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The Internet

Warming Battle Over Online Taxes 358

Posted by timothy
from the taxman-cometh-and-he-is-irritable dept.
mackertm writes "The NYT (free registration, blah blah) has an interesting story about the fight over Internet taxation. A coalition of states and some big clicks-and-mortar retailers are leading the charge to simplify the process of collecting taxes online. Amazon, Dell, and eBay are the biggest pure e-tailers resisting this movement. It's fun to see Amazon try and talk about how difficult it would be to implement taxes for all states, when it's already doing it for Target and Toys 'R Us."
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Warming Battle Over Online Taxes

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  • To avoid this... (Score:5, Insightful)

    by Tebriel (192168) on Wednesday February 19, 2003 @03:31PM (#5337330)
    Can't I just start ordering things from companies based in other countries? Say, a Canadian company? No tax then, right?
    • by RazzleFrog (537054) on Wednesday February 19, 2003 @03:34PM (#5337358)
      Sure. Double your shipping charge so that you can get out of paying the tax. Legally, of course, you are still obliged to pay use tax to your state (if they require it). These are not new taxes but just ways of enforcing already existing taxes.
      • Re:To avoid this... (Score:2, Interesting)

        by MikeFM (12491)
        And if China implements a tax on everything sold online, regardless to the fact that neither the buyer or seller live in China, we're legally required to pay that tax.. if you feel like obeying the laws. Just because something is legally required doesn't mean it's logical or that you actually have to do it.

        Don't forget to ask why certain companies are wanting to push Internet taxes. A lot of companies get to keep a portion of the taxes they collect from their customers. If they help push these laws through they'll get to keep some of the money collected. Meanwhile Ma & Pa Shop get to deal with more redtape that ends up costing them more and making them less likely to successfully launch a new business and thus hurting the economy.
    • Two words: Customs Duties.

      Painful! And plus they might search your stuff, so no purchasing of illicit materials or sex toys ... they might go missing.
    • by phorm (591458) on Wednesday February 19, 2003 @03:54PM (#5337548) Journal
      In Canada, we pay tax on online purchases from major retailers.

      When importing across the border, I've also often got nailed with not only tax, but duty and border charges.

      Unless you can save some money on the item itself and save on tax, it would probably cost you more in the long run.

      Of course, we're always happy to have you supporting our economy, so buy Canadian eh!
    • Say, a Canadian company? No tax then, right?

      Actually, you probably will owe tax, as well as import duties on many products.

      On the bright side, Canadian dollars only cost about sixty-seven cents U.S., so it might still be worthwhile.

  • by govtcheez (524087) <govtcheez03@hotmail.com> on Wednesday February 19, 2003 @03:31PM (#5337333) Homepage
    "Clicks and mortar"? "E-tailers"? That alone was enough to keep me from reading the article.
  • by B3ryllium (571199) on Wednesday February 19, 2003 @03:32PM (#5337342) Homepage
    Texas is finally getting the internet!?

    Wow, I thought this day would never come. I thought all them rednecks would just be sittin' there talking about their "inner net" (inner netting on shorts), for decades ... :)
  • google link (Score:3, Informative)

    by Anonymous Coward on Wednesday February 19, 2003 @03:33PM (#5337348)
    why don't people post non-reg links to these NYT stories? http://www.nytimes.com/2003/02/17/technology/17ECO M.html?ex=1046062800&en=a7c25eb86d3b8b8b&ei=5062&p artner=GOOGLE

    (I mean, people other than people like me who do it as a reply.. the ones that post the stories, or *cough*edit*cough* them).
  • Another Idea (Score:5, Insightful)

    by attobyte (20206) on Wednesday February 19, 2003 @03:33PM (#5337351)
    I would rather pay the sales tax of the state that the e-tailer is in. Then I can choose if I want taxes to go to my state or to another. If I don't like the current Governer I can shop at buy.com and let my money help their state. Why should a state hand over money when they do not depend on any resources from the state the are giving the money to.

    Mike
    • Re:Another Idea (Score:4, Insightful)

      by HarveyBirdman (627248) on Wednesday February 19, 2003 @03:38PM (#5337387) Journal
      Why should a state hand over money when they do not depend on any resources from the state the are giving the money to.

      Because your state is where you are (theoretically, at least) represented. You are not represented by the other state, and thus you cannot be taxed by their system without representation.

      • Right... so if I cross the state border into Texas and go shopping at the Galleria in Houston, then when I check-out, can I tell the clerk, "I'm not represented by this state" and refuse to pay taxes?
    • by DABANSHEE (154661) on Wednesday February 19, 2003 @03:43PM (#5337439)
      Its simple really.

      If you live in California & travel to Oregon to visity aunty Jill, you pay Oregan sales tax while there.

      So wouldn't the simplest solution be one where you pays salestax in the state you visit vitually, IE the state the etailer resides in.

      Sure it might mean some of the big etailers relocating to the state with the lowest salestax, but that sort of thing happens in regards to corporate/ business taxes anyway, so so what.
      • You actually can get a tax refund for any taxes paid in the state of Oregon while you are visiting as long as you then pay the Use tax in California. You will also notice that if you buy something like furniture the store will ask you what state you live in so that they charge you the proper sales tax. I recently bought a dining room set in Connecticut but they charged me NY taxes.
      • If you live in California & travel to Oregon to visity aunty Jill, you pay Oregan sales tax while there.

