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The Almighty Buck Government The Internet United States News

End of the Internet's Tax-Free Ride? 426

News.com has a piece looking at renewed efforts by both state and federal lawmakers to subject Internet sales to state taxes. "Two bills are pending in Congress that would allow tax collectors to target out-of-state Internet and mail-order retailers, and their supporters are optimistic about their political prospects... Meanwhile, pro-tax states are trying their own ways to circumvent a long-standing rule saying a retailer must have physical presence before it can be forced to collect taxes. One effort came from New York state, where legislators recently approved a measure requiring Amazon and other online retailers (that lack a physical presence in the state) to collect sales tax on New Yorkers' purchases... This is not exactly a new debate... But now, with a Democratic Congress and a potentially Democratic administration next year, the arguments may gain more political traction."
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End of the Internet's Tax-Free Ride?

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  • Fantastic (Score:5, Interesting)

    by Lost+Found ( 844289 ) on Tuesday April 15, 2008 @06:24PM (#23083772)
    More taxes... I'm sure everyone feels a lot of sympathy for them with it being tax season and everything. I'm sure it will be a lot of fun for small mom and pop retailers to deal with filing paperwork and collecting tax in 50 states just in order to sell trinkets off a small business website.
    • Re: (Score:2, Insightful)

      by Bryansix ( 761547 )
      If you have a small mom and pop and operate on the Internet most likely you didn't design your shopping cart from the ground up. A popular free solution comes from Paypal. It isn't just for paypal accounts anymore. They allow you to accept credit cards as well. So the only company that would need to make the change is Paypal and I'm sure it won't be too burdensome for them.
      • Re:Fantastic (Score:5, Informative)

        by pjl5602 ( 150416 ) on Tuesday April 15, 2008 @06:44PM (#23084008) Homepage
        I get the feeling you don't run a business that collects sales tax then. PayPal may collect the sales tax, but the business is still on the hook for sending the tax into the state.
        • Re:Fantastic (Score:4, Insightful)

          by Garse Janacek ( 554329 ) on Tuesday April 15, 2008 @07:07PM (#23084198)
          The business may be on the hook, but that doesn't mean PayPal can't implement a simple automatic click-through system so you basically just need to print out and sign some automatically-generated forms at the end of the year. I'm sure other similar services will implement the same thing. One also suspects the states themselves will be on board to make it as easy as possible to send them money, so I don't see this being much more onerous or difficult than any other business tax.

          The only real negative effect for internet businesses is that they've been evading sales tax for years, and now their customers will have to pay more. Which I find personally a little annoying, but I don't really oppose it, it was kind of inevitable -- the only reason this loophole existed in the first place is that online commerce became so big, so fast, that the tax system hadn't yet adjusted to the changing consumer behaviors. Effectively, we've been experiencing a decrease in tax during the past several years while it was easy to purchase anything online tax-free, which was not the case pre-amazon. And decreases are nice for the individual, but the balance had to come out somewhere...
          • Re:Fantastic (Score:4, Interesting)

            by Anonymous Coward on Tuesday April 15, 2008 @07:16PM (#23084290)
            Yeah, but it's going to hurt online retailers. They will have to offer alot more free shipping. The only reason to shop online in my case was because it was cheaper to pay shipping than sales tax, which netted more money in my pocket. If I have to pay sales tax and shipping, then I'm just going to wal-mart to buy what I need. It's more convenient and cheaper in the long run. Plus I don't have to wait three days to play with my new toys. :)
            • Re: (Score:3, Interesting)

              some states have a "use tax" where you list the amount of tax-free out-of-state purchases you made and pay sales tax on them when you file your state income taxes. (Of course, most people don't). I am aware of some states nailing people over that, though.
          • Re:Fantastic (Score:5, Insightful)

            by Grokmoo ( 1180039 ) on Tuesday April 15, 2008 @07:25PM (#23084368)
            This would not be possible without changes to the tax code. To pay state taxes, the business in question would need to open an account with the appropriate agency in each of the fifty states (assuming they had customers in each of the fifty states). Having gone through this process for Maryland, DC, and Virginia, I can tell you that the administrative burden this would put on small businesses would be very severe. This alone could probably keep an employee occupied full time for weeks.
          • Re:Fantastic (Score:5, Insightful)

            by techno-vampire ( 666512 ) on Tuesday April 15, 2008 @07:33PM (#23084414) Homepage
            The only real negative effect for internet businesses is that they've been evading sales tax for years...


            No, they haven't. Tax evasion is what happens when you fail to pay your taxes, or use phony deductions to lower your taxes. Internet businesses haven't been paying sales taxes to other states in the past because the law said that they didn't have to. If this law goes through, that will change until and unless the courts say the law is unconstitutional.

          • Re: (Score:3, Interesting)

            by PPH ( 736903 )

            The business may be on the hook, but that doesn't mean PayPal can't implement a simple automatic click-through system so you basically just need to print out and sign some automatically-generated forms at the end of the year.

            Yeah. That's the same form we fill out to report (and pay state B&O tax) our companie's gross reciepts. Gross reciepts from sales in any state or country. I don't know how many other states have this kind of tax structure, but if even a fraction of the 50 did, there would be nothing left for the company.

