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NEW YORK — Shopping online can be a way to find bargains while steering clear of crowds — and sales taxes. But those tax breaks are starting to erode. With the recession pummeling states' budgets, their governments increasingly want to fill the gaps by collecting taxes on Internet sales, which are growing even as the economy shudders.
I'm a dotcom business developer and I think a state sales tax on Internet-based sales is long overdue. It's unfair in its current incarnation. For example, a store with a brick-and-mortar presence in Virginia must levy a Virginia sales tax to Virginia customers who order online. However, a competitor based next door in North Carolina does not have to levy any sales tax to Virginia customers, provided they have no Virginia brick-and-mortar presence.
Early on, in the late 90s, the moratorium on Internet sales taxes made sense. It no longer makes any sense. We've created a system that encourages long haul shipping of products to consumers.
If you hate any tax whatsoever, you'll hate an Internet tax. But the reality is that state governments WILL generate their required tax revenue somehow. Currently, states that levy a sales tax, are simply replacing that lost revenue with higher state income and property taxes. If you're buying that $500 camera online, you can afford to pay $25 to your state government, to help offset the cost of maintaining state roads that allow the UPS truck to deliver your order to you
I'd suggest they make it temporary rather than permanent to start with. Before this economy tanked, Texas was doing OK without it. As it stands, schools will be squeezed, forcing towns to come up with higher property taxes.
For example, a store with a brick-and-mortar presence in Virginia must levy a Virginia sales tax to Virginia customers who order online. However, a competitor based next door in North Carolina does not have to levy any sales tax to Virginia customers, provided they have no Virginia brick-and-mortar presence.
That's right, and that's how it should be.
Quote:
Originally Posted by seanpecor
Early on, in the late 90s, the moratorium on Internet sales taxes made sense.
The moratorium you're talking about was on taxing the Internet as a communication medium or a utility. Look at your telephone bill, your cellphone bill, your gas bill, your water bill, your electric bill..... Do you really want to see those same taxes applied to yet another service that the government has absolutely nothing to do with providing? Their hands are in our pockets deep enough - I'm already feeling Tim Geithner's hand on my behind... I'd rather he didn't squeeze.
There's a logistical angle to this that the vast majority of people have no concept of.
Sales tax is levied by different localities. For instance, in California, there's a base sales tax that's levied by the state. In some counties within California, there's an additional percentage that's added to the state's base rate. Within some of those counties are cities that add their own percentage on top of the county and the state rates. Each entity wants their piece of every sale.
You mentioned that you're a "dotcom business developer". Surely, you (of all people) understand how the Internet levels the playing field for budding entrepreneurs and gives them the opportunity to start their own small business and break free from the doldrums of being a wage slave at some dead end job.
Forcing these people to collect sales tax would put them out of business, plain and simple. There are SO MANY tax jurisdictions, SO MANY licenses that would need to be acquired... The amount of additional work that would be required would keep an entire accounting department busy full time. There's no chance whatsoever that an individual or even a couple would be able to deal with everything that would be required and still run their business.
Quote:
Originally Posted by seanpecor
If you're buying that $500 camera online, you can afford to pay $25 to your state government, to help offset the cost of maintaining state roads that allow the UPS truck to deliver your order to you
UPS already pays for those costs via commercial vehicle registrations, apportioned license plates (IRP) and additional fuel taxes (IFTA). If you believe that any of that $25 is going to the roads, then I have a bridge to sell you.
There are SO MANY tax jurisdictions, SO MANY licenses that would need to be acquired... The amount of additional work that would be required would keep an entire accounting department busy full time.
What are all these licenses you're talking about?
I have one business license; its in the county my business is in.
I collect taxes for other counties I work in, and I don't have to buy a license there. My business license is reciprocated everywhere.
As for keeping up with it, any simple accounting software can keep up w/ what tax money goes where.
As for keeping up with it, any simple accounting software can keep up w/ what tax money goes where.
Trying to understand the scope of the work involved: How many taxes do you collect? Are they at both county and state levels? How many times a year do you have to pay these taxes? Are all payments on the same dates? Are they all paid the same way, i.e. check or electronically? Do you have to file a report with them? How do you determine the rates and changes to the rates?
I have one business license; its in the county my business is in.
I collect taxes for other counties I work in, and I don't have to buy a license there. My business license is reciprocated everywhere.
As for keeping up with it, any simple accounting software can keep up w/ what tax money goes where.
It is minimal additional work, if any at all.
I'm not talking about business licenses.
Yes, you collect taxes for other counties in Georgia, and you report those taxes to whatever authority is responsible for collecting sales tax in Georgia.
Let's say you wanted to sell to someone in California. Do you know what rate to collect from each customer? Do you know who you have to pay that sales tax to? Do you have a Seller's Permit issued by that authority? If the answer to any of those questions is "No," then you can't sell to anyone in California.
Oh, and have fun filing 50+ sales tax reports every three months.
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