States Push to Collect Online Sales Tax

Carl Bialik from the WSJ writes "On Saturday, 18 states will implement the Streamlined Sales Tax Project, which will make it easier to collect local and state sales taxes on purchases made over the Internet while offering amnesty on uncollected taxes. In their longstanding opposition to collect sales tax, many online retailers 'have cited a 1992 Supreme Court ruling that said that it would be too onerous for e-tailers to calculate all the permutations of differing state and local tax rates,' the Wall Street Journal reports. 'One goal of the project was to remove the ruling as a key defense for online merchants.' Is your state involved? 'The states that have signed on are Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota and West Virginia. Five more -- Arkansas, Ohio, Tennessee, Utah and Wyoming -- are in the process of finalizing the requirements needed to join, while Washington, Texas and Nevada are in earlier stages.'"

Direct URL to SSTP web site

[xmas2003]

Here's a direct link to the StreamLined Sales Tax website [streamlinedsalestax.org] which is confusing as all get out with their last press release being in 2002; makes you wonder how "legit" these guys are. BTW, should this be filed under "The Mighty Buck" instead of Politics?!? ;-)

BTW, there's been a noteable increase in Wall Street Journal stories on Slashdot - certainly has improved the quality - kudo's to the editors and Carl Bialik from the WSJ [carlbialik.com]

halloween webcam is coming [komar.org]

California charges it

[JoeCommodore]

They call it a "Use Tax" on thier tax form, been doing it for two years now. :/

Re:Direct URL to SSTP web site

[hsmith]

If i recall correctly, this is actually a company that is trying to sell their taxing product to the several states and they have a good few states lined up. The guy in charge was on a talk show i listen to a few months ago. Basically, they wrote the software to do all the taxing and now they are going and getting the clients (individual states). So once they have enough states they are "in business" so to speak.

Not quite

[dreamchaser]

Prior to online sales, the rule was that if the seller had what is called a 'nexus' (meaning a busines presence basically) in a given state, then sales tax applied. The buyer and seller did NOT have to be in the same state if nexus could be established.

While I disagree with this arguement, it *could* be argued that the Internet creates a presence in every state, far beyond the old days of mail order catalogs.

What it really boils down to is politicians on both sides of the aisle hate seeing money being exchanged that they can't get their greedy hands on.

That varies from state to state

[brokeninside]

Many states, Ohio being one, tax all purchases that are made out of state and shipped to an Ohio address. There is even a special line on the Ohio income tax form especially for reporting the amount of goods you've purchased online, through mail order, over the phone, etc.

Of course no one I know of that lives in Ohio has ever put any amount there other than a 0. Nonetheless, it isn't accurate to say that interstate transactions are not subject to and have never been subject to sales tax.

Re:Wait just a darned minute

[Snar Bloot]

Untrue. Mail order items are subject to sales tax, only you have to voluntarily claim them and remit the tax to your state department of revenue. The problem is, it's widely ignored and pretty much unenforceable. So...now...we have some states (like mine) which gather the vast majority of their revenue via sales tax (no personal or corporate income tax). As more and more of comsumer sales shifts to the internet, less and less revenue is generated. Essentially, the tax base shrinks. This puts more of a tax burden on other taxes (like, for instance, property taxes). Eventually, these other taxes are bearing an unfair proportion of the burden.

One other point: It puts local mom-and-pop operations at a disadvantage. Why should I purchase locally, even if it's the same price, when I can just "buy it over the internet, tax free". It puts all the retailers on the same level.

Re:California charges it

[HTTP Error 403 403.9]

If the end buyer is (delivery is taken) in CA then I simply pay the "use tax" on the item. The customer never sees a sales tax entry.

Use tax =/= sales tax.

Use tax is assessed on any item purchased by the end user. There are many exemptions but the primary one is the end user is exempt from paying use tax if the end user has already paid sales tax.

If you are paying the "use tax" for the customer and not showing taxes paid on the receipt then CA may go after the customer for use tax. The customer can't prove sales tax was paid on his/her purchase.

Re:Not quite

[Anonymous Coward]

Jurisdiction has very little to do with where the IP packets are exchanged, but more a test of whether the merchant does business in such a way that that they could expect to take advantage of the state's legal system. This is about personal jurisdiction of state courts (as opposed to subject matter jurisdiction). There re a series of factors courts use to determine whether a state has PJ over a defendant. These are things like whether the defendant does alot of business vs. a couple of transactions, can a transaction be completed using their website vs simply informational, how much advertising is done in the state, and some others I don't know off the top of my head.

In theory, every item purchased out of state and brought into a state is subject to sales tax. It is the respopnsibility of the buyer to report the sales and pay the tax. Most states simply do not enforce this for most items because of the small amounts involved. The notable exception is automobiles, where many states require proof of the tax payment before a license may be obtained.

Re:Direct URL to SSTP web site

[Anonymous Coward]

I am involved with the implemnation (one of the states listed). The national-level project has been a messed up nightmare. The project within our state government has gone well....but coordination with the national team has been a nightmare. It seems most of them don't have a clue. Yes....the site is legit (unfortunately).

Re:A most welcome development

[RexRhino]

Because state taxes are supposed to be taxes in the state! I.E. Michigan sales tax is on sales that are in Michigan, not on sales that are in California.

And also, states, counties, and municipalities are not being cheated out of anything. The money of the people belongs to the people, not the government. The people are being cheated out of their property.

Re:California charges it

[j. andrew rogers]

I am fortunate enough (or unfortunate, depending on how you look at it) to have full exposure to the accounting for my wages here in California. The last time I checked a few months ago, of the money that gets paid out to cover my paycheck, 52% goes directly to the government at various levels, and 48% goes to me.

Most people have no idea just how much in taxes they actually pay.

social programs

[falconwolf]

I'm not sure when this all started (maybe all the social programs after the great depression?), but the entitlement attitude of todays society is going to be the downfall of this country.

ooh, I missed this. Anyway, though FDR did a lot that has been built on since, the ball was rolling before he inflated it. Some credit the start to the 14th Admendment [usconstitution.net] and others put it elsewhere. When Lincoln started collecting an income tax of 3% or 5% [taxworld.org] people were upset, and they only went along with it because the Civil War had to be paid somehow, however compliance wasn't high.

Here's what Col. David Crockett when he was a US Representative from Tennessee said one day in the House of Representatives when a bill was taken up appropriating money for the benefit of a widow of a distinguished naval officer, Not Yours To Give [house.gov]. It's a good read, and I thank someone else on /. for posting it previously.

Falcon