            Trust me. You don't want the Washington State Dept. of Revenue to know that you exist.

            • Re:Fantastic (Score:5, Interesting)

              by LynnwoodRooster ( 966895 ) on Tuesday April 15, 2008 @08:22PM (#23084794) Journal
              Additionally, at least in the State of Washington, the State gets to decide if your resale certs on file are valid. If they are not - regardless of a sworn statement from the business/entity that supplied the resale cert - you, the seller, are on the hook for any sales taxes that should have been collected.

              In essence, the only way you can be sure you are collecting the proper amount of sales tax is to collect tax on EVERYTHING, regardless of the actual legal resale or charitable tax status of the buyer. And the buyer's statement is not enough proof to show otherwise.

              Trust me, I've gone through a WA State DOR "audit" and extortion (pay us $10,000 and we'll just forgive that other $4,500 - never mind that our own directions and documentation we provided at your request 4 years ago caused you to underreport and misclassify your business as a manufacturing, not engineering/design company).

              Bottom line for this "Internet Tax" issue: if it doesn't apply to catalog sales, it shouldn't apply to Internet sales. Sales out of state are sales out of state, regardless of the means of delivery of the sale.

          • Re:Fantastic (Score:5, Informative)

            by nmos ( 25822 ) on Tuesday April 15, 2008 @08:58PM (#23085132)
            It isn't that simple. There isn't a single "State" sales tax, at least in the states I've lived in. Often there is a base rate for the state + an additional rate for the county and another rate for each city. In addition different taxing authorities (city/state/county) have different ideas of what kinds of items are taxable and at what rates. For example, in a nearby city you wouldn't pay any tax on a hamburger patty and a bun from a supermarket but those same items purchased from a restarant are taxed, and at a much higher rate than other kinds of items. I wouldn't be at all surprised if the cost of complying with this mess ended up being more than the taxes themselves.

            The only real negative effect for internet businesses is that they've been evading sales tax for years

            That's just not true. Here in AZ at least, our "Sales Tax" (really a use tax) is considered a tax on the business rather than the consumer. What that means is that I already have to pay taxes to AZ on everything I sell no matter where the buyer is so in effect I'd be taxed twice if I had to pay again to the buyer's state as well. If anyone has been evading taxes it's the citizens that havn't been reporting their out of state purchases and paying the relivent taxes to their own state.
             
          • Re: (Score:3, Interesting)

            by tompaulco ( 629533 )
            The only real negative effect for internet businesses is that they've been evading sales tax for years, and now their customers will have to pay more.
            Internet businesses have not been evading sales tax. They are not required to collect or pay sales tax. Rather it is the consumer in most states who has been evading paying the "USE TAX" aka Sales Tax on items bought out of state.
            What the New York government is trying to do is get some of that money which New Yorkers owe the government, but instead of colle
          • by Creepy ( 93888 ) on Wednesday April 16, 2008 @09:01AM (#23089678) Journal
            There is no way this will work without a unified sales tax system. State taxing is ridiculously complex and there is no easy way to automate it.

            First off, Internet businesses are not avoiding sales tax; they are exempt from collecting it in states they don't operate in because every state has a different law on how much to collect and when it needs to be paid, therefore it is left to the consumer to pay this tax.

            I'd say 90% of the people I know could currently be thrown in jail for tax evasion for failure to pay Use Tax [wikipedia.org] (mentioned in TFA).

            This is non-trivial, and NOT solvable by changing a program on PayPal. Why? Take Minnesota, with a 6.5% Use Tax, but a threshold of $770 payable yearly on Tax Day (April 15). Until $770 is spent, purchasers don't need to pay tax on catalog or Internet sales - how does PayPal know when $770 is spent? It doesn't - it only knows what is spent on PayPal. Furthermore, this tax is paid separately using a different form (as it is in every state that has it, I believe), so prepaying and rebating it is giving the government a free loan on a purchaser's money (I certainly would take it to court on those grounds).

                Then there are the punishments for late payment - say you live in Vermont (due monthly on the 20th) and your PayPal account doesn't have enough cash on the 20th of the month. Suddenly you owe $50 more, 5% additional penalty per month + interest. Do you assess that on each purchased item, once for each purchase, or just once for the entire thing? The law isn't clear.

                What we need is uniform sale and use tax laws like the mentioned Streamlined Sales and Use Tax proposal, but some states don't want to concede because if the tax is, say, set at 5%, you piss off brick-and-mortar retailers in states where tax is greater than 5%. To be fair to all states you need to set the tax at the maximum tax used in any state, which is currently Tennessee's 9.4%. I have serious doubts states with no sales tax will agree to a 9.4% tax.

            I've covered a fraction of the states - now lets toss in counties, boroughs, and municipalities. Alaska, for instance, has no state sales tax, but 95% of boroughs issue one, so to be fair to retailers, you would also need to collect for the borough.

            So there you have it, all the issues involved (at least that I can think of) - got an easy solution? I certainly can't think of one.
    • by Reziac ( 43301 ) * on Tuesday April 15, 2008 @06:28PM (#23083820) Homepage Journal
      Not to put ideas in their pointed little heads, but I'm surprised that the feds don't just impose a uniform federal tax on internet, mail order, and all other non-local sales of goods or services, with some small percentage earmarked for the states based on where the federal tax dollars come from.