        And yet, if you live in Oregon or Montana, and travel to Washington, you make a royal pain in the ass of yourself by trying to present your driver's license to every store you buy $2 worth of goods from, as a get-out-of-tax-free card. And then bitch about how long it takes the poor sales people to figure out how the fsck to write up a tax-free sale for your stupid ass. Disclaimer: I am a "customer service representitive" (aka min. wage retail slave) in the state of WA.
      • If you live in California & travel to Oregon to visity aunty Jill, you pay Oregan sales tax while there.

        Well, if Oregon _had_ a sales tax (one of the few states in the US that doesn't), then this would apply. The politicians are desperately trying to figure out a way to convince voters to pass the constitutional amendment required to allow a sales tax in Oregon, but even with its current state budget crisis, it'll be a cold day in hell before its voters decide to allow a sales tax to be implemented. There is absolutely zero trust by the public that allowing a sales tax won't be abused by the legislature.

        The only way I can imagine that the public might allow a sales tax is if the legislature simultaneously _completely_ eliminated the income tax in Oregon, but I highly doubt this will happen.

      • I think it makes lots of sense to do it that way. Although I can see a lot of companies suddenly moving to New Hampshire (no sales tax).
    • Some states, like Delaware, don't have sales taxes. So that's something else to consider when making an online purchase. I bet in no time the no-tax states will have a lot of new e-businesses registering there.
  • by in_ur_face (177250) on Wednesday February 19, 2003 @03:33PM (#5337353)
    I think the little businesses just starting on the web will be hit bad if all sales were to be taxed. A lot of times, I bet the savings of sales tax is the reason for buying online. This will just reduce online sales and profits for these businesses. Everyone wants a slice of the $$$ pie...
    • by kfg (145172) on Wednesday February 19, 2003 @04:06PM (#5337677)
      No, where it will hit the small time operator hardest is in implimentation costs.

      Toys Be Us and Shit already *has* a presence in all states, and accounting services to deal with it. For them paying online taxes, while costly, isn't really as big a deal as it might appear. It's more a question of how to put it into reasonable practice.

      But for the little guy it means setting up tax accounts in every state before he can even do a lick of business, and the cost of maintaining them properly may well exceed his profit margin.

      It's already hard enough to deal with the paperwork and compliance issues in *one* state. Having to do it in all 50 will be enough to force many of the moms and pops of the world into tending the fryer istead of being independent business people.

      Think about that for a minute and think about why the big boys might be very, very, VERY much in favor of paying all these taxes.

      KFG
      • Make it very clear -- that Toys B Us only has to pay for the overhead of accounting for the tax. The customer pays the tax quite directly. Even the overhead is paid for by the customers indirectly but it is vanishingly small. In fact a little creative accounting can make a "pretty penny" in accumulating rounding on taxes.
    • Yes, but...

      Why should we discriminate against bricks-and-mortar retailers? Why should it only be their customers, who support their local economy, who are penalized?

      Granted, implementation of sales taxes for all fifty states plus potentially scores of international jurisdictions is a nontrivial endeavour (understatement), but it's part of the cost of doing business. Look on the bright side--online retailers get to save a lot of money on mortar.

      If the only added value an online retailer can offer is "I can offer marginally lower prices because I skirt tax laws"--do they deserve to be in business?

  • by tgagnon (651625) on Wednesday February 19, 2003 @03:35PM (#5337360)
    If they ever really start bringing taxes into online purchases you can bet sales will start to drop significantly...

    I mean, usually, you have to pay more just because of S&H, then add taxes to the mix and ordering online almost becomes too expensive, especially when making larger purchases.
    • Realize that price is just ONE of the factors when buying online. yes, it IS often cheaper. but that is usually more of a side-effect of the reason that buying online is so great - AVAILABILITY. If the shop in my small midwest town has the same item you can buy online, it probably WILL be more expense, because it of convenience. More likely, though, it ISN'T available here.
  • by scarolan (644274) on Wednesday February 19, 2003 @03:37PM (#5337378) Homepage
    I'm selling medical equipment online [medicalresourceusa.com] and one of the main reasons customers like to purchase from us is because they avoid paying sales tax.
    • your clients are doing. In most states you have to keep track of nontaxed purchases and pay a use-tax at the end of the year. If you are not you are illegally avoiding taxes and will likely never be caught (which is why the "no-tax" internet is a myth).

      The thing that pisses me off is if an internet retailer charges me a "tax" they are not a government entity and if they are not paying my use-tax legally I'm still liable, thus have been lied to and essentially charged an extra fee instead of a tax. BTW who the fuck do these companies pay this tax to? the fed? doubtful. Sounds like a way for them to drum up more cash and less work.
  • by elflet (570757) <elflet@[ ]tquestion.net ['nex' in gap]> on Wednesday February 19, 2003 @03:38PM (#5337382)
    Amazon claims "it would be too burdensome to collect and dispense them on behalf of so many different jurisdictions", but the major e-commerce engines (e.g ClearCommerce's engine [clearcommerce.com]) have a tax table broken down by zip code. This table is updated whenever the tax regulations change. Little companies such as Apple Computer, who is required to charge sales tax on online purchases, depend on this to keep the billing straight. It's all handled in the software, and has been for a looooong time.
    • I doubt it's this simple.

      I imagine that the problem lies less in computing the taxes, but in actually paying them to the corect parties, along with the appropriate paperwork. Streamlining that part would undoubtedly make compliance a lot less burdensome.

    • by kfg (145172) on Wednesday February 19, 2003 @04:13PM (#5337744)
      you need to readjust the lenses on your perspective goggles.

      Apple is a *huge* comapany with a world wide presence and sales in the billions of dollars.

      "Small" business is generally considered to be one with gross annual sales of 3 million or less. Even that's really pretty big.

      A *little* company is my mom trying to broaden the market for her handmade jewelry by offering it online. Having to handle sales taxes for every jurisdiction would simply kill that. Dead.

