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US Senate Passes National Internet Sales Tax Mandate 297

Posted by timothy
from the man-vs-the-states dept.
SonicSpike writes with the news that the U.S. Senate yesterday "passed a nonbinding proposal to allow states to collect sales tax on Internet sellers that have no presence within their borders. The proposal was an amendment to a 2014 budget bill that the Senate debated Friday. It was pushed by Senators Mike Enzi, a Wyoming Republican, and Dick Durbin, an Illinois Democrat, and was designed to give backers a sense of whether they had enough votes to push forward with final legislation to impose an Internet sales tax. The vote showed they have plenty of backing to overcome any filibuster seeking to block a final sales tax bill."
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US Senate Passes National Internet Sales Tax Mandate

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  • First! (State) (Score:2, Informative)

    Shouldn't change life in Delaware much. We don't have sales tax, period.
    • Same in Oregon for pretty much anything that isn't tobacco or gasoline, and only one of those are practical for purchasing online.

      OTOH, I am curious as to whether or not some neighboring state (*cough* California *cough*) would decide to charge me their sales tax rate for anything that an online retailer would sell to me if it comes out of a warehouse that is sitting within their borders...

      It'll change a few dynamics, to say the least.

      I do recall only one site online charging any sales tax - DAZ Productions [daz3d.com]

      • Re:First! (State) (Score:5, Interesting)

        by Anonymous Coward on Saturday March 23, 2013 @03:37PM (#43258683)

        As an Oregon online retailer, I can say that this will be big pain in the ass, because I'll go from collecting tax for zero states to collecting tax for 46 states, and having to calculate all the various kinds of taxes levied by cities and municipalities. It's going to be a fucking nightmare, which is why the supreme court stopped it in the first place.

        At least Ron Wyden is doing his damn job by fighting it.

        • Re: (Score:2, Interesting)

          by WindBourne (631190)
          That is why I think that we should be offered the option to apply a flat 10% sales tax that is collected by the shipping firm. Then the shipping firm is allowed to keep say 5% of that, for handling it. With this approach, it would make it trivial for anybody, including foreign firms, to pay the sales taxes. And at 10%, where will be districts that are higher than it, but on average, the majority is bought at around 7-8% sales tax. As such, this is not too far from where it needs to be, and it removes all o
          • it removes all of the overhead of paperwork, lawyers, etc.

            ...and that's why there will be no possibility of such a system being implemented. These laws are thought up by bureaucrats and lawyers. They're not going to let go of their slice of the pie.

        • Re:First! (State) (Score:5, Interesting)

          by cob666 (656740) on Saturday March 23, 2013 @04:43PM (#43259135) Homepage
          Before you can even collect sales tax you will have to register with each state and pay for a sales tax id ($100 for CT alone). I don't believe for a second that states are going to give sales and use tax ids away for free either. I don't see how this is going to work for anything but the largest online retailers and I'm still not convinced that this doesn't violate interstate commerce.

          Instead of requiring retailers to PAY the sales tax, they should only be required to remit sales logs and let the state collect the use tax from whoever purchased the goods. But, that makes too much sense and would again put the responsibility on the state to collect the money when all they really want is a ride on the internet sales gravy train.
          • by westlake (615356)

            I don't see how this is going to work for anything but the largest online retailers and I'm still not convinced that this doesn't violate interstate commerce.

            The same retail giants who sell enormous quantities of goods across state lines and who have immense regional distribution centers in many?

            That sure looks like interstate commerce to me.

            • by Fjandr (66656)

              The poster almost certainly meant they aren't convinced it doesn't violate the Interstate Commerce Clause, which prevents individual States from creating barriers (i.e. taxes) to imports from other States.

              Those retail giants collect taxes from transactions where both origination and destination of the sale are in the same State.

        • "As an Oregon online retailer, I can say that this will be big pain in the ass, because I'll go from collecting tax for zero states to collecting tax for 46 states, and having to calculate all the various kinds of taxes levied by cities and municipalities. It's going to be a fucking nightmare, which is why the supreme court stopped it in the first place."