      Of course, they'd never consider REDUCING SPENDING, not so long as there's any citizen's assets left untaxed at a rate lower than 100% :(

      • Tax and spend! (Score:4, Insightful)

        by jmorris42 ( 1458 ) * <jmorris@@@beau...org> on Tuesday April 15, 2008 @06:49PM (#23084062)
        > not so long as there's any citizen's assets left untaxed at a rate lower than 100% :(

        Oh of course not! And why should they when they consider it their money in the first place. How else to explain the mind set that calls every tax cut 'a giveaway to the rich', refers to how much a tax cut will 'cost' the government, how much it will 'cost' the government to implement a tax cut, etc. In their evil brains it is ALL theirs and they begrudge each and every cent they are forced to 'spend' when they allow a taxpayer to have a dollar with no strings attached.

        And the summary is spot on folks. Since the Internet becane bigtime either Congress of the White House has been outside the control of Democrats so the net was safe. Divided government is usually the best kind. Something the Dem leaning slashdot users might want to keep in mind come November. Congress is almost a statistical certainty to remain in Dem hands so ask yourself, Is Maverick really THAT bad?
        • Re: (Score:3, Insightful)

          by Reziac ( 43301 ) *
          Totally agree with your comment, in every respect... our only hope at this point is if the gov't becomes ensnarled in such gridlock that it grinds to a complete halt.

          BTW you might want to read this: http://slashdot.org/comments.pl?sid=521014&cid=23059926 [slashdot.org]

        • Re:Tax and spend! (Score:4, Informative)

          by ppanon ( 16583 ) on Tuesday April 15, 2008 @07:58PM (#23084614) Homepage Journal

          So ask yourself, Is "Maverick" really THAT bad?
          He wants to continue getting blank cheques to continue a war that has a true cost for the current 5-year span estimated (once you count extra long-term healthcare costs for injured soldiers and replacement costs for equipment worn-out due to heavier war use) at 3 trillion dollars. And he's willing to continue it for up to 100 years if that's what it takes. That money's got to come from somewhere, and right now it's mainly being borrowed from the Chinese instead of being paid for by USA citizens. Even the Democrats can't waste money at anything close to that rate if they stop the war.

          Seriously, most of the federal deficits of the last 30 years have been under/due to spending under Republican administrations. How long do you think your $9 trillion debt can continue to increase before the world starts treating dollars as toilet paper? You think oil is expensive now?

          Yeah, he's that bad. He's less in touch with reality than Tom "Scientology" Cruise (that other "Maverick" pilot).
          • Re:Tax and spend! (Score:4, Insightful)

            by jmorris42 ( 1458 ) * <jmorris@@@beau...org> on Tuesday April 15, 2008 @11:11PM (#23086012)
            > And he's willing to continue it for up to 100 years if that's what it takes.

            I wasn't exhorting the dishonest lefty trolls to consider the virtues of divided government, I was asking the more moderate ones to think on it. The material below is for them, btw.

            > Seriously, most of the federal deficits of the last 30 years have been under/due to spending under Republican administrations.

            Agreed. But dig in a bit and notice Clinton went crazy taxing and spending and trying to socialize 1/7th of the economy his first two years and suddenly became the 'third way' triangulator we were promised when he was campaigning... just as soon as Newt took the House away from him.

            Bush II was much less spend happy in the years when Repubs didn't have both ends of Penn. Ave. Heck, just as soon as San Fran Nan took charge in the House he got so much religion on reigning in spending he found his long lost veto pen. He even waves it around from time to time... too bad he still doesn't actually USE it much.

            The exception is Reagan. In his case deficits seem to have been the price he was required to pay to win the Cold War. Democrats would agree to let him build up the military, research DSI, etc. so long as he would go along with them continuing to spend to buy votes. Odds are most folk posting on /. don't remember just how things were before the Wall fell. If ya think the GWOT and Islamic goons wanting to cut heads off is a bit scary, that wasn't nuttin' compared to the Soviets hellbent on conquering the world, tens of thousands of H bombs on a hair trigger and the whole MAD Doctrine thing. It was different times.

            But in summart, divided government is good. Less gets done with divided government, and I can live with that a lot more than what we have seen the last decade or so when one side reigns supreme. Because sometimes the best action is inaction.
            • Re:Tax and spend! (Score:4, Insightful)

              by jollyreaper ( 513215 ) on Wednesday April 16, 2008 @09:58AM (#23090644)

              The exception is Reagan. In his case deficits seem to have been the price he was required to pay to win the Cold War.
              Reagan didn't win the Cold War, you ignorant twat. Quit rewriting history.
              • by DesScorp ( 410532 ) on Wednesday April 16, 2008 @11:18AM (#23092010) Journal

                Reagan didn't win the Cold War, you ignorant twat. Quit rewriting history.
                Rewriting history? Are you kidding me? Only a tard of the lowest order would argue that Reagan wasn't instrumental in bringing the USSR down. He had help (some of it from inept Soviet leaders themselves), but all but the most partisan moonbats would agree that Reagan put a stake in the Soviet heart. In the late 70's, the Soviets were well and truly poised to dominate the world. In little more than a decade, they disappeared. To say that people like Reagan, Thatcher, and John Paul II had little or nothing to do with it is the most blatant rewriting of history of all.

