Senate to Vote on Internet Tax

[allan]

Well, it looks like it his happening. I received a notice from the Jewelers of America (a very large jewelry group in the US) that the senate is planning on voting on internet tax either Monday or Tuesday.
As a brick and mortar jeweler established 1939, I do have mixed feelings on this. Naturally, when I'm in the business, I am upset that people can avoid the sales tax that we must collect when selling products. But when I'm buying tobacco for my pipe out of state to avoid the exorbitant and punitive taxation in my own state, (NY) well, ...
Really mixed feelings on this.
Allan

 

[philobeddoe]

It's going to happen sooner or later, I really can't believe the govt. has not taxed Internet sales this long. Ultimately it's only fair to brick and mortar businesses. I don't want to pay tax any more than you do, but we all knew it was inevitable.

 

[papipeguy]

Up to now sales taxes are enacted state by state. If you are refering to the Feds then this is a different kettle of fish altogether as it would amount to a federal sales tax. That would be a huge deal but no surprise.

States have been putting pressure on the big e-tailers for some time- Amazon in particular. It's inevitable so we'll just have to deal with it.

 

[dragonslayer]

You're actually already obligated to pay tax to the state on any Internet purchase, people just ignore it. But you could be audited and hit with all the penalties. This is way over due and the software for the 10,000 plus zip codes is already in place. This is actually a good thing in the end except for tobacco and some Nazi state taxing. We have been riding the free train for a long time. But in reality we’ve already supposed to be paying the tax.

 

[zonomo]

You're actually already obligated to pay tax to the state on any Internet purchase, people just ignore it. But you could be audited and hit with all the penalties. This is way over due and the software for the 10,000 plus zip codes is already in place. This is actually a good thing in the end except for tobacco and some Nazi state taxing. We have been riding the free train for a long time. But in reality we’ve already supposed to be paying the tax.

I'm not sure this is correct dragonslayer. The internet wasn't around when commercial tax laws were enacted. The laws all had to catch up. The rule is that you must pay sales taxes in your state if the company have a legal office there. For example, if you buy a Dell computer, you pay sales tax 100% of the time since Dell has offices in every state. Back when buy.com was still around, you would buy that same computer with no sales tax. I'm also not sure why you think a tax is a good thing. Originally taxes were supposed to be limited and they only taxed a few things. That kept the tax revenue very small and consequently the Gov'mt very small. It wasn't until the passage of the 16th Amendment in 1913 that taxes were permanent but the rate was only something like 3%. Now we have ZERO control over this amount of tax, it goes up and it goes down and states pile on. No thank you. I dont want the gov'mt in any circumstance to get 1 more dime of my money.

 

[peckinpahhombre]

Zonomo - I think it depends on the applicable state laws. See this discussion re Michigan (I am sure many states have similar laws): http://pipesmagazine.com/forums/topic/shipping-into-michigan#post-282191
Enforcement of those laws is of course a different issue.

 

[instymp]

I hate Taxes & Gov. intruding and believe smaller Gov. is better. But, I also believe that state sales taxes make it fairer for local business to compete with online business.

 

[brian64]

It wasn't until the passage of the 16th Amendment in 1913 that taxes were permanent but the rate was only something like 3%. Now we have ZERO control over this amount of tax, it goes up and it goes down and states pile on.

The reason sales taxes seem so bad is because we have to pay them in addition to the income tax.
Every penny of the “Federal” income tax goes to pay the interest on the debt to the privately owned, unconstitutional “Federal” Reserve (which is not federal and has no reserves). Nationalize the Federal Reserve so that the government can issue constitutional, interest free currency and you get rid of the completely unnecessary income tax. Then sales taxes won’t seem so bad.
It is incomprehensible that this country has allowed a private, international banking cartel to control its currency for 100 years now...and pay through the nose out of our hard earned pay for them to create fraudulent currency out of thin air.
Why an Income Tax is Not Necessary to Fund the U.S. Government
http://www.devvy.com/notax.html

 

[captainbob]

You all make very good points. But, the bottom line is this. We are going to pay more for our tobacco to put into our pipes. It isn't an if, it is a when!

