company? The money paid for the product is the customer? Really? By that logic someone would have to go through the immigration process just to buy something from overseas, or a company could have a global, taxable presence just by shipping enough packages.
There’s stretching logic and reason, and then there’s taking it out back and shooting it, and you most certainly just did the second.
Re: Re: One good thing...
The product isn’t the physical presence.
If you live in Florida and drive to PA and purchase a product in one of their shopping malls, then drive home with it … is the business in PA required to pay taxes to FL for the product you purchased from PA store?
Re: Re: Re: One good thing...
The product isn’t the physical presence.
You are correct and the AC is wrong. The case on point is Quill v. North Dakota: http://scholar.google.com/scholar_case?q=504+U.S.+298&hl=en&as_sdt=2,19&case=3434104472675031870&scilh=0
The issue there is whether a state can, under the Dormant Commerce Clause, tax an out-of-state retailer. The Court created a four-part test, one prong of which was “substantial nexus” which is where the “physical presence” comes in. Courts have been interpreting this requirement to be fulfilled when a company like Amazon has affiliates in the state. Amazon has hundreds of thousands of affiliates located in all the states, so they saw the writing on the wall and started supporting the Marketplace Fairness Act. If they’re going to get taxed, they want other big e-retailers to be taxed too. Now that Congress is passing this law, the “physical presence” requirement goes away. The reason is simple. The test from Quill only said an out-of-state retailer couldn’t be taxed by a state without the “physical presence” because that would be stepping on Congress’ toes as only Congress has the power to regulate interstate commerce under the Commerce Clause. Now that Congress is getting in on things and exercising its power under the Commerce Clause to permit states to tax even out-of-state retailers who have no physical presence, the Dormant Commerce Clause reason that did not permit states to do this themselves goes away. States are no longer stepping on Congress’ toes since Congress is permitting it.
If you live in Florida and drive to PA and purchase a product in one of their shopping malls, then drive home with it … is the business in PA required to pay taxes to FL for the product you purchased from PA store?
No, the PA business would pay sales tax to PA. You may have the duty to pay a use tax in FL. http://en.wikipedia.org/wiki/Use_tax
Re: Re: Re:2 One good thing...
The seller is not the one being taxed. The obligation to PAY sales tax is on the buyer, not the seller.
The seller simply collects the sales tax, and remits that to the state. It is never the seller’s money, they are not “paying” the sales tax.
That’s different from a state taxing a seller on things like inventory or other corporate income tax…that is entirely different than sales tax.
Florida’s statements, which I have posted somewhere in this thread, amount to, if you buy something out of state but paid no tax on it then you owe use tax. This has been also written as if you pay a lower amount of tax out of state then you may owe the difference to FL. Generally however, if you buy something in another state, on vacation or whatever, and bring it here to FL you won’t owe use tax on it since you paid sales tax on it somewhere else. It is vague however, because it does not stipulate that you paid FL sales tax. So there could in theory be a double hit. I don’t believe it is being interpreted that way however. The biggest hits will come if you buy a large ticket item in a state where there is no sales tax. Then you get the big ol stick in the rear when you bring it here…such as with a car.
Re: Re: Re: One good thing...
“If you live in Florida and drive to PA and purchase a product in one of their shopping malls, then drive home with it … is the business in PA required to pay taxes to FL for the product you purchased from PA store?”
Well, according to the “length of the cord” theory of law interpretation, OF COURSE you do!
Re: Re: One good thing...
“if you buy a product from another state, when you get that product, then that product is the PHYSICAL PRESENCE you are talking about.”
Entirely incorrect. You’re mixing meanings.
The physical presence is the vendor itself, not the product. If I sell a product out of state today I am not required to collect sales tax on behalf of that state because I am not located there. I am only in Florida.
However, when I buy online from a company somewhere else in FL, they collect sales tax because they’re located in FL. If I buy from a company in MD, with no physical presence in FL, they do not collect sales tax for FL in the transaction. However, that does not mean that I am not still obligated to pay sales tax to Florida. I am, only now they call it “use tax” instead.