          • Re: (Score:3, Informative)

            by Khaed ( 544779 )
            And he's willing to continue it for up to 100 years if that's what it takes.

            You are either:
            a) Intentionally misrepresenting what McCain said, or
            b) You don't know what he actually said.

            What he said was that he wouldn't object to a presence (like the one in Korea, Japan, Germany, or France), for 100 years, so long as Americans aren't being killed. You can see the comment yourself: http://youtube.com/watch?v=VFknKVjuyNk [youtube.com]

            Or you can just continue to believe the lie spit out by his opponents and happily go on di
          • Re: (Score:3, Interesting)

            by Solandri ( 704621 )

            He wants to continue getting blank cheques to continue a war that has a true cost for the current 5-year span estimated (once you count extra long-term healthcare costs for injured soldiers and replacement costs for equipment worn-out due to heavier war use) at 3 trillion dollars. And he's willing to continue it for up to 100 years if that's what it takes. That money's got to come from somewhere, and right now it's mainly being borrowed from the Chinese instead of being paid for by USA citizens. Even the De

        • Re: (Score:3, Informative)

          by keithjr ( 1091829 )
          Yes. Maverick really is that bad. We can argue fiscal opinions and schools of thought until we're blue in the face. But that thought wearies me. I'd rather focus on hard evidence.

          We've proven that tax cuts are not a fiscally responsible way to balance a budget or stimulate an economy. We know this because any administration that's overseen one has overseen horrific national debt, and the latest has been the worst in history by orders of magnitude. This isn't opinion. It is cold, hard fact.

          The Democra
          • Re:Tax and spend! (Score:4, Insightful)

            by jmorris42 ( 1458 ) * <jmorris@@@beau...org> on Tuesday April 15, 2008 @11:23PM (#23086072)
            > We've proven that tax cuts are not a fiscally responsible way to
            > balance a budget or stimulate an economy. ... This isn't opinion.
            > It is cold, hard fact.

            No exactly. Go look up the numbers after you jot off a flame at me for being a neocon fool. But the 'cold hard fact' is that revenue to the Federal Government, measured in total or just from the Income Tax is up bigtime. The problem is spending rose even faster than revenue.

            And it can't be blamed on the War either. The revenue increase easily covers the War, the problem is we went on a spending binge. While a partisan could try to fuzz the issue with whinging about the razor thin majorities of the Republicans or the RINO problem I won't.

            With the President willing (yeah, right) to veto the Republicans had sufficient numbers to have reigned in spending. Democrats would have howled bloody murder, slung the usual accusations about Republicans being uncaring monsters...blah blah the children! blah blah. but they could have made it stick. The problem was they went native, becoming the thing they went to Washington to fight.... they became Incumbents. They discovered the POWER of spending other people's money and they discovered they liked it.

        • Re:Tax and spend! (Score:5, Insightful)

          by fermion ( 181285 ) on Tuesday April 15, 2008 @09:11PM (#23085252) Homepage Journal
          I don't mind tax cut, but as fiscal conservative I do mind spending money we do not have. McCain budget, recently unveiled, cuts taxes but also involves a deficit of 200 billion per year. Given that our gross debt is is now almost 80% of GDP, I don't know how we can allow a continuation of the borrow and spend economy promoted by the conservative GOP. As a reference, the evil tax and spend democrats left us with a gross debt of between 40-60% in 1980 and 2000.

          Pretty much, as a fiscal conservative I understand the need to not spend more money that you make, or can reasonably pay back. I certainly do not understand people paying, for example, half a trillion dollars in a discretionary war with no plans on how repay the debt. It has crossed my mind that these so-called conservative, mostly christian, persons do not feel they have a moral obligation to pay debts that they can paw off to other people, but that, frankly, makes more sense. Any responsible moral person knows the first rule to keep your word and pay off debts.

          At the end of the day, taxes pay for things we use and need in this great country. I have no problem paying taxes, because the United States has given me an education, opportunities, and freedom. None of those, especially the last, are free. Why would I want to use things that I don't pay for,a nd perhaps even be charitable. For instance, everyone complains about gas taxes, and they suck. I mostly use about 30-40 miles of road, mostly in crap shape. Outside of town we have a beautiful 6 lane road through cow pasture, built so that developers could make money building and selling houses, and used by by a few commuters who do not even come close to cover the costs of the road. I could complain, but what good does it do. I pay taxes to pay for what we need in America, not for what I need.

          OTOH, I do order for amazon, and the lack of taxes is a consideration in my purchase. But it is my states decision to base their income primarily on a sales tax, a tax which is both regressive and extremely difficult and expensive to collect. They could do payroll taxes, or investment taxes, but they don't. Everyone, even those would make barely enough to live on, have to pay the tax. Well, i am sorry. I don't think sales taxes work, and the lesson they should be taking from the internet is and globalization is to create a tax based on ability. Remember, as many conservatives know, a penny from a pauper is worth much more than a dollar from a millionaire.