      KFG
    • It's fun to see Amazon try and talk about how difficult it would be to implement taxes for all states, when it's already doing it for Target and Toys 'R Us."

      Well, that may be, but we ought to be thankful Amazon is fighting for free commerce. Complex taxation would tilt the playing field in favor of the big players. So in a sense they're doing the rest of us a favor, which they don't have to. Amazon can afford all this extra software and programming, and/or services that provide the tax tables. The mom and pop clicks and mortar stores might not be able to. This stupid intestate taxation and the complexity it brings will only decrease the number of players and reduce competition in the ecommerce business. The ultimate sad result might be that no one but huge players can afford to compete, and small players will be forced to become Amazon or Yahoo Store "partners."
  • eBay taxes... (Score:5, Interesting)

    by $$$$$exyGal (638164) on Wednesday February 19, 2003 @03:38PM (#5337385) Homepage Journal
    Does anyone know how eBay would start collecting taxes? Would they do it on the items full price? Or maybe just on fees that eBay collected? And/Or would each seller have to start collecting taxes on every item sold?

    I, for one, don't collect taxes when I'm running a garage sale.

    --sex [slashdot.org]

    • by Joe the Lesser (533425) on Wednesday February 19, 2003 @03:41PM (#5337411) Homepage Journal
      I, for one, don't collect taxes when I'm running a garage sale.

      The IRS has been notified of your fraud. Have a nice day.
      • Cute, but the IRS doesn't collect Sales Tax. That's a purview of the State and Local governments. Most localities also have exemptions specifically for people who have a garage sale and similar endeavors.

        Of course, it might be funny to see the local tax collectors shaking down the neighborhood kids when the open their lemonade stands in the summer...
        • No, but the IRS certainly would like you to declare that auction sale as taxable income... as would your state tax authority if applicable.

          And the IRS isn't going to shake down the neighborhood kids for this same reason - unless they're selling cocaine-laced lemonade it's unlikely they'll have profit high enough to get above the minimum taxable income. (But if they do, then the IRS will happily go after the kids, and then go after the parents because the parents illegally declared the children as a deduction when they were clearly above the maximum allowable income for a child under the age of 19 (or 23 if in college) to be declared a dependant).
    • Re:eBay taxes... (Score:2, Informative)

      by Anonymous Coward
      It would be on the price the item sold at. The ebay fees would be considered a service and would not be taxable. The responsibility theoretically falls on the seller but I can see someone like Paypal offering tax services. As for garage sales, as long as you are only selling small ticket items (under $1000) you should be ok. The state has better things to do then to come after every garage sale.
    • Most garage sales are exempt from sales taxes. Each state has its own rules, but in general if your sale is temporary and under some dollar amount, you are exempt.

      The problem at eBay is that many of the sellers are businesses doing it year round for significant revenue. They aren't exempt, except that they are doing business in states where they have no physical presence.
    • Major resellers in Canada often have the following listed in their auctions

      Final price will add 7% tax to all residents of Canada, with an additional x% to residents of the province of yyy (where the company resides).

      For things like garage sales and personal sales, double-dipping should be considered. The tax was already paid when the item was first bought, the government really isn't entitled to a second round for the same item. Of course, that doesn't stop them when it comes to used dealership cars, houses, etc - so they'll probably try anyways.
      • It sounds like the sales tax situation in Canada is much more simple than it is in the US.

        In the US, sales taxes are levied at a state, county, and city level. Not all states, counties, or cities levy one though, and how much each levies varies.

        To make it more fun, whether or not sales tax applies can be dependant on the item - a large number of states/etc. don't tax "basic needs" like food, and some non-food items (usually baby needs, such as diapers).

        In theory you can figure out everything you need from zip codes. In reality, the zip code doesn't always give good enough granularity (zip+4 does I think).

        As far as eBay, garage sales, etc go - yeah, you're supposed to charge taxes, declare them as income, etc. but nobody does. Unless it's an item worth tens of thousands of dollars it's just not worth the various tax authorities time... and even then, it's the income tax auditors that'll come after you, not the sales tax divisions.
    • Re:eBay taxes... (Score:4, Informative)

      by VivianC (206472) <internet_updateNO@SPAMyahoo.com> on Wednesday February 19, 2003 @04:16PM (#5337777) Homepage Journal
      As the law stands now, it would be up to each seller to file a sales tax form in each state where s/he has made a sale. So, if you have five auctions this year and each winner is in a different state from you, you now have to file sales tax returns in those five states.

      At an average H&R Block rate of ~$75 per state return, you'd be looking at some massive auction fees. In short, quite possibly the end of online auctions by small players.
  • by eaddict (148006) on Wednesday February 19, 2003 @03:38PM (#5337388)
    Drop the internet sales tax idea completely. Want a package shipped to use? Delivery tax. Road Tax. What to connect to the net? line tax. Connection tax. Why not have all these 'toll roads'? It would make the people who are using the products/services pay for things.
    • I say do both. That way, we can get rid of income tax, SocialistSecurity and all that ilk. It would all be optional taxes. The rich buying their Lincolin Navigators would be paying more, while me in my little VW will pay less than half!

  • I think... (Score:5, Informative)

    by Iscariot_ (166362) on Wednesday February 19, 2003 @03:38PM (#5337390)
    It's a very interesting debate. In my eyes it comes down to lazyness versus saving a 'buck or two'.

    Personally, I like the lazyness route. If I can order something and it comes to me, I think it's worth the extra wait. On the flip side, many would prefer going to the store to buy what they want (though paying a few pence extra) so that they can get it now. How much do you enjoy instant gratification?