Remember the sales tax obligation is always on the buyer. The seller simply acts as a collector and then remits that to the state. The money collected in sales tax never belongs to the seller.
And unless the bill is worded differently, and I suspect the way this is, each state will come up with their own rules…once you do one sale in a state you’ll probably have to register and report regardless of the dollars collected. And once you register, you are generally on the hook to file the reports with each state regardless of whether you actually did any business in that state for the specific period.
Fairness?
This same tax doesn’t apply if you call on the phone and order.
Re: Fairness?
This tax does apply if you call on the phone and order. See http://thomas.loc.gov/cgi-bin/query/z?c113:S.743: , nothing in there mentions the specific method of order-taking. The tax applies any “remote sale.”
Re: Re: Fairness?
Ooops, Except people that cross state lines CA -> OR. Doh!
If companies like Walmart and similar stores support this, then it is not a good idea. Just like when At&t supports a piece of legislation. It should be an instant red flag, and cause everyone to raise an eyebrow.
Re: Re:
^^This^^
Of course this administration is willing to support the online tax bill, it’s all for crony capitalism.
Dig into the donors of Organizing For America to see where it’s money is coming from.
This would be just one more nail in the coffin of American Entrepreneurialism and put the engine of the economy, the small business man out to pasture.
The reason this has not been done as yet is that it’s such a bad idea economically. But then this is the SOP for this administration, look at health care, regulations, tax policy, and government grants to failed companies.
Masnick, who is your ISP, and why do they suck so much, past few weeks your web site has been horrible, slower than a dial up connection !!!.
I guess you are using some bargain basement service provider, so you can skim more money out of this site.
I guess you don’t mind if your site is one of the slowest on the net, it’s not like anyone takes any notice of you anyway I guess.
It’s just a shame for a “tech” site that you fail to display or present any form of decent ‘tech’, even on your own web page.
Re: Slow as Molasses?
This site is quite quick here down under for the most part, hasn’t changed much at all over time. I am using ADSL with downstream rate of 10 Mbits/sec.
I would say that it is likely there is a problem elsewhere in the path to you, including some possible problem with your ISP.
Re: Re:
Have you maybe, just maybe, considered the “remote” possibility that it’s you, or rather, your net connection, that’s the problem? If it were Techdirt being slow, it would logically be slow for everyone, which is not the case (at least for me, I haven’t noticed a single thing wrong with Techdirt in quite a while).
Re: Re:
You use buzz words and personal attacks poorly.
Feel better about yourself now?
Why buyers? jurisdiction and not sellers??
Can someone explain to me the logic of basing sales tax on where the buyer is located, rather than on where the seller is located? It seems like going by the buyer?s location makes everything much more complex, since it?s the sellers who have to implement tax collection. Why should they be subject to the regulations of places where they are not located?
What is so important about buyers? locations as opposed to sellers? that makes all the added complication worthwhile?
Re: Why buyers? jurisdiction and not sellers??
Because all the sellers would then relocate to states with no sales tax such as Oregon.
They want to eliminate as much “wiggle room” as they can.
An perfect example are companies such as MS and Google maintaining a PO Box as a corporate HQ just to use (abuse) tax laws and not have to pay million/billions.
It’s the law. Play the game.
Re: Re: Why buyers? jurisdiction and not sellers??
Ah. Of course. It?s obvious once you see it.
Thanks.
Considering that point, I have to admit that this does make sense (granting the notion that sales taxes make sense at all, which is a whole other can of worms). It?s still depressing to see that government can only seem to deal with anything, ever, by making things more complicated and increasing the visible footprint of the machinery of control.
Re: Why buyers? jurisdiction and not sellers??
Because if you’re going to have a law to screw over people selling on the internet, so that regular stores have an advantage, it helps to make things as hard for them as you can make it; to just really twist the knife and put as many out of business as you can.