__________________________________________________________________________________________________________________

 

[appointed]

Everyone here is always so pessimistic. They might raise taxes for awhile, but I am still hopeful that my fellow countrymen will rise up and put an end to this nonsense. King George III tried all this year ago and we whipped the invincible British empire. Let them take away a few more liberties, raise some more taxes and put just a few more folks out of work. After all, there ain't too much that a bunch of angry rednecks can't do. From what I've read, this bill is already facing opposition in the House.

 

[appointed]

@rothnh :rofl: Ok, maybe I am being too optimistic, but the whole "I'm gonna lose my guns, pipes, liberty, be taxed to death and things are only gonna get worse from here" is just not good at motivating me to get out of bed in the mornings.

 

[bigboi]

Well, with guys like Rand Paul and companies like Ebay oposing the bill the opposition may just get noticed.

 

[admin]

There is nothing good about this from a business perspective if it passes.
It could cost jobs, lower sales and profits, negatively affecting the economy on a micro and macro level.
Specifically, it could hurt PipesMagazine.com, G.L. Pease Tobaccos, and Brigham Pipes. There are of course others, but I mention these since I have the most regular dealings with Greg and Brian on a semi-daily basis.
Online retailers would suddenly be forced to not only collect taxes, which will likely affect their sales negatively, but they are also burdened with the cost of administering this, which further impacts the bottom line.
However, there are two intriguing aspects –
1. Online retailers with out-of-state sales of less than $1 million a year would be exempt. I never tried to estimate the sales levels of the retailers that advertise on PM. I wonder which might be exempt, and which wouldn't be, if any.
2. eBay sellers would be impacted, but BriarBid sellers would not – if I understand it right.
That's a potential tiny little silver lining for BriarBid that might add a few more dollars to the top line. Hopefully it won't result in getting hundreds or more dollars cut from ad budgets... and from budgets to buy pipes and tobacco - which would affect Greg Pease's sales and Brian Levine's Brigham sales.
Nobody thinks of this kind of stuff. We're little guys in the overall scheme of things, but we could get hurt considerably.
Here's the latest in today's NYT article:

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

 

[peckinpahhombre]

Online retailers with out-of-state sales of less than $1 million a year would be exempt. I never tried to estimate the sales levels of the retailers that advertise on PM. I wonder which might be exempt, and which wouldn't be, if any.

I noticed this as well Kevin, and as a tax planner the wheels started turning. Take someone like Rich at 4noggins for example. A number of questions pop to mind.
First, when calculating "out of state sales", does that include "out of country sales"? I suspect a material chunk of Rich's annual sales are to foreign buyers.
Second, let's say someone like Rich had out of state sales in excess of $1 million so that he would otherwise be caught. Could he bifurcate the business into two or more businesses. For example, one business deals with east coast sales and the other deals with west coast sales, each one having out of state sales of less than $1m. I suspect the drafting of the legislation would require an aggregation of the sales of businesses owned by the same person. Query whether having your wife own one business and you the other would get you there. The devil will be in the detail and the legislative drafting I suspect.

 

[admin]

I was thinking the exact same thing.
That's the first thing I would do - split into two businesses.

 

[surlysoul]

Query whether having your wife own one business and you the other would get you there. The devil will be in the detail and the legislative drafting I suspect.

I don't think this would work, due to constructive ownership rules.

 

[peckinpahhombre]

I don't think this would work, due to constructive ownership rules.

I assume you mean that you believe the legislation will contain such rules. I do agree that they will have to consider the inclusion of constructive ownership rules to avoid planning of the type articulated above. I guess we will have to see what the legislation looks like.