          • Re:Tax and spend! (Score:4, Insightful)

            by SRA8 ( 859587 ) on Tuesday April 15, 2008 @10:55PM (#23085952)

            I don't mind tax cut, but as fiscal conservative I do mind spending money we do not have. McCain budget, recently unveiled, cuts taxes but also involves a deficit of 200 billion per year.
            Unfortunately he also proposes to continue many of Bush's programmes. This means that even if income/sales taxes are low, there is a HIGH tax via inflation (c/o printing money, borrowing from abroad) a VERY HIGH tax on future generations (c/o the ever-growing national debt) and finally a very high tax on society (c/o pollution, structural breakdowns, overtaxed armed forces, deterioration of educational system, etc.)
        • Re: (Score:3, Insightful)

          by timeOday ( 582209 )

          Oh of course not! And why should they when they consider it their money in the first place.

          I hate to say this, but Americans are very undertaxed relative to govt spending. The only thing worse than heavy taxes and heavy spending is light taxes and heavy spending (i.e. what we have now), because it WILL have to be repaid... with interest! Our deficit spending is killing the dollar, sending gas prices (and all imports) sky high.

          At the risk of getting burned at the stake, I do see a problem with the men

          • Re: (Score:3, Insightful)

            by jmorris42 ( 1458 ) *
            > The only thing worse than heavy taxes and heavy spending is light taxes and heavy spending..

            No argument from me on that one.

            > At the risk of getting burned at the stake, I do see a problem with
            > the mentality that it's "our money" implying we deserve to pay no taxes

            It is MY money, if you don't want YOUR money the Department of the Treasury accepts donations. I lean Libertarian but not so much I think all taxes (and by extension all government) is wicked. Call me a Constituitionalist. So I thin
          • Re: (Score:3, Interesting)

            by JavaLord ( 680960 )
            I hate to say this, but Americans are very undertaxed relative to govt spending. The only thing worse than heavy taxes and heavy spending is light taxes and heavy spending (i.e. what we have now), because it WILL have to be repaid... with interest! Our deficit spending is killing the dollar, sending gas prices (and all imports) sky high.

            What is killing the dollar is that its losing its place as the reserve currency of the world. This has a little bit to do with spending, but more to do with oil being tr
      • by Ucklak ( 755284 ) on Tuesday April 15, 2008 @07:04PM (#23084174)
        Normally, brick and mortar taxes are supposed to pay for police, fire, and whatnot.
        This internet tax doesn't use any of that. The fees we pay for shipping and handling cover the road fees required to bring the product to our door.

        I already pay tax on my internet service.
        • by Reziac ( 43301 ) *
          And I agree, we already pay more than plenty fees and taxes, not to mention the rapidly-inflating cost of goods of all sorts...

          Allow me to rephrase your sig in context:

          If you steal from one person, that is banditry; if you steal from many, well, that's just taxes.

    • Re:Fantastic (Score:5, Insightful)

      by Tackhead ( 54550 ) on Tuesday April 15, 2008 @06:29PM (#23083832)

      I'm sure it will be a lot of fun for small mom and pop retailers to deal with filing paperwork and collecting tax in 50 states just in order to sell trinkets off a small business website.

      Which, if you're a major retailer, is probably the point. With the stroke of a pen, all of your smaller competition can be eliminated.

      It doesn't have to be that sinister, of course. It could be as simple as the fact that it's an election year, and what better way to raise money for Congressional campaigns (and make sure that retailers throw a few bucks for ex-Congressmen currently "working" as lobbyists) than to threaten to do something unpleasant between now and the election...

      • by fm6 ( 162816 )

        With the stroke of a pen, all of your smaller competition can be eliminated.

        I think you have that backwards. It's the little guys that can't afford to move their operation to a state that doesn't have sales taxes.

        Ever hear of Fernley NV? Neither did I until Amazon built a huge warehouse there. Why? Because it's right across the border from California, and a few hours drive to a lot of northern CA cities. It allows Amazon to compete with California retailers without paying California taxes.

        But the big issue isn't big-versus-little. It's brick-and-mortar versus online. Why should a

      • Re: (Score:3, Insightful)

        by xant ( 99438 )
        Yes, it's the time-honored strategy of "doing things voters hate during an election year". Its strategic value has never been accurately estimated.
  • Use Tax (Score:5, Insightful)

    by Bryansix ( 761547 ) on Tuesday April 15, 2008 @06:25PM (#23083784) Homepage
    It is important to note that anytime sales tax isn't collected for you by the company you buy from you still have to pay that tax when it comes to April 15th. This is called Use Tax. The only problem is it operated on the honor system so I'm sure only a small percentage of this tax is ever collected.
  • Standing (Score:3, Interesting)

    by HaeMaker ( 221642 ) on Tuesday April 15, 2008 @06:26PM (#23083786) Homepage
    It will be interesting because they probably don't have standing to collect. They would either have to collect from the customer or setup a customs system when the goods enter (are imported?) to the state.
    • Re: (Score:3, Insightful)

      by PunkOfLinux ( 870955 )
      Isn't this illegal, since only the feds can regulate interstate commerce?
      • by jmorris42 ( 1458 ) *
        > Isn't this illegal, since only the feds can regulate interstate commerce?