    Another issue how might this affect small companies, like the guy that makes and sells mIRC [mirc.com]. Taxes are complicated, and it might make it difficult for people such as him to sell his product w/o having to spend a lot of time and money creating an e-commerce engine (or partnering with someone that does) that customizes the amount of taxes per-state.
    • Good point. Shouldn't the government be obligated to somehow set up a big, free database of tax schemes, or at least significantly deconvolute them (as they have been claiming?) Additionally, a database alone wouldn't solve the problem without also streamlining payment.

      One thing that people have been saying is that online taxes are imminent. Yes and no - walmart.com, for example, has been in violation of the law for a long time if they haven't been collecting. Amazon.com hasn't been in violation. So this is a clear example of places like Walmart saying "If I get screwed, screw everybody else too." Nice.

  • it will happen (Score:4, Interesting)

    by kin_korn_karn (466864) on Wednesday February 19, 2003 @03:38PM (#5337391) Homepage
    I work for a company that operates a major niche web site and have spent the last 6 months implementing sales and use tax for our billing and customer service systems. It's on its way :(
    • And the problem is, even as it creates a new revenue stream for the states, it will hack away at that revenue stream. Here's why:

      Advantages of "e-tailers": open 24/7 (matched by a few brick and mortars), no sales tax, sometimes cheaper, no overhead of retail front

      Advantages of "retailers": can see and touch item before buying, have a physical point of contact for service/product issues, no shipping time, no shipping charges.

      This isn't about "leveling the playing field." The field is clearly pretty level, if not already skewed in retailer favor, and what this will do is skew it further in that direction. Mostly, it's about revenue for the states. What I doubt most of them realize is that if they eliminate one of e-tailing's few advantages, it's possible that e-tailing itself will take another hit. Not to mention the growing number of businesses that do both.

      I'd actually guess that given the regularity that the underlying concept of tax-scheme-vs-business-growth comes up, the would-be policy makers behind this do understand that.... but that the states (31 at last count?) that are pushing for this are probably the ones with the least significant numbers of catalog/online retailers.

      • One more thing. I also wonder if the burden of implementing (or purchasing) a system that calculates appropriate taxation on an item for any given state will become an obstacle to small on line retailers. It may not even be as simple as a different percentage rate for each state: for example, when I was living in California, I seem to recall a "snack tax"... some of the stuff I bought at the grocery store was taxed differently than other stuff. That's about the time I gave up trying to do sales tax in my head anymore... keeping different running totals to be multiplied by different percentages was an interesting exercise, but it became easier just to glance over the reciept for glaring errors.
        • It's definitely been a burden here, with 5 people on the project. We're using an aftermarket product that specializes in calculating sales and use taxes. It's a nearly impossible to use, antique style piece of crap, but at least we don't have to maintain all the tax rates ourselves. I don't think a small site could afford to implement it.
  • by madshot (621087) on Wednesday February 19, 2003 @03:40PM (#5337403) Homepage Journal
    Lets see.. Federal Income Tax, State Income Tax, Property Tax, Local Tax, Sales Tax, and now, Online Sales Tax.. Did I miss any? (probably missed a few) oh wait, I need to pay rent this month.. wonder if there is any money left from my paycheck.. I love this country very much, but someone needs to learn how to manage their money better and it's not me.. because I'm not the one spending it.. Could be worse I guess.. I could live in Canada.. eh?
    • I feel fairly sure that if you add up all the taxes you pay (income, sales, property, utility, phone, gas, etc.), it'd amount to over 50% of the average person's income.

      Don't you cross some sort of line into communism or socialism when more than half of your money goes to the government?
    • by doowy (241688)
      Could be worse I guess.. I could live in Canada.. eh?

      No joke here folks. I worked in the U.S. for a while, and I paid a lot less taxes (your situation may vary) than I do in Canada.

      Of course, in Canada we don't mind so much - we implement silly things like free healthcare (getting sick in the U.S. was one of the worst experiences of my life. who wants to argue with insurance companies when you're bed ridden?).

      aside: Honestly, people always talk about how great our healthcare system is in Canada. Guys, I experienced Canada's [a lot] and the U.S. [a bit], there is a HUGE difference. The hype is true.

      The U.S. has better roads though - can't argue with that.
  • by rnicey (315158)
    Seeing as many people here rely on Internet jobs of one kind or another, and this could be a rather large nail in the coffin of online sales, it's far from fun.

    Amazon and others are part of a growing lobby group and as such their opinions are industry wide, not just for themselves.

    These companies already pay a large tax to the country. They exist and employ people who pay taxes and consume goods. I see no point in reducing the effectiveness of their business model thereby hurting all the people below them in the chain.
  • due to IP spoofing, Firewalls, etc, there's no real evidence that any transaction occurred in the US, making the taxability dubious. Personally, I think this will get ugly and complicated, due to regs for location of warehouse, customer, shipping address, HQ of retailer, site of retailer's web host, etc. How many states could potentially collect on one transaction?
  • by unfortunateson (527551) on Wednesday February 19, 2003 @03:43PM (#5337430) Journal
    Currently, they're subject to the same tax rule as internet, and as I'd said the last time this came up on Slashdot, they're 4-10X the size of all internet sales.

    The recent changes merely clarified that, for instance, BN.com really is Barnes & Noble and subject to the same taxation where they have physical presences, i.e. everywhere.

    There's lots of catalog sales out there. If they're not collecting sales tax, I shouldn't either. We collect it for Illinois, where we're based (and even that's fuzzy: my server's in Connecticut).