 

[wildcat]

its called A USE TAX -- in many states, the laws require residents to pay the use tax, which is taxed at the same rate as the state's sales tax, on all taxable products that a resident has not paid taxes on, no exceptions.
As noted here and elsewhere, as law abiding citizens, we're required by state law to list the amount of taxable products we purchase during the tax year that we have not yet paid the taxes on, and declare that total amount on our state income tax forms, so the state can collect the unpaid taxes we owe.

Insanity. By law if I drive to Vermont and buy a pouch of Carter Hall or Juicy Fruit in Vermont and pay Vermont tax, New York wants "it's" tax too, even though said pouch of Carter Hall or pack of gum never even entered NY before the sale. How does this make any sense...?
Ah well, the sad part is, this will happen. We the sheeple will do nothing about it because we have forgotten that elected officials work for us, not the other way around. There will be no revolution of any sort... not while there's football, pro wrestling and free internet porn that won't get watched by itself. Who's got time to revolt.
Turn off the lights on your way out kids, the game's over. Thus ends the crazy man's rant.

 

[zonomo]

I signed this and here is the email I just received from my state Senator. I wrote her back a very angry (but professional) email stating that she will forever lose my vote if she votes for this.
Dear Mr. xxxxx,
Thank you for contacting me regarding the Marketplace Fairness Act. I appreciate hearing from you on this important issue.
Senator Michael Enzi (R-WY) introduced the Marketplace Fairness Act (S. 743) on April 16, 2013. If enacted, this legislation would allow states to enforce their existing sales tax laws and collect taxes owed on Internet sales transactions. On April 26, 2013, I voted with 63 of my colleagues on a motion to end debate and consider the Marketplace Fairness Act. Please be assured I will keep your thoughts in mind as the Senate considers this legislation.
General sales and use taxes provide state governments with a significant share of total tax revenue each year. The use tax is the companion to the sales tax, applied to goods purchased from vendors outside the purchaser's state of residence. Generally, this sales tax revenue is collected by the retailer at the point of transaction and remitted to that state or local government. While the legal burden is on the consumer, the retailer acts as the collection agent for the state.
State and local governments are concerned that the expansion of Internet commerce, and interstate transactions, will gradually erode their tax base. This concern arises because the U.S. Supreme Court has ruled that out-of-state vendors are not required to collect sales taxes for states in which they (the vendors) do not have a physical presence.
This effort was formalized by the Streamlined Sales Tax Project (SSTP), which was created in 2000. The participating states are working to simplify and better synchronize individual state sales and use tax laws so that all types of vendors, from traditional "main street" retailers to those conducting trade over the Internet, can easily collect and remit sales taxes. The member states believe that a simplified, relatively uniform tax code across states would make it easier for remote vendors to collect sales taxes on goods sold to out-of-state customers. Washington State adapted its state tax structure to the multi-state agreement and these changes took effect on July 1, 2008.
As a member of the U.S. Senate Small Business Committee, I am a strong supporter and advocate for small businesses in Washington State and throughout the country. Small businesses are critical to the Washington State economy, in that more than six out of every ten workers in our state is employed by a small business. Yet, these businesses face unique challenges, especially in gaining access to much needed capital. For these reasons, I have worked to ensure that small businesses in Washington State are provided the assistance that they need to develop. I will continue to be an advocate of the SBA loan programs and other federal programs that provide assistance to small business.
Sincerely,

Maria Cantwell

United States Senator
For future correspondence with my office, please visit my website at

http://cantwell.senate.gov/contact/

 

[carytobacco]

This isn't about "leveling the playing field", it's about grabbing more cash for the government. If they were really concerned about protecting small retailers, they would encourage states to get rid of the sales tax for small business. I know it's a federal issue, so they can't directly do anything about state sales tax, but they are using a lot of state politicians to push this.
Not only that, but the fact that Amazon and other large internet retailers support this tax shows you all you need to know. This is about large internet retailers using the government to impose more regulations on smaller competitors. The only good thing right now in the proposal is that it exempts those that do under $1 million in sales, but there's no guarantee that that provision will still be in there once the bill passes (if it does, which it probably eventually will).