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

[andvari]

I think this is going to tilt things back to local shops that can also ship. Shipping costs depend on distance, and also so does shipping time. So the advantage of ordering things out of state will disappear. However the advantage of not having to spend half a day in traffic is still a big one.

Now my brother lives in a state that collects no sales tax, so I can definitely see that I'll be doing more shopping when I visit him.

 

[skids]

I think this is going to tilt things back to local shops that can also ship. Shipping costs depend on distance, and also so does shipping time. So the advantage of ordering things out of state will disappear. However the advantage of not having to spend half a day in traffic is still a big one.

Now my brother lives in a state that collects no sales tax, so I can definitely see that I'll be doing more shopping when I visit him.

Yep, I agree..Time is of the utmost importance to me at this phase of my life with 3 little ones. So driving all over the place isn't always a good use of time. In this case, if I can save the time (and fuel) driving to pick something up I will use the internet to have it come to me.

I suspect it will make people a little less likely to use Amazon for everything. But I don't think the whole window shopping mentality will go away because now internet retailers and brick and mortar will be more directly aligned on price and therefore more competitive. Festool may not be affected, but I bet you will see prices overall for some items potentially vary more, (possibly nudge down-wishful thinking) a bit as a result of this since it could make certain markets a little more hyper.

 

[Rob Lee]

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?

Hi -

Generally (and again, I'm not familiar with every tax law) you pay the tax where you take possesion/delivery of the goods. However, if the amount is large enough - your state may come after you for the tax (think cars, RV's etc) and you will have to claim back the tax from the state where you purchased the goods (or claim an exemption at time of purchase).

Cheers -

Rob

 

[waho6o9]

If you want less of something Tax it.

This is no way to grow the economy. Unless of course you
want to grow the public sector, which removes capital
from the private sector.

[huh]

 

[Michael Kellough]

Commerce makes the world go 'round. It should not be taxed, period.
Okay, maybe activities that the State wants to discourage could be taxed but not normal commerce.

States (and the Federal gvmt.) should be funded by a progressive income tax.
Just my opinion...

 

[mouppe]

Peter, I would imagine the threshold applies to all businesses so the tax only applies to incremental sales, similar to a personal tax allowance.

 

[BUTTER]

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?

Technically, yes, if you haven't paid sales tax on the online purchase from another state, you are supposed to pay your local tax on that purchase.  Of course, no one does that, and because online retailing has exploded over the last ten years, local economies have suffered, and municipalities are forced to raise tax rates to make the difference (exacerbating the problem.)

I recently received a sales call from a new Festool dealer based on the East Coast (I'm in CA.)  When I asked the salesman why I should consider their company, his first answer was that I could avoid sales tax!
I am fortunate to have a knowledgeable and independent Festool dealer not very far from me. (Shout out to Anderson Plywood in Culver City!!!)  I told the salesman that I would prefer to support local jobs and pay the tax that funds our schools.

Not everyone is lucky enough to be so close to a good retailer, and people like Bob Marino are then able to step up and give people the personal service they deserve, so I do think that there will continue to be a good market for internet sales.

I am glad that Festool structures their pricing in the US, so that everyone has an equal chance to make a profit providing sales and service.

 

[Rick Christopherson]

I'm looking at this from both perspectives; as a consumer and as a small retailer.

As a consumer, it is not a big deal. I don't go to the internet for the purpose of skirting sales tax. Yes, it is nice not paying it on larger purchases, but I use internet sales mainly when there is something I can't go pick up immediately at a local store.

However, as a small retailer, the paperwork would kill me unless they also included some simple manner for recording and submitting to a single entity. Even in the metropolitan area that I live, there are several different tax rates depending on which suburb the sale is made. There is a single state-wide tax, but some cities also impose a local tax as well.

So even ignoring any local (city) taxes, it would still mean keeping track of 50 different state taxes, and filing 50 different tax submissions. The money isn't an issue because that just gets passed on to the buyer. It would be the bookkeeping nightmare it would "possibly" create.

For the large retailers, the added paperwork would not be a hardship, and many of them already have to do this for a lot of different states because they have a physical presence in them. It's the small retailers (like myself) that would get crushed by this. I have heard that some companies are advocating some sort of minimum threshold of either sales volume or company size before this would kick in. Then it wouldn't be so bad.

 

[Runhard]

I'm looking at this from both perspectives; as a consumer and as a small retailer.

As a consumer, it is not a big deal. I don't go to the internet for the purpose of skirting sales tax. Yes, it is nice not paying it on larger purchases, but I use internet sales mainly when there is something I can't go pick up immediately at a local store.

However, as a small retailer, the paperwork would kill me unless they also included some simple manner for recording and submitting to a single entity. Even in the metropolitan area that I live, there are several different tax rates depending on which suburb the sale is made. There is a single state-wide tax, but some cities also impose a local tax as well.

So even ignoring any local (city) taxes, it would still mean keeping track of 50 different state taxes, and filing 50 different tax submissions. The money isn't an issue because that just gets passed on to the buyer. It would be the bookkeeping nightmare it would "possibly" create.

For the large retailers, the added paperwork would not be a hardship, and many of them already have to do this for a lot of different states because they have a physical presence in them. It's the small retailers (like myself) that would get crushed by this. I have heard that some companies are advocating some sort of minimum threshold of either sales volume or company size before this would kick in. Then it wouldn't be so bad.