Re: Re: Why buyers? jurisdiction and not sellers??
That’s why Amazon now supports the bill, so it can eliminate the competition.
More legislation that hurts SMEs and consumers, and that will do nothing to help the High Street stores (not sure what you lot call them); all so the fat cats in DC and the multinationals can suppress competition and line their own pockets.
Corporate America at work. The same attitudes are becoming increasingly common here in the UK too.
Time for online companies to lobby back? I wonder who has the stronger lobby muscle 😉
Other than that it’s just business as usual in the US where legacy businesses are much more important than innovating ones =)
It’s rather sad to see our “representative” government easily pass legislation which benefits them while having difficulty passing anything that benefits the majority of their constituents. This has got to be one of, if not the worst, congress ever.
Re: Re:
“It’s rather sad to see our “representative” government easily pass legislation which benefits them while having difficulty passing anything that benefits the majority of their constituents. This has got to be one of, if not the worst, congress ever.”
Hands-down worst ever. Did you notice how they moved at absolutely light-speed to vote themselves pay raises, DURING the fiscal cliff negotiations? They can drag their feet on everything else, but when THEY benefit, its full-steam ahead and don’t block the tracks!
I can see it now
I think perhaps 1% of all online commerce revenue for 20 years seems fair compensation for my toil inventing that. Race you to the PTO!
Seriously? You people need to get out more. Here its been this way forever. You pay taxes that apply where you live, end of story.
Talk about crying over nothing. Too complicated to own a business? Then go work for someone. *sigh*
Re: Re:
Never run a business, huh.
It is a burden to assess taxation at a State, County, City level. There have been many studies done and they all point out the high cost to business that this would cause.
So – yeah, serious? …. go do some research before spewing crapola.
Amazon didn’t flip because they wanted to hold back smaller competitors. Amazon got sick of fighting states over not collecting the sales tax, and constantly having to make threats of moving all their distribution centers out of the state to avoid having to pay the tax. It’s too much hassle for Amazon to fight it, and costing them more money then it would save.
Does this mean we can make B&M shops post the final sale price instead of the pre-tax pricing schemes we have now?
I always hear the argument against this is that it’s too onerous to force companies to figure out their tax obligations and adjust their labeling accordingly, but if we’ve decided it isn’t to onerous for internet companies they why do B&M stores get to skip out on the responsibility?
Ahhhh. The scent of money. The thrill of the chase and the excitement of riches beyond measure… Taxes. Newly minted and freshly carved from the public carcass and cooked with the most luscious bureaucratic marinade and special interest seasoning. Nothing can match the power of new funding for some future political spending spree.
Keep in mind that the GDP measures government spending as a good thing. An idiotic Keynesian economic dream.
With the House and Senate out of public control there is little doubt that this federal stupidity will grow. Taxes have always been a great method of control over goods and services.
Since government spending and self restraint is non existent the basic response should be NO. What is the problem is that citizens can’t vote specifically about legislation that directly harms their lives. On may wonder at the logic of requiring the US House and Senate to be forced to ask for voter approval of the various bills and acts but considering the worthless special interest infested legislation produced lately there should be no problem. (with the logic) Its so obvious that the elected politicians have NOT been doing their jobs of protecting the average citizen.
In many US states there are voter requirements on tax bills and other legislation. As one might have guessed the property, sales and income taxes are much lower in such smart states with wise citizens. Compare Co or Wy with NY or IL. The ratio of taxation is sometimes 5:1 (and greater in some cases) and yet the lower taxation states do better in services and infrastructure upkeep. It is (again) a voter awareness problem.
For random example; In IL a roadwork construction project asphalt truck would load up at the asphalt plant with asphalt being billed to that same state/county/township roadwork project and divert it to some politicians or other paying residents driveway re blacktopping. (Cook county ‘Trucks for hire’ scandal) When big money is involved corruption is rampant. Always hard to ferret out.
One of the finest/best ways to put a cork on runaway government is to limit its ability to tax the populace. Since taxation is abused in so many ways by special interest legislation its an easy logical thing to do.