    Always collecting for the 'home' state tax is a bad idea too: It'll just force businesses to incorporate in states such as Alaska without sales tax. But on $130K sales on our little company, a monthly check to 47 states is a huge burden.
  • Tax (Score:5, Funny)

    by grub (11606) <slashdot@grub.net> on Wednesday February 19, 2003 @03:43PM (#5337434) Homepage Journal

    So there I was; 15 years old, naive and about to go on my first date where sex was involved. I went to the pharmacy and asked the man for condoms. "Here you go, that will be 5 dollars plus 70 cents for the tax." the pharmacist said. I replied "Tacks? So that's how those things are held on."
  • I feel this would hurt more than help.

    I (and possibly others) buy more things online partially on the basis that it usually isnt taxed. I buy more things online than I should (as many many others do too) more-so on the basis that I can get more for my money. I definately would purchase less if I knew I was going to be taxed. Whats the incentive to buy online (when taxes are involved)? Prices are sometimes lower than retail stores, but when I buy a $1500 laptop at Fry's ELectronics and pay $125 in tax, thats a HUGE incentive to buy from someone online from out of state!!! If the internet plans on being taxed, I would seriously have to reconsider buying expensive items online, in the long run it would put many online retails out of business, for the sole purpose of funding the Gov't. Does anyone else feel this way???

  • by HeelToe (615905) on Wednesday February 19, 2003 @03:44PM (#5337447) Homepage
    I'm lost.

    There was a recent article on this on /. where I saw many good arguments about states trying to tax internet/mail order sales.

    I am still at a loss to understand why the state I'm sitting in has a right to tax something I purchased elsewhere. Is it solely the fact that I'm sitting in their jurisdiction? Really, then, they're after me, and they're using the retailer as a collector for their tax. How can my state tell some company in another state they must comply with tax laws where I sit? Doesn't this interfere with interstate commerce, the domain of the federal government?

    I saw an argument that resources provided by my state are used in the transaction (things like the roads the UPS truck drives on and so forth). I just don't buy that. What am I (or the merchant) paying for shipping? We're paying a fee to a company that operates in my state which pays taxes based on its revenue which should be used to pay for those state services.

    This whole internet tax thing just feels like a big attempt to get some budget revenue for states in budget crises. It's the big juicy target of today they're all hoping to nail. It seems to me they should be laying off state workers (just like so many of us were laid off from the private industry) instead of trying to cover their lack of financial prudence.
    • "Doesn't this interfere with interstate commerce, the domain of the federal government?"

      It does. Congress will have to pass legislation specifically allowing it. Such legislation has not yet been introduced, but unfortunately they're working on it. I've already written my congresscritters asking them to oppose it. (Not that I think it does a lot of good, but it doesn't cost me very much to do it.)

  • What the....? (Score:3, Insightful)

    by s1r_m1xalot (218277) on Wednesday February 19, 2003 @03:45PM (#5337459)
    It's fun to see Amazon try and talk about how difficult it would be to implement taxes for all states, when it's already doing it for Target and Toys 'R Us.

    I understood this sentence at the first "it".
    It was a little vague by the second "it".
    By the third "it" I was confused.
    At the fourth "it" in it it was a little confusing what part of it "it" was referring to

    • I thought it was pretty clear. It is really quite simple, if Amazon is already doing it why can't that they just extend it to their other sites. oh never mind some people just don't it.
  • So now, I have to pay shipping and tax on items online, wait days to get it, and have an even hard time returning it or getting a refund if it was a defective item? No thanks.

    Sure, I'm all for taxes, I understand what taxes do. But I also see a suffering economy with low consumer confidence, low consumer spending, and now the government is finding ways to increase the average cost of living with no direct benefit to the consumer? Online businesses have just as much if not more expenses than an average brick and mortar store. How many Wal-Marts do you know of that get millions of customers a day who merely walk in, take up space and never purchase anything? There are a number, but it's no where near the amount of people that log into a website, browse, and never buy. Where as that store never has to pay a metered fee for someone who walks into the store, online companies do. Heck, just today I've been to 10 online stores browsing and never purchased an item. I've been to maybe 3 regular stores, and purchased an item from 2.

    I don't think it's very unfair to not require online consumers to pay taxes in the originating state. It's going to drive away people from purchasing online, driving up the cost of ecommerce sites, causes more ecommerce sites to go out of business, more layoffs, lower consumer confidence, all because Uncle Sam wants to make change right now. Why not wait 5 or 6 years after the economy has recovered to do this?...

    *watches all the green eyes blink*
    • and have an even hard time returning it or getting a refund if it was a defective item?
      You won't, at least if my experience is anything to go by... I bought some CDs from amazon.co.uk [amazon.co.uk] and by accident they sent me a wrong one (a Faithless one instead of a Today Is The Day one - quite a difficult mixup!). What did I have to do?

      Simple. Place CD in envelope, fill in return form, send it back. Receive email apologising for the mistake and informing me they'll give me a refund as well as the CD I ordered in the first place within 48 hours. Sorted.

      I've heard some horror stories about internet purchasings, but amazon have been exemplary to me and as such I use them for all my online entertainment purchases and I recommend them to people who ask.

      In real life I tend to get bad service from shops with bad reputations and good service from ones with good reputations. To this end I am pimping Amazon for all it's worth. If some shops in the real world were as courteous and apologetic as they were they'd be facing less competition.

      -Mark
  • "To calculate your sales tax, press OK noooooowwwwww."

    "..."

    "..."

    "...Why don't you just tell me what your sales tax is?!?!"