          I would go further, and ask where the Constitution gives Congress any authority to allow one state to tax a transaction that takes place in another state.

          Please don't cite me the Supreme Court... I know about their prior decision. But that doesn't make it Constitutional. Hell, SCOTUS had done A LOT that's unconstitutional.

          Even the widest interpretation of "regulating interstate trade" does not cover taxation. It simply isn't legal for one state to tax a transaction in another state this way. And a sal

    • by edmudama (155475)

      Until you get charged sales tax by the state in which the internet retailer exists.

    • Shouldn't change life in Delaware much. We don't have sales tax, period.

      Shouldn't change life anywhere. This is a non-binding resolution that has no force of law, even if it passed both chambers (and it hasn't). The only thing this means is that if congress actually decides to take up this issue in the future, it probably has the votes to pass. Which seems reasonable: I don't like paying taxes, but taxes should be fair. People are already required to pay these taxes, but evade them by buying from out of state merchants. If the merchants are required to collect the tax, th

    • by gtall (79522)

      No, you just tax the rest of the states by making your business laws so lax that companies incorporate in Delaware where they are immune to things like bankruptcy laws...if you can call those laws you have "bankruptcy laws". Your bankruptcy courts make it easy for scum like SCO and their fellow travelers to make out like bandits after screwing their customers and anyone else they could throw a sueball at.

      Delaware is a disgusting state that should be disbarred from the Union.

  • So, big deal. We all know how much the big spenders would love more money to waste though.
  • Nor is it a tax of mass destruction.
  • Not to worry (Score:5, Informative)

    by Freddybear (1805256) on Saturday March 23, 2013 @02:59PM (#43258437)

    They've been trying to pass legislation like this for the last seven Congressional terms, this makes it eight.

    http://www.netchoice.org/library/sales-tax-collection-myth-vs-reality/ [netchoice.org] ...legislation has been proposed in each of the past seven Congresses that would reverse decades of history and legal precedent preventing out–of-state sales tax collection, and another bill is being circulated for cosponsors by Senator Mike Enzi (R-WY). It would impose on all states and all retailers the provisions of the now voluntary Streamlined Sales Tax Agreement (SSTA). SSTA proponents have touted this measure as a simplified, streamlined method for collecting sales tax. Unfortunately, the reality is far different – the SSTA promises to increase significantly the complexity and compliance burdens for interstate sellers.

  • How can states enforce this against sellers with no financial interest in the state? If the out of state seller doesn't pay, what recourse is there?
  • by rsilvergun (571051) on Saturday March 23, 2013 @03:09PM (#43258499)
    but mostly because sales taxes are primarily regressive taxes (they impact poor and middle class much more than the rich because poor/mids spend a greater percentage of money surviving). At the same time I'm a lot more concerned about wealth inequity than I am about paying an extra 10% on crap I buy online.
  • by trout007 (975317) on Saturday March 23, 2013 @03:14PM (#43258545)

    This will be struck down. You can't tax a person or business not in your jurisdiction. You could try to make your citizens pay the tax but you can't require an out of state business be a collection agency.

    • by amiga3D (567632)

      Given the way things are going in the courts I doubt this will be struck down.

    • Re: (Score:3, Insightful)

      by Seumas (6865)

      The flaw in your statement is that it assumes adherence to the constitution, which we have dismissed at every opportunity over the last fifteen years. In a world where privacy, due-process, and protection of citizenship mean nothing, a little interstate commerce and taxation is trivial. Further, just as we have plenty of people in our population that say things like "we have too much free speech and the government should regulate the news" and "we should give up some of our privacy to be more secure against

    • by hedwards (940851)

      This has been law of the land for a very long time. The Federal government can most certainly enforce the right of the states to tax their own citizens. What would be unconstitutional would be differing tax rates for in and out of state retailers. In all cases I know of, the sales and use taxes are the same, what this legislation would do would enforce the retailers to collect, remit and report the taxes that are already owed by the citizens of the state.