        Which is why Congress is trying to pass a law. You are right that the antics of NY are obviously illegal but they probably aren't dumb enough to think it will actually pass or not get shot dwon in court. But as a PR stunt it will help get Congress to make it legal.
        • Re: (Score:3, Insightful)

          by PunkOfLinux ( 870955 )
          I thought that was in the constitution... nothing supersedes constitutional law.
          • Executive Order? ;-)
          • by jmorris42 ( 1458 ) *
            > I thought that was in the constitution... nothing supersedes constitutional law.

            1. Ah the joy of watching a young idealist's faith dashed. Our rulers ain't been bound by that old yellowed parchment for at least a century. Me, I say it was Lincoln who first really and truly wiped his arse with it, others put the exact point +/- fifty years from him depending how cynical they are But it is worse these days, if a day goes by now without a Congresscritter, Federal Judge or POTUS violating his Oath it m
  • by PPH ( 736903 )
    ...Internet businesses move offshore.
    • Why would they? What would that accomplish?

      a) It's a sales tax; it costs them nothing.

      b) In most countries online sales are subject to tax and the companies have been required to collect the taxes all along, and guess what? Those countries still have plenty of locally-based companies selling online. The free-ride US shoppers have been getting is not the norm, and is in no way a precondition to having high internet sales.

      c) Moving offshort wouldn't accomplish a damn thing anyways. Instead of a sal
      • Re: (Score:3, Informative)

        by petermgreen ( 876956 )
        moving offshore can work very well for small items.

        jersy is a classic for this. It is not part of the EU VAT system. It is also very close to britan (and to france too for that matter, I dunno if there are french companies who use the same trick).

        So small items which are under the threshold for import VAT are frequently shipped from there to UK customers hence avoiding the VAT on those items.
  • But now, with a Democratic Congress and a potentially Democratic administration next year, the arguments may gain more political traction.

    You had me up until you got to that last sentence. More election year tripe. Woooo, the evil Democrats are going to tax my intarnets!!

    • Re: (Score:3, Interesting)

      Woooo, the evil Democrats are going to tax my intarnets!!
      Yes, the Dems love to tax the fuck out of every thing they possibly can.

      Deal with it.

      It's reality.

      Reality is a heartless, cruel bitch.
  • by xLittleP ( 987772 ) on Tuesday April 15, 2008 @06:31PM (#23083858)
    I think John McCain wants to ban internet taxes. From his website [johnmccain.com] (about halfway down the page):

    John McCain Will Ban Internet Taxes. John McCain has been a leader in keeping the Internet free of taxes. As President, he will seek a permanent ban on taxes that threaten this engine of economic growth and prosperity.
    Proceed to mod as flamebait...
    • by geekoid ( 135745 )
      Yes, ye claims he wants to ban all kinds of taxes...but doesn't bother to say what programs he will cut.
      Stupid and irresponsible. It's not the taxes, it's the programs.

      Not to mention any talk about banning taxes is pretty much irresponsible considering the debt we are incurring.

    • Re: (Score:3, Informative)

      by ijustam ( 1127015 )
      Probably not the best place to mention McCain, considering he opposes [newsmax.com] network [allthingsd.com] neutrality [eweek.com]
    • Re: (Score:3, Informative)

      Federal internet taxes are not the same thing as paying state sales tax on purchases made over the internet. Internet taxes would be taxes on either personal/business connections or services or other infrastructure, similar to the federal taxes that currently show up on cell phone, landline and cable bills already.
      • Re: (Score:3, Informative)

        by MBCook ( 132727 )

        True, but the federal government has done this kind of thing before. Besides simply declaring that such taxes can't be passed (you could argue interstate-commerce clause), the feds can just fiddle with funding.

        "Violate our ban and you get no federal help for disasters, or maybe to help with police/etc, or road assistance, or health care (ouch), or something else." The states will run scared. It worked for getting the drinking age raised to 21.

  • Bad Summary (Score:5, Insightful)

    by Gat0r30y ( 957941 ) on Tuesday April 15, 2008 @06:35PM (#23083894) Homepage Journal

    But now, with a Democratic Congress and a potentially Democratic administration next year, the arguments may gain more political traction."
    This is about states trying to collect state tax on goods crossing state lines, which are sold in their state. NY State is totally broke that is why they are pushing for this. (Despite the fact that even were they to be successful it would only bring in ~ 100 Million dollars compared to their 100 Billion budget).
  • Double taxation (Score:5, Insightful)