In the realm of limiting runaway government spending programs who cares about fair. Fair has noting to do with it. Dump and complain about any elected politician or idiotic bureaucracy infested party (both of them?) that allows such obvious slipshod taxation.
In all cases; ?Spending will increase to match available funding.? It is mandatory that this funding be strictly limited otherwise it will be common that government will waste billions on panic/fear based nonsense like Doctor Who imaginary cybermen attacks. (Oops? Did that already happen?)
Reactionary,
Mentioned before is the two part action; 1) A constituent calling their legislator and POLITELY explaining how dissatisfied they are with a vote on extra taxes is a great thing to do. It lets them know they wont be able to get their vote for reelection and spends some of their limited congressional staff budget allowance.
2) Send a few bucks to the few House and Senate legislators and a BRIEF note telling them you love them when they say NO to more taxation. Even if these politicians are from another state.
I think its fair, online retailers should pay sales taxes. maybe to the state they are based in, or ship out of, if not the locality they are shipping too.
Re: Use the ICC properly for a change.
If the Feds are going to allow the taxation of interstate commerce, then it’s the Feds that should be doing the taxing. They should not be allowing all of the individual states to engage in an Articles of Confederation style free-for-all. If the lack of taxation is really “so unfair”, then give the Internet resellers the same single taxation authority to worry about.
Make it a federal sales tax and tell the states to go pound sand. Ban the current state practices entirely including “use taxes”.
This kind of interstate nonsense is why we have a federal government to begin with.
Re: Re: Use the ICC properly for a change.
States would still be able to collect taxes if there was a “substantial nexus” with the out-of-state retailer, so we’d end up having to pay both state and federal tax. No thanks.
Re: Re: Use the ICC properly for a change.
Sanest comment in thread.
Re: Re: Re: Use the ICC properly for a change.
I should clarify, federal sales tax is a shitty idea. At the same time it’s insane that the federal government is using it taxing authority over interstate commerce to sign-off on exactly the kind of insane tax situation that giving them that authority in the first place was meant to fix. Honestly I wonder if this is even constitutional really, there are some powers the federal government simply is not allowed to delegate to the states.
So why not just buy overseas and avoid their bullshit?
My Senators voted for it, i already emailed them and copied their house pals… NO VOTES FOR YOU, NO MONEY FOR YOU, and YES I WILL CONTINUE TO BE ACTIVE AND SHOW YOU FOR THE MONEY GRUBBING BOUGHT AND PAID FOR TURN COATS YOU ARE….
Taxation without representation
So, a small online retailer in Illinois who makes $1 million a year in interstate sales will need to: keep track of the purchases made by citizens of New York, charge those citizens, then forward the amount to New York.
What’s the problem with this? Well, the business in Illinois is able to vote the politicians in Illinois out of office if they are unhappy with the way the state is handling taxes. I’m upset with what my county is doing with the income from sales tax, I have the recourse to vote for other people.
However, the politicians in New York have absolutely no accountability for the business in Illinois. And the business has no recourse against said politicians.
So…please tell me how this is not taxation without representation?
Taxation without representation?
So, a small online retailer in Illinois who makes $1 million a year in interstate sales will need to pay sales tax for their customers in New York.
What’s the problem with this? Well, the business in Illinois is able to vote the politicians in Illinois out of office if they are unhappy with the way the state is handling taxes or what have you.
However, the politicians in New York have absolutely no accountability for the business in Illinois. And the business has no recourse against said politicians.
So…how is this not taxation without representation?
Its a NEW TAX… how is it fair if even tho it pass i will still buy online… because online is cheaper then retail stores.. there only saying its for fairness.. if u want fair then quit taxing us!
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It was only a matter of time...
Before the government saw how much online shopping was becoming the preferred way to make a purchase, so they want their cut. It’s unfortunate that online taxes have become something that will burden smaller businesses, but this is the greedy world we live in…
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