      And, the Federal government doing the forcing, is cer

      • by Skapare (16644)

        More specifically, this new law would favor brick and mortar stores by allowing those stores to collect tax from OUT OF STATE people ... and at the WRONG RATE. Sure, we have been allowing stores to do just that all along. The meaning here is that the stores ARE doing this as a tax based on the STORE location, rather than the BUYER location. To be fair, the exact same thing needs to be applied to internet stores. Further, there is no tracking required of mortar stores. But some proposals for internet st

    • by khallow (566160)

      This will be struck down.

      There are two things to note here. First, this is a rare legitimate application of the Commerce Clause. Second, the Supreme Court has upheld unconstitutional law before (such as the recent Obamacare ruling).

    • In most states, the sales tax is not paid by the company. The state is taxing YOU. It just mandates that companies that want to sell to you have to collect the tax and submit it.

      I'm actually kind of surprised the states haven't started issuing subpoena to the large online retailers, to get names and addresses of people that have ordered over a certain amount. and then go after them. (In pretty much every state with sales tax, you are required by law to include those purchase totals on your taxes, but no

      • by Fnord666 (889225)

        I'm actually kind of surprised the states haven't started issuing subpoena to the large online retailers, to get names and addresses of people that have ordered over a certain amount. and then go after them.

        Probably because subpoenas are supposed to require probable cause before being issued. Fishing expeditions like you describe are specifically prohibited. Unless the company has a presence in the state in question, it could also simply ignore the subpoena since I don't believe they have any force in other states. (insert oblig. IANAL here)

    • The government can and will do whatever it wants, including directly violating the law of the Constitution, without consequence.

      Domestic wiretaps and killing Americans without trial are proceeding full steam ahead. It's so normal it isn't even a talking point any more.
      • by Trogre (513942)

        If that were even remotely true you would know what you, as a US citizen, were then required to do.

        How's that working out for you so far?

    • I passed up mod points to comment on this. Aside from the fact that this deals explicitly with commerce across state lines, which is EXACTLY what the commerce clause states it is about, very, very clearly, the claim that this is 'Taxation without representation' is such a ridiculous amount of hyperbole and ignorance that I'm shocked, and a little ashamed, that none of the 8 comments preceding this have pointed out that this is being carried through BY YOUR LEGALLY ELECTED REPRESENTATIVES. Unless you live
  • The states already get plenty of tax on out-of-state internet sales. Those packages don't appear by magic. They're moved (usually by ground) from origin to destination, paying taxes all along the way. Fuel and mileage taxes and registration for vehicles, income tax from the employees, property tax from the depots and warehouses in the origin and destination states, corporate taxes from the shipping companies, etc.

    • by hedwards (940851)

      Umm, you do realize that businesses generally get to write off a lot of the, right? And these are businesses that don't have a presence in the state anyways so there's nothing to write off. So, it means precisely zip to us here in WA that a company has a warehouse in CA or TX, as those places don't remit any of it to our government to pay to run the state.

      If you're going to comment, could you at least do some research?

      • You realize I'm talking about the shipper's warehouses, right? Track your next cross-country shipment. Unless you live right on the border next to a big city in another state, it's going to land at a warehouse in your state where people are employed to move that package. Those employees pay income tax. The shipper pays property tax. They pay taxes on the fuel they put in their vehicles. There's also probably a mileage tax on those vehicles.

        ?Comprende?

        • by hedwards (940851)

          And those taxes are a tiny fraction of what the state is eligible to collect on those transactions. In extreme cases you're talking about as much as 30% of the purchase price and most of that being written off by the businesses. In most cases the shipping total comes out to a small fraction of the cost of the total purchase.

          So yeah, the amount the state is getting from that is negligible.