    by tompaulco ( 629533 ) on Tuesday April 15, 2008 @06:35PM (#23083900) Homepage Journal
    New Yorkers are already required to pay Use Tax, though most people probably don't do it. Are they going to get rid of the Use Tax when they implement this Out of State Sales Tax? I doubt it. Do they have jurisdiction to require an Out-of-State vendor to collect Sale Tax on their behalf? I doubt it. Do they have jurisdiction to demand payment from said Vendor? I doubt it.
    What they are trying to do is shift the burden of collecting tax from themselves to somebody else, the vendors. They have already successfully done this for in-state Vendors via sales tax collection, and also shifted the burden of collecting income tax, Social Security and Medicare to employers. All they really have to do anymore is sit back and get paid.
    The problem with requiring Out-of-State vendors to collect sales tax, is that there are approximately a half million tax districts in the United States. As a vendor, I know that there are over 15,000 in my state alone. They change constantly. I get notices in the mail every two to three days of a tax district instituting, increasing, occasionally decreasing or abolishing a sales tax rate. A brick and mortar can just plug in the tax rate for their current community into the desk calculator and they are good to go. A mom and pop internet outfit would have to spend probably 24 man-hours a day updating sales tax rates, or spend extra money to pay an outside outfit to calculate their sales tax for them.
    I am sure new York just wants money without having to pursue it themselves, but the assumed unintentional side effect is that they are going to hurt small business on the internet by and large without effect on the large businesses.
    • Re: (Score:3, Insightful)

      by hal9000(jr) ( 316943 )
      Do they have jurisdiction to require an Out-of-State vendor to collect Sale Tax on their behalf? I doubt it. Do they have jurisdiction to demand payment from said Vendor? I doubt it.

      New York will sue and probably win. Do you forget that New York state will tax you [pcworld.com] if you telecommute to work for a company based on NY while you live outside NY. Enter the state on business and you own NY state tax for the YEAR.
    • by alen ( 225700 )
      there is a company called CCH that collects all kinds of tax info from around the US, organizes it and sells it to businesses so they can collect taxes. this has been the case with telephone service for decades now
  • ...of balancing fairness with ease of use.

    If sales tax is a consumption tax (which it appears to be according to posts in the previous article re: New York State [slashdot.org]), then it is probably fair to expect to receive taxes on these purchases. However, to facilitate this, legislative bodies need to make it relatively simple for the parties involved to do so.

    While it sounds relatively simple, this is a problem that has faced mankind since taxes came about (thousands of years ago), and the legislators still don'

  • In RI, we pay a "use tax". If you buy something in-state, it's covered by the "sales tax" (7.5%). I suspect it's an un-Constitutional form of inter-state commerce taxation by RI, but there you have it.
    • Here in Oregon we haev NO SALES TAX AT ALL. it has been brought up 8 times by our legislature and it has been voted out by citizen rferendum every single time. Yes we are loons in many respects but this one is a point of pride. I wonder how many companies will re-locate to this tax haven...
  • See (Score:2, Interesting)

    by BigJClark ( 1226554 )

    This doesn't bother me, not in the least. I can remember a day, when any use of the Internet to sell anything was abhorent. Advertising of any matter was viewed with disgust.

    Now, due to the greedy bureaucratic fatcats who wish to tax the little guy to the bitter end, we might see a drop in pointless port 80 communication. (Present company excluded, of course).

    I say bring it, lets clean the fat off the bone.
  • by Chas ( 5144 ) on Tuesday April 15, 2008 @06:41PM (#23083966) Homepage Journal
    Maybe if some of these states (including my own) were actually more business-friendly, they wouldn't have to worry about taxing online venues. As it is, these states seem hell-bent on chasing jobs out and have to go looking for "free money" to funnel into their pockets.
  • THIS IS ASININE! (Score:5, Interesting)

    by Jane Q. Public ( 1010737 ) on Tuesday April 15, 2008 @06:41PM (#23083968)
    There are ALREADY laws and taxes in place! A state does not have legal authority to impose taxes on a sale made in another state. That is, it cannot force an Oklahoma retailer to collect California sales taxes for a sale made to a Californian.

    However, as far as I am aware ALL 50 STATES have "use taxes" in place, that are supposed to be paid for out-of-state purchases. In most cases the amount of use tax is identical to what the sales tax would have been if the sale had been local. The difference is that the purchaser, not the seller, is responsible for paying the tax. This is the way it MUST be... neither the individual States nor the Federal government have the Constitutional authority to force a business to collect taxes for the other 49 states. And even if they could, it would be an excessive burden... trying to keep track of tax rates for different kinds of products in 50 individual states is beyond the reasonable capabilities of most small businesses, which even today are still the backbone of our economy. Further, the Federal government also does not have the authority to collect State taxes on their behalf.

    The taxes are already there. The laws are already in place. If they don't like the way that works... too bad. They just do not have the Constitutional authority to do this. And there is nothing new here, either... people have been buying by mail-order for at least a couple of centuries now, and this debate has been going on all that time. DO NOT let them try to tell you that eBay is forcing their hands. Hogwash.
    • However, as far as I am aware ALL 50 STATES have "use taxes" in place, that are supposed to be paid for out-of-state purchases.

      Not quite true, though close. New Hampshire does not have a use tax. New Hampshire does tax purchases typically made by tourists, such as restaurant meals and lodging, but it doesn't call those "sales taxes". Things you could reasonably buy over the Internet are not taxed.

      Maybe New Hampshire will become the address of convenience for Internet retailers. That would be a wonder

  • by DaSpudMan ( 671160 ) on Tuesday April 15, 2008 @06:42PM (#23083980)
    Comments in the article say it all:

    "...money has been unfairly left in taxpayers' pocketbooks. "

    "Verenda Smith, government affairs associate for the Federation of Tax Administrators, framed the decision as a moral one of sorts: "Do you want to be a good American, or do you want to be an American who wants to cheat your government deliberately?"

