Internet Sales Tax...I think it's coming sooner then we thought...

Bob Marino

Bob Marino

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Jan 16, 2007
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I know this has been in the works for years, but it looks like Internet based companies will be forced to charge, collect and remit sales tax in the not too distant future as legislation to do so is gaining ground.
I'm not making it political (and please lets not get political about it) and not saying it's a good or bad thing for Internet companies or consumers, just passing along some info.

http://www.nytimes.com/2013/04/23/technology/internet-sales-tax-gains-ground-in-senate.html?_r=0

Bob
 
This is crony capitalism at its finest, and it is practiced by both political parties.  The large internet guys (Amazon) are not fighting the tax any longer.  The administrative burden of 50 different sets of laws can be absorbed by the large companies but the big guys can handle the burden.  Also, the "big box" stores (Best Buy) will get another chance at life as they will stem the losses to online retailers (in their estimation). 
If these big companies would spend their money on innovation instead of buying congressmen, think of the benefits to the consumer. 
 
Well this stinks! I have about $25,000-$30,000 worth of tools and machinery I want to buy over the next few years to build a complete woodshop. I might be buying a lot of stuff in the near future  [eek]
 
This tax loophole never existed in Canada, so I can't feel too sorry for our United States friends.

 
Good article Bob...it's a lovely mentality we have chosen in America today. Simply translated: if your low on $$$ just ask for more instead of lowering your costs and working harder.

Heaven forbid we spend less. Says the guy who just spent $1400 on a miter saw!!
 
Hi -

The thing that most people miss about paying sales tax (and this may be different in some jurisdictions) is that the consumer is the one that owes the tax - no matter whether it is collected or not by an out-of-state, or out-of-province supplier.

As a business - we remit relevant taxes on all purchases, no matter whether the tax was collected by the vendor or not...that's just the law.

No one like to be an unpaid tax collector... it's a significant cost to many businesses.

If you're not paying the appropriate tax (whether or not it's collected) - you will have some exposure in the event of an audit, or an audit of the firm that made the sale....

Cheers -

Rob
(who is not a tax expert.... but employs dozens of them....  [crying] )

 
I'm relatively ignorant or the US state based tax loopholes, but I was under the impression this was simply easier to exploit with internet sales ... but the same actually applies for interstate credit card phone sales, etc ??

 
I have enjoyed buying out of state and saving the tax but I am not against taxing internet sales. I think it levels the playing field for local business.  

We just need a fairer tax system and less of it !

Thats not going to happen as they will just add tax and not take it away anywhere else.
 
The topic of sales tax and internet purchases is always a touchy one. I'd just ask that we don't get into a huge debate here, but as always feel free to discuss. Thanks.
 
Is there any significance to the fact that most internet retailers have an outgoing shipping cost to contend with that a brick and mortar store, who's customer comes to them does not?
 
skids said:
Is there any significance to the fact that most internet retailers have an outgoing shipping cost to contend with that a brick and mortar store, who's customer comes to them does not?
Click to expand...

Rockler and Woodcraft have both internet sales and brick and mortar.

I can order from Rockler and get away with not paying sales tax but I can't do the same with Woodcraft because Rockler moved out of my state while Woodcraft stayed. Definite advantage to Rockler when they offer free shipping on the item I am interested in.
 
Frank Pellow said:
This tax loophole never existed in Canada, so I can't feel too sorry for our United States friends.
Click to expand...

    It's not a loophole Frank.  This has to do with State sales tax and purchases made in that state.  In CA. alone tax revenue is in the 110Bn plus range.  All Canada tax revenue is 237Bn at the federal level in 2011.  In CA. we also have on top of everything else a 1% lumber fee.  It's not for what wood gets forested in CA.  It's just another tax on top of everything else.  It's even charged on all cabinetry, etc. brought into the state.  How can a state justify such a tax for a product not made in the state and has nothing to do with the states natural resources?... well in CA. they don't have to ..  They just call it a fee, as taxes have to be voted on. 

 
zapdafish said:
Rockler and Woodcraft have both internet sales and brick and mortar.