  • by The_Rook (136658) on Wednesday February 19, 2003 @03:51PM (#5337516)
    while i sympathize with local and state governments having trouble balancing their books, doing so through value added and use taxes are the worst way to go about it.

    value added taxes are favored by (wealthy) tax theorists because they tax consumption and therefore cannot be avoided. however, they are highly subject to the condition of the economy. any economic slowdown and sales taxes drop along with consumer spending. also, they are popular with the wealthy because the tax is paid only when you spend money, and not on income.

    which is their biggest problem. low income taxpayers are disproportionately taxed compared to wealthy. for someone making a hundred grand a year, the value added tax on a computer is nothing. but for someone making 20 grand a year or less, that tax becomes significant. because they are a tax on consumption, value added taxes are a direct drain on the economy - they slow down and reduce consumption and reduce the total number of transactions that can take place in an economy.

    if states and local governments really have a problem with colecting value added taxes, then the true answer is to drop the value added taxes completely, rely on income and/or property taxes, and build up the infrastructure that will encourage internet and mail order businesses to set up shop in their own state.
  • Personally I have no problem with companies collecting taxes on internet purchases as long as it follows the same gneral rule as mail order(which isn't bying something off a web site just another mail order venue)...in otherwords taxes are collected if you live in the same state as the business in question (where are Amazon's servers, well that state pays taxes) or any state the business has business presence in...does amazon have office sin MA, well then I would except to pay 5% ales tax on my purchase. I just don't understand why this is such a confusing issue when businesses have been doing this for years.
  • I found it interesting that Sun charged me sales tax of 4.9% (Kansas?) for the bandwidth to download the recently mentioned OS release. In Kansas, services (and a few other exceptions) are not taxed. In this case, there is no physical product. I pay tax on the broadband connection here. What I bought was bandwidth there, wherever their servers were located. Although I used a credit card with a Kansas address and therefore listed that as my address, I could have physically been anywhere, even outside the US.

    Also, this was true the last time I checked, in my previous city, cable internet came with a "franchise fee" - a tax to fund the government oversight of the service. The cable company charged sales tax on that.

  • there is a significant difference between the tax setup when you have a physical presence in a given state (as Toys R Us do in just about every state) and when you do not.

    the proposed tax system would honor existing tax jurisdiction boundaries based on customer location. these jurisdictions do not follow zip code or any other boundary that can be discerned from existing customer info. to support this properly requires a set of a "tax jurisdiction" IDs and the user has to supply one when placing the order.

  • by squarooticus (5092) on Wednesday February 19, 2003 @03:55PM (#5337560) Homepage
    The stated purpose of "use tax" is to tax the "use" of items not purchased in the state. But, since that tax isn't levied against in-state purchases in addition to sales tax, isn't that simply an underhanded attempt to regulate interstate commerce? I'm surprised these laws were not struck down by the SCOTUS in the past.
    • We've got a use tax here in Michigan, but I've never paid it, simply because I think it's unenforceable. Only Congress has jurisdiction over the taxation of interstate commerce. Maybe these states should become familiar with Article 1, Section 6 of the Constitution. [findlaw.com]
      • We've got a use tax here in Michigan, but I've never paid it, simply because I think it's unenforceable.

        Most states enforce it only for large ticket items, like expensive jewelry, boats, and other items. They know you've made the purchase by looking at credit card records, but it is only worthwhile for them to go after the big purchases.

        Cars, of course, are easiest to enforce sales tax on since in general they have to be registered in the state in which you live.

  • by adzoox (615327) on Wednesday February 19, 2003 @03:56PM (#5337579) Journal
    If goods are to be taxed on eBay, who's state do I collect for? The home state? The destination state? Do you know how difficult that would be to pay? To keep up with?

    Also, EVERYTHING I sell is used. Taxes cannot be charged on used goods. Taxes were ALREADY paid. I have heard of some states trying to come down on flea markets and yard salers in some states. If they are selling new, it's one thing. If selling used, again, taxes have already been paid.

  • What living bipedal organisms would ask for the government to put taxes on services rendered, that have already been taxed?

    Obviously, we are not dealing with living bipedal organisms...

    This is also an issue of TAXATION WITHOUT REPRESENTATION. What services are offered for paying such a "tax", why do they not recognize the contractual relationship as this "tax" being formed as an "optional" service, and who recognizes that the internet is composed of private communications networks that can't legally be taxed?

    This "tax" is a violation all the way, up and down, my Constitution; me being a sovereign State.
  • I'm all for online taxes, even though I do play the hypocrite and take advantage of tax-free online shopping whenever possible (as in purchasing my dual G4 -- I'm economically rational, after all!). The budget crunches that are affecting state and local governments are at least partially exacerbated by the loss of sales taxes due to online and catalog shopping. It's not a huge amount, just as the album sales lost to MP3s aren't likely to be a huge amount, but it's just as much a factor to municipalities as folks who drive an extra ten minutes to visit the CompUSA the next county over, where sales tax is a few percent less. In times like this, when services and civil service jobs are being slashed, every penny really does count.

    However, a balance must be struck. The complexities of managing sales taxes could prove a murderous burden to small sites -- the same worry that motivated the Court to strike down catalog sales taxes in Quill Corp v. North Dakota:

    [O]ur decision [in
    Quill] is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve.

    No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions.

    The states have been attempting (since Quill came down in 1992) to strike a deal with Congress: pass legislation to let us collect taxes on catalog, and now Internet, sales, and we'll simplify our codes so they don't pose a burden to retailers. So far, Congress hasn't bitten, but I think that if a fair and easy-to-use system can be developed, one that places the primary responsibility upon the states for distribution of the funds, then it will prove a minimal burden to commerce sites.
  • by dave_aiello (9791) on Wednesday February 19, 2003 @04:04PM (#5337663) Homepage
    The Amazon Marketplace, ZShops, etc., are a huge moneymaker for Amazon now. They are also a safety net for a lot of people who have lost their jobs.