I agree with the above statement. I buy online because I do not have a Festool, Lie Nielsen or Lee Valley dealer near me and also for the convenience, not to avoid sales tax. If I want to buy something I will buy it regardless if I have to pay sales tax, but it is nice to save a little here and there.

Daniel

 

[fortrout]

WELCOME to Delaware. No state sales tax. People drive from New Jersey, Maryland, Pennsylvania, to shop TAX FREE. The malls are full of out of state plates all the time. Not sure how long it will stay this way,but as a consumer it has been very helpful raising a family. [big grin]

 

[Corwin]

I'm looking at this from both perspectives; as a consumer and as a small retailer.

As a consumer, it is not a big deal. I don't go to the internet for the purpose of skirting sales tax. Yes, it is nice not paying it on larger purchases, but I use internet sales mainly when there is something I can't go pick up immediately at a local store.

However, as a small retailer, the paperwork would kill me unless they also included some simple manner for recording and submitting to a single entity. Even in the metropolitan area that I live, there are several different tax rates depending on which suburb the sale is made. There is a single state-wide tax, but some cities also impose a local tax as well.

So even ignoring any local (city) taxes, it would still mean keeping track of 50 different state taxes, and filing 50 different tax submissions. The money isn't an issue because that just gets passed on to the buyer. It would be the bookkeeping nightmare it would "possibly" create.

For the large retailers, the added paperwork would not be a hardship, and many of them already have to do this for a lot of different states because they have a physical presence in them. It's the small retailers (like myself) that would get crushed by this. I have heard that some companies are advocating some sort of minimum threshold of either sales volume or company size before this would kick in. Then it wouldn't be so bad.

According to this article, "Sellers with more than $1 million a year in sales would be responsible for collecting the tax from buyers in the 45 states plus D.C. that currently charge sales tax."  Just how many of your Domino gadgets are you selling?    [blink]

 

[Rick Christopherson]

According to this article, "Sellers with more than $1 million a year in sales would be responsible for collecting the tax from buyers in the 45 states plus D.C. that currently charge sales tax."  Just how many of your Domino gadgets are you selling?    [blink]

I got an eBay petition about this threshold a couple days ago, but I wasn't sure if it was actually part of the current legislation. The fact that it was being petitioned, suggests that it isn't currently part of the legislation.

Granted, I am so distrusting of email notifications, that when the URL was not directly to eBay, I didn't even read it.

 

[peter halle]

Rick,

I think that the initial threshold as part of the proposed is 1,000,000.  I think that I read that Ebay is trying to use its influence to get the threshold raised to 5,000,000 so that over 90% of its sellers would be exempt.

"EBay is pushing to expand the exemption to cover all businesses with less than $10 million in out-of-state sales or fewer than 50 employees."

Read more: http://thehill.com/blogs/hillicon-valley/technology/295259-ebay-rallies-users-to-fight-internet-sales-tax#ixzz2RKejxvr8

Peter

 

[Rick Christopherson]

Peter, I just looked at the email from eBay that I previously deleted. You are correct. They do appear to be advocating $10 million, not the $1 million I had previously recalled. That is what made me assume that there wasn't otherwise a threshold to the tax. So I am assuming that there has always been a lower threshold, but the eBay email just made it sound like there wasn't because they want the threshold to be higher.

That deception is just one more reason why I'm glad I didn't click on their link to read more.  [smile]

 

[Bob Marino]

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]

 

  Well, get going' Dan!

Bob

 

[Bob Marino]

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] )

Basically agree, Rob, but in the USA, the purchaser, not the on-line retailer is responsible for paying the tax, unless that retailer has a nexus of business in that state.

Bob

 

[Bob Marino]

Rob
(who is not a tax expert.... but employs dozens of them....  Crying )

Now, that's funny!

Bob

 

[Runhard]

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]

 

  Well, get going' Dan!

Bob

I wish I could buy everything that I want sooner but I don't have the space in my basement. I am looking to move or maybe even build a new house, but this could be a few years away unless I can find a house that I really love. I am also taking my time on deciding on what equipment to buy. I only want to buy once and I want it to last me the rest of my life. I'm 37 and hope to have my equipment last 40 or more years in a hobbyist shop.

Daniel

 

[Bob Marino]

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?

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.    

Alex,

 I think much depends on the size and type of online business. I can only speak of what I am familiar with, so here goes. I don't have employees - in the fact that I don't pay any one person/staff member at my  fulfillment center - though that may change, I get charged a fee for their time as well as for the space my business occupies there. I also pay insurance-  fire/theft liability. And there are Internet hosting fees, as well as considerable web improvement costs. But by far, the biggest expense is shipping. If a customer walks into a retail store to buy a $12.00 box of sandpaper, the brick and mortar makes his x amount of profit. If I (or most any other on-line dealer) ships that same box of paper (and offers free shipping) he's lost $$$ on that order. If a customer buys an MFT from a retail store, again, the b & m makes his "x" profit, the online retailer can lose anywhere from 30-80% profit on that table.  Yep, online dealer can charge shipping, but at the expense -- no pun intended of losing sales to others who offer free shipping. Again,  B& M's have as you stated, do have some higher costs than on-line retailers no question, but shipping is a killer.
This is not meant as a rant, simply an explanation.

Bob

 

[Bob Marino]

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?

If this legislation passes, you would be obligated to pay the Illinois tax rate.

Bob