I can order from Rockler and get away with not paying sales tax but I can't do the same with Woodcraft because Rockler moved out of my state while Woodcraft stayed. Definite advantage to Rockler when they offer free shipping on the item I am interested in.
Click to expand...

And that - in a nushell - underscores the unfairness of the current situation....

As a consumer - you owe the tax - no matter who you buy from. One firm, as a result of tax nexus, is forced to collect it from you. The second has no nexus - and does not have to collect it. You perceive a benefit to ordering from Rockler, as you do not "have to" pay tax (you do, but if you do not voluntarily remit it, you are passively engaging in tax avoidance).

This is is an endemic problem in Canada for cross border shopping, where the Federal goverment decides what to collect at the border, despite there being NO exemption for th provincial component of the tax for many provinces....

Let's not even get started on the hidden taxes consumer's don't see.... taxes on factors of production and stewardship fees, as well as their reporting. We have a list of products we will not ship to California due to onerous reporting and stewardship fee collection...!

Cheers -

Rob

 
They should change the entire system if it is really about the consumer paying the tax.  When you buy a product at a brick/mortar store, you pay the rate where that store is located.  If I live in Illinois and travel to Florida to buy a pair of shoes on vacation, I don't pay the Illinois sales tax, I pay the Florida rate.  If this legislation passes, and I buy something from Bob Marino, am I supposed to pay the Illinois tax rate or the Ohio (or New Jersey, or whatever) rate?
 
skids said:
Is there any significance to the fact that most internet retailers have an outgoing shipping cost to contend with that a brick and mortar store, who's customer comes to them does not?
Click to expand...

But with a brick and mortar shop the customer has to spend money to collect the item himself. It's not much if you live around the corner, but it can add up if you have to drive 1 or more hours.

Next to that, running an internet based shop is generally considered to be a lot cheaper than running a brick and mortar store, you don't need as much employees for the same turnover, and you can have a cheap building on an out of sight location, while stores often need to pay a lot more for a premium location in a shopping area.    
 
ccmviking said:
Frank Pellow said:
This tax loophole never existed in Canada, so I can't feel too sorry for our United States friends.
Click to expand...

    It's not a loophole Frank.   This has to do with State sales tax and purchases made in that state.  In CA. alone tax revenue is in the 110Bn plus range.  All Canada tax revenue is 237Bn at the federal level in 2011.   In CA. we also have on top of everything else a 1% lumber fee.  It's not for what wood gets forested in CA.  It's just another tax on top of everything else.  It's even charged on all cabinetry, etc. brought into the state.  How can a state justify such a tax for a product not made in the state and has nothing to do with the states natural resources?... well in CA. they don't have to ..  They just call it a fee, as taxes have to be voted on.  
Click to expand...

Sorry, but the way I read what you have said, that makes it seem like even more of a loophole.  Wherever there are such bureaucratic messes, there are loopholes.
 
I am convinced that it will happen.  I will continue to support dealers who provide the service level and products that I desire.  I feel sorry for the small business owner who does just over the proposed threshold.  Imagine on December 28th looking at your sale for the year and being real close to the threshold and then getting a large order.  Accept or delay until Jan 2 of the next year.  Of course I am sure that the procedure would be required / not required by the previous year's sales, but inevitably it would come into play.

Maybe many more smaller companies?  HMMM.

Peter
 
Kev said:
I'm relatively ignorant or the US state based tax loopholes, but I was under the impression this was simply easier to exploit with internet sales ... but the same actually applies for interstate credit card phone sales, etc ??
Click to expand...

Yes, it's the same thing.

Prior to e-commerce volume was small so people didn't get their knickers in a twist over the lost revenue. Now though it's much more of an issue.

 
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