    Do the states that are pushing for sales tax collection really expect all of these small-scale sellers to set aside and remit taxes to the hundreds of separate jurisdictions in the USA? Or, do they expect Amazon to collect the tax based on where the 3rd party seller says they are located?

  • by Gorimek (61128) on Wednesday February 19, 2003 @04:05PM (#5337672) Homepage
    Internet mail order is no different than phone or mail based mail order.

    If they want to enforce sales tax on those sales, fine. But call it what it is.

    Or will they actually tax mail order orders ordered over the web, but not the same orders from the same customer to the same vendor using phone??

    That would be so stupid that it may just happen...
  • by cybermace5 (446439) <g.ryan@macetech.com> on Wednesday February 19, 2003 @04:16PM (#5337787) Homepage Journal
    It's smoking.

    Yep, another thing to blame on the smokers.

    See, states have been taxing cigarettes like mad. New York, for example. Some retailers in other states were doing a rather brisk business selling cigarettes online: no tax.

    They all thought the government would clamp down on internet taxing before too long, and they were right. Not only do they get to claim they're protecting the world from smokers, but they grab some extra cash for the here and now. Never mind that sales taxes always have a chilling effect on spending. Technically, though, it's just the companies that are doing bad right now. Joe Six-pack has been spending his little heart out, and the economy hasn't budged.

    So is it the state's fault for raising taxes on cigarettes, or the online retailers "cheating" the states out of the money they've already spent that was supposed to come out of smoke taxes?

    I don't smoke, but think it's none of the government's business.
    • In response, I think that you need a smoker's opinion.

      I am a smoker, and have been for years. Granted, it's a choice I made all those years ago to pick up a cigarette and smoke it, but now I've become part of a ridiculed and oppressed minority, with none of the benefits of other minority groups (weither based on gender, race, etc) such as legal representation, there is no "smokers rights" groups, and, of course, I'm very much discriminated against.

      I am part of the most taxed segment of the United States a)because I make less than $20,000/year, b)I'm unmarried, and c)because I'm a smoker. When I buy cigarettes, not only do I have to pay a sales tax on the actual cost of the cigarettes, but also on the tax that the states place on each pack already! Then, I can only smoke in certian areas, and in some states, I can't smoke at all except for in my home or car.

      To forestall any arguements that I can quit, I relize this, but I enjoy smoking, and don't want to stop right now. The government continually raises taxes and oppresses me, and fellow smokers.

      Now that the governement and/or states are attempting to tax internet sales, you are all experiencing the same thing that us smokers have been experiencing for years: taxation of a habit that you (typically) enjoy, and don't want to quit doing.

      Just my $.02 worth
  • Time for tea party (Score:3, Insightful)

    by Camel Pilot (78781) on Wednesday February 19, 2003 @04:33PM (#5337963) Homepage Journal
    As an online retailer why should I spend my resources to act as a tax collector for another state of which I use no services or even visit.

    This is an issue between the State's tax agency and the citizen of the that State, leave be the hell of of it.

    And what if I don't. If I do not have any presence in that State of question can they really do anything. Can Florida AG enforce compliance in Idaho?
  • by ElitusPrime (202338) on Wednesday February 19, 2003 @04:33PM (#5337964)
    Target and Toys 'R Us should have been collecting sales tax all along. Since they have stores nation-wide, they have nexus in all of the states. By 'agreeing' to collect sales tax, they're just agreeing to start doing what they should have been doing already.

    Behind the scenes, they probably made a deal to agree to these taxes in exchange for the states not going after them for past taxes on their Internet business.

    The spin that the stores have put on this is pretty clever. By agreeing to the tax, they put pressure on Internet sites without nexus (like Amazon and eBay) to pay sales taxes on their business. They know full well that Amazon and eBay (without a network of stores) will have a difficult time figuring out how to collect all these taxes. Target and Toys 'R Us already have it figured out. This gives the chains with physical locations an advantage.

    Also, this is just the beginning. Once sales tax is collected on online purchases (which won't add up to much money), what to stop a whole new wave of taxes on online sales? It's going to get expensive and complex very quickly.

    Worse of all, big sites like Amazon and eBay will find a way to cope, but Mom 'n Pop Internet stores likely won't survive. Less competition, higher prices, less innovation. As is the case with most taxes, the consumer loses in the end...
  • by cdipierr (4045) on Wednesday February 19, 2003 @04:41PM (#5338048) Homepage
    I'm a little sick of all of the "I buy my laptop online because it's $125 cheaper without taxes" argument.

    Yes, you're right, it's cheaper to do that, but that's primarily because you're breaking the law. Just because you don't pay taxes at the time of purchase does not mean that your laptop is tax exempt. You should be filling out the appropriate "use tax" form for your state and sending the money to them.

    I realize that hardly anyone actually obeys the use tax laws, but that doesn't make your argument any more valid. It's basically the equivilent of saying "Laptops would cost more if they stopped letting me steal money from banks!"

    So, would this tax enforcement at the time of purchase hurt online sales? Maybe. But, please realize it's not a new tax, it's just forcing you to pay one you're already supposed to be paying.
  • Why not institute a 5% flat tax? Winners would learn to advertise prices "including tax" as they do in other parts of the world.

    Of course, sales tax should be a flat rate nation wide also...

    But that would make sense to the general public. And we all know legislators don't like that (think USA tax codes).
  • It's fun to see Amazon try and talk about how difficult it would be to implement taxes for all states, when it's already doing it for Target and Toys 'R Us."