  • by DigitalSorceress (156609) on Saturday March 23, 2013 @03:47PM (#43258759)

    I have a hosting customer (who is also a friend) who is a very small manufacturing business - they hand make jewelry and sell it on their web site.

    They are a mom-and-pop operation and have no hope of being able to track 50 states worth of sales tax obligations and file 50 states worth of forms... never-mind that others have mentioned elsewhere that there are some 10,000 distinct sales tax jurisdictions in the US.

    If they're actually required to track even just 50 states worth and file those forms, they're not going to be able to comply. Their business is close enough on margins that this could quite seriously push them over the edge and make them close up shop should it be too onerous.

    If the fed wanted to jsut say "5% sales tax on all Internet sales apportioned to the states by share of gdp" that would be one thing, but keepint track of that many moving targets would be too much for mom and pop shops.... big retailers have accounting firms or departments to handle it - one more way the little guy is getting destroyed.

    • by the eric conspiracy (20178) on Saturday March 23, 2013 @04:12PM (#43258967)

      It would seem to me that whatever solution Congress adopts there will be a variety of services made available for these sorts of businesses. Hopefully there will also be a threshold below say some million dollars per year where this sort of stuff isn't required. Of course given the stupidity of Congress one can't count on this being part of the legislation.

      I don't have to file tax returns myself; I just buy a copy a tax software package once a year, put in my financial info and shazzam! the returns are uploaded. Shouldn't be a big deal to actually pay the tax.

      The real onerous part of this process would be where states start wanting an audit. Now THAT would have serious potential to destroy a small business.

    • by Fnord666 (889225)

      If they're actually required to track even just 50 states worth and file those forms, they're not going to be able to comply. Their business is close enough on margins that this could quite seriously push them over the edge and make them close up shop should it be too onerous.

      From the article

      The budget amendment is an initial step toward allowing state and local governments to collect sales taxes from out-of-state retailers who sell more than US$1 million worth of products in a year over the Internet

      Unless your friend does a heck of a business they probably would not be affected at this point.

  • Nighmare (Score:5, Insightful)

    by pubwvj (1045960) on Saturday March 23, 2013 @03:50PM (#43258785)

    Dealing with all the localities is a paperwork and regulatory nightmare. They should not be making the states be able to do remote sales. If they want the money they should simply have a federal sales tax and then the government can divvy the money up to the states just like they do with so many other funding things. Instead they are creating more of a burden for small businesses. Once again, Big Corp has the advantage since they have the systems in place for this and can spread the overhead over many products. Big Gov loves Big Corp.

  • In the state tax office in the capitol city, someone blurts out "WTF is bitcoin ?"

  • This should be just loads of fun. I see this probably causing retailers to keep track of each sale by state of purchase, calculate the amount of sales tax, and send it to the appropriate state. Guess who's going to pay for all this?
  • Is a way around that pesky Constitution that forbids interstate sales taxes.

  • Section (a)(2)(D)(ii) says "Provide -- ... (ii) software free of charge for remote sellers that calculates sales and use taxes due on each transaction at the time the transaction is completed, that files sames and use tax returns, and that is updated to reflect rate changes as described in subparagrah (H); ..."

    There appears to be no requirement that software be:

    • Suitable for high reliability in a high volume retailer web site
    • Be properly supported by the software provider
    • Be able to support the variety of sof
  • I think there's a bigger picture here that most people don't consider. Internet sales, except for digital downloads, require shipping...and that's not free. I might be wrong, but I imagine that some portion of these shipping costs that everyone pays find their way back to the states in different forms such as road tolls, airport fees, income taxes of employees and so forth. In fact, I'd wager that the USPS would be in far worse shape if shipment of online goods hadn't filled the hole that email has cause
  • Chicago has a LOCAL 10.5% sales tax.

  • nonbinding proposal

    nonbinding

    Nothing to see here folks, except trying to look like they're doing something for the brick-and-mortars. Nonbinding resolutions pass all the time and they are nothing but lip service. They are not laws.

    --
    BMO

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