    It's not your money. You are cheating the government out of funds to spend on their favorite pork project.
    • Holy fuck (Score:2, Troll)

      by aztektum ( 170569 )
      Best comments ever

      It occurs to me that our economy may be in a bit better shape if, you know, we paid less in taxes and had that money spend on frivolous shit. I suppose either way it ends up in some fat cats pockets (via government contracts or purchase of goods, what's the diff how they get it, so long as they get it!)
    • And they are right.

      And to expand on it, much of the stuff you think of as 'yours' is not, it is theirs.

      If you decide not to pay your income tax, or your property tax if you live in a state with one, you will find our very quickly how right they are. They will come for their money and if they have to sell your shit to get they'll be happy to do it. If they have to bring along someone with a rifle they'll do that as well.

      Most state governments and certainly the IRS can levy a tax against a person for any reas
    • by ccmay ( 116316 ) on Tuesday April 15, 2008 @08:14PM (#23084734)
      do you want to be an American who wants to cheat your government deliberately?"

      I want my government reduced to 1890 levels, and armies of government useless eaters forced to find honest work.

    • Re: (Score:3, Insightful)

      by theodicey ( 662941 )
      You tell 'em. When those Minnesota politicians came along with their funny accents asking to repair some damn highway bridge, you bet I told them where to stick their pork projects!

      Look, it's not the government you're cheating when you evade sales and use taxes -- it's me. And everyone else you know. Because we have to pay your share.

      The fact that Ms. Smith sees it from the government's point of view is bad public relations, but it doesn't change the facts of the matter.

  • by geekoid ( 135745 ) <dadinportland@y[ ]o.com ['aho' in gap]> on Tuesday April 15, 2008 @06:43PM (#23083992) Homepage Journal
    from a nut job candidate, big deal.
  • by barfy ( 256323 ) on Tuesday April 15, 2008 @06:57PM (#23084114)
    This is not a dem/rep issue, or a congressional issue at all. It is a supreme court ruling. Simply the Nexus issue means that a state cannot force citizens of another state to collect their sales taxes. There really isn't anything the congress can do about this.

    Now there could be a federal sales tax, and that could be appropriated to the states somehow. But I don't think there is a snowball's chance this would pass. People will scream and hop around, but you are simply not going to get around this.

    However, just because Amazon doesn't COLLECT the sales tax, does NOT mean that it is not owed. A sales tax is less commonly, but more correctly called a USE tax. And it is supposed to be paid, even if it is not collected by the merchant. This means there could be a reporting agreement made with major retailers at least, and they could send you a bill for the tax that you are required to pay.

  • What the heck is the point of a consumer sales tax anyways? Why can't the price you see the product for, plus perhaps shipping and handling charges, if they are applicable, just be what you pay?
    • by QuantumG ( 50515 ) *
      Here in Australia we fought for years to not have a general sales tax.. then the biggest nay-sayer of GST got power and he immediately flip-flopped and introduced a GST. He got away with it by requiring sellers to put the GST inclusive into the price.. so the customer never has to add the 10%, it's already added. At the end of your receipt the total GST for the transaction is listed, so if you think you have a right to claim it back, you don't have to do the math to extract it from the total. Of course,
  • I live in NYC and not only does just about every place I buy online from already have a store somewhere in the state so I have to pay state tax and postage, I also have to pay a NY state "use tax"--the amount due based on my income--under the assumption that I'll buy something from another state.
  • Addressed to the government: GET your GREEDY PAWS OFF the INTERNET!
  • The US budget calls for spending the equivalent of $10,000 for every man woman and child (3 trillion / 300 million pop.). When is it enough? Isn't there some point where we can say that the people are taxed enough?
  • "READ MY LIPS, NO NEW TAXES"
  • Because they have this obsessive need to balance the budget, get a surplus (government has no right to make a profit), cut services to civil services (like healthcare and welfare), raise taxes, and cut military funding. Don't take my word for it, look at Clinton's record.
  • by sudnshok ( 136477 ) * on Tuesday April 15, 2008 @11:35PM (#23086162)
    I posted this on CNET, but I might as well post it here as well:

    Is there anything better than sensational bogus statistics? Some politicians claim states would lose half a trillion dollars in tax by 2011? Do they think most Americans didn't make it past 2nd grade math? Let's examine that claim with real math and logic:

    Here are the e-commerce retail sales for the last 9 years:

    2007 $136B
    2006 $108B
    2005 $86B
    2004 $69B
    2003 $57B
    2002 $44
    2001 $34
    2000 $29
    1999 $15

    Source: http://www.census.gov/eos/www/archives.html [census.gov]

    That's a total of $578 billion in revenue for 99-07.

    Now, if we assume an average of 7% sales tax, and we assume that ALL items are taxable (which in most states they are not, like food and clothing), you would need $7.14 trillion in revenue to accumulate sales tax of $500 billion (which is the claimed lost tax by 2011).

    That would mean that e-commerce would have to magically jump from $136B in revenue to an average of $1.6 trillion each year for 08-11. I mean, seriously, their figures are not even in the same ballpark as reality.

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