    Amazon has my full support to use all the doubletalk they want if it saves me from paying taxes.

    I don't care about the state government.

  • -Because I happen to have a web-page and linked to a couple of e-retailers, I fell under the umbrella for a MASSIVE government initiative to deal with the 'problem' of e-busineses.

    Very, Very annoying.

    I have managed to learn during this whole process, (or rather, make that, I have been 'informed' by my auditor), that Canada had participated in an international symposium on e-business and the problem of tax-collection this past summer and that this was part of an international 'crack-down'.

    Essentially, all the industrialized governments of the world are dancing in a fit of greed-inspired agony over the perception that PEOPLE ARE ENGAGING IN TRADE WITHOUT INVOLVING GOVERNMENT!!!!! --And by golly, Big Brother wants his cut. Up front and right now.

    I recently started using Paypal, and I swear, two weeks later, I got a call from the government demanding that I give them my access codes so that they could pick over my records. Wow. I mean, Wow.

    And this is the auditing department. In today's virtually cashless society, if they decide that you are being uncooperative, they can freeze your accounts. No money in, no money out. How many employers will pay you in cash? Exactly.

    And to all those of you who thought, "Wow! Cashless society! Cool!" Thanks guys. --I know personally three unrelated people who have had their lives put on hold, one for several weeks, one for the whole last year, and another for going on five years, because the Government in all its red-tape glory, saw fit to punch the 'Hold' switch at their banks, preventing them from depositing or withdrawing money in any form. --And these people are not assholes or anything. They're smart and capable. But they also committed the crime of being out of work and unable to make student loan payments. --And one of them is still in school! (Ah, red, red tape. . .)

    --Now they live hand to mouth on kindness, bent rules and what little cash remains circulating outside the digital system. Gee, I sure love the government. You think this stuff doesn't happen? Think it can't happen to you? Stick around. The steam roller is just shifting into drive. . .

    So. . .

    Faced with this threat, I pretty had to do what I was told by my Auditor. Thankfully, he seems to be a fairly un-corrupted individual; I don't see him asking for bribes or such, which is nice. But he's also a fairly bland civil servant without any imagination. Indeed, he actually told me that taxes were fair and normal and that people who complained were selfish.

    I told him that he'd been duped, and we got into a long, albeit fruitless conversation. --He was surprised to learn that Income Tax had been a WWII war measures act which was supposed to exist for the duration of hostiliies only, but which somehow, just seemed to linger 'till today. He didn't know this! He seemed to think that Income Tax had been around forever and that it was normal and right. And when he did learn that it was a relatively new phenomenon, he just shrugged. "Oh well. It's here now. Nothing we can do about it."

    Yeah, except ratchet up the pressure on Tom, Dick & Harry making sales over Ebay. There was a time when you could buy something off a friend and not even think about taxation. That'll end really soon, kids!

    This world has gone insane. Microsoft pays no tax and the private citizen is being bled dry. Insane.

    Not convinced?

    Let me share the story of another friend of mine; She's an artist. She paints and draws cartoons and illustrations for magazines and children's books. --That's where all her income comes from, and she lives a frugal, but otherwise happy life. Well, anyway, she has a small following and recently she decided to start selling some of her original paintings. When tax time came around last year, she dutifully declared the extra income. Well, guess what? She got audited. (A lot of that going around these days, it seems! Control. Control. . . Big Brother is watching you.)

    Well, when the government learned that she had sold some of her paintings, the auditing department declared that she no longer qualified under tax law as an artist; that she now had to be considered differently. --That is, they came and they fucking counted all her paintings, (several hundred), made an assessment of the value of them all based on what she had made through her recent sales, and then handed her a bill for the tax she now owed on all the unsold paintings she had in 'stock'.

    See, when it comes to manufacturing, the government demands tax payment up front on all goods produced, before they go to market. Ever wonder why there are end of year liquidation sales? This is why. --If you sell everything off or DESTROY goods, (as some manufacturers do), then you don't get to reclaim the tax you paid on them at the end of the year.

    My friend is currently fighting this insanity, but guess what? She's making installment payments anyway on the thousands of dollars she suddenly 'owes' the government because the threat of having all her accounts frozen and assets siezed was too much for her.

    I can't wait until this whole bullshit parade of a society, which punishes its teachers and its artitst, burns to the ground. There are going to be a lot of greedy morons running around in panic and grief of their own making because suddenly all the money and material wealth they have spent their lives accumulating will be worth zip. None of this shit will be important soon.

    Soon. Soon. . .

    When those trade towers fell, I was enraged because the people who died were honest custodial workers and support staff. If the towers had collapsed around 2:30 P.M., I would have been MUCH more content. I think this was perhaps the biggest indicator of who was REALLY responsible for that stage-production 'terrorist' act.

    Reichstag, Reichstag. . .


    -Fantastic Lad

  • by peterdaly (123554) <petedaly@ix. n e t c o m.com> on Wednesday February 19, 2003 @05:33PM (#5338576)
    While Amazon and Dell are the loudest complainers, they will be laughing all the way to the bank when the aftershock is over.

    Small Businesses which sell online will be killed by this as I understand (which I may not) it's present form. Small one or two people web stores just don't have the resources to collect and pay sales tax to all 50 states. It's hard enough to do for the one they are in. For example, some states don't charge tax on clothes while some do. I know in my state certain types of groceries are taxed while others are not. With all the differences, not to mention the actual payments to each state, the overhead of maintaining this is huge.

    I am sure this could run many small web sites out of business. Amazon at least should welcome that.

    -Pete

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