Senate to vote on bill to end sales-tax exemption on Internet commerce

posted at 9:21 am on April 22, 2013 by Ed Morrissey

The Senate may act to raise taxes today, and barely anyone knows about the effort.  A bill that would allow all states to collect sales taxes on Internet purchasers by their residents may get a floor vote today:

The days of tax-free online shopping could finally be numbered.

The Senate is planning to vote on a bill as soon as Monday that would give states the authority to collect sales taxes on all Internet purchases, handing local governments as much as $11 billion per year in added revenue that they are legally owed — but that hasn’t been paid to them for years. …

The bill introduced by Sen. Mike Enzi (R-Wyo.), called the Marketplace Fairness Act, would grant all states the power to collect taxes from out-of-state vendors selling goods to their residents.

“Legally owed”?  Yes, actually that’s true.  If you buy tax-free goods, you are supposed to declare them on your annual tax return, but states don’t bother to enforce that — because it would be impossible to do so.  The exemption on collection was created by Congress on interstate sales for the purpose of encouraging Internet investment and expansion, which shows that no one really expected states to ever collect those taxes, at least not at the time.

The Post notes how the exemption has bitten into brick-and-mortar sales, but misses a couple of important points:

Since before the dawn of Internet shopping, the basic rule was that as long as a retailer didn’t have a physical presence in the state where the consumer was shopping, the company wouldn’t have to collect a sales tax. Technically, shoppers are supposed to track these purchases and then pay the taxes owed in their annual tax filings. Few people, however, do this or are even aware of it.

The result: Online retailers have been able to undercut the prices of their non-Internet competitors for years. Over time, shoppers learned that they could browse products in the aisles of a Best Buy, only to click “purchase” on their smartphones for a tax-free deal from an Internet retailer.

However, unless you pay for an Amazon Prime membership or find other free-shipping deals, the amount saved in tax avoidance is lost in shipping costs and delayed receipt of goods.  The reason this became more attractive over time is the increase in sales taxes imposed by the states.  Also, other attractions for on-line sales is a much greater selection and better price competition, which in some areas brick-and-mortar retail can’t or won’t provide.

In the end, though, the question is one of equal application of the law.  Is it just to keep the exemption on tax collection almost twenty years after the commercialization of the Internet, which shows no sign of abating at all?  The competitive disadvantage for brick-and-mortar stores is real, and they’re already in big enough trouble without forcing them to collect taxes while their competition doesn’t.  Enzi’s proposal is certainly reasonable, and arguably necessary — and worthy of serious debate, which would be nice to see before a floor vote on the proposal.

Update: I’ve gotten a few e-mails asking why I didn’t argue to eliminate sales taxes altogether.  For one thing, that’s up to the individual states, not Congress. Not every state has sales taxes now, either.  Also, if more people have to pay sales taxes because of this effort, it could increase pressure in the various states to either reduce or eliminate sales taxes, although that hasn’t really been the case in the few states that have forced Amazon to collect the taxes.

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It will kill internet sales. Who will want to pay shipping and taxes and then wait for their purchase when they can go down to the store and get the same thing toda

melle1228 on April 22, 2013 at 9:36 AM

Nah, it will just shift things around a bit. There are a handful of states with no sales tax. Orders placed within those states and shipped from those states will STILL not have any tax.

dogsoldier on April 22, 2013 at 10:20 AM

This will just push business to Craigslist type websites with a more local flavor to it and more cash transactions. It will be interesting to see how much of an effect that will be.

Dusty on April 22, 2013 at 10:21 AM

We’re not talking about federal taxation here. We’re talking about 50 individual jurisdictions with their own respective taxing authorities.

gryphon202 on April 22, 2013 at 10:12 AM

If the federal government is mandating a tax be levied,to me that’s a federal tax.

Les in NC on April 22, 2013 at 10:22 AM

gryphon202 on April 22, 2013 at 10:12 AM

If the federal government is mandating a tax be levied,to me that’s a federal tax.

Les in NC on April 22, 2013 at 10:22 AM

I don’t know if I would characterize this as a “mandate” per se, but regardless, I think it’s a terrible idea.

gryphon202 on April 22, 2013 at 10:24 AM

Sigh, Mr. Morrissey I should be surprised by your response but I’m not. I’m convinced one of the things keeping this failing economy alive has been internet sales for the past 15 years.

As a kid in California, the sales taxes were 6%+ with each county having its own rate. It was cheaper for me to spend my allowance to buy toys when on vacation outside of the Bay Area usually. These days for many items, even though I live in my state capital, it is often cheaper and wiser to mail order items than drive 20-40 miles to more options. Passing more laws that require more paperwork will just be another nail in the coffin.

If they want more national sales taxes/tariffs then the idiots in CONgress need to repeal the federal income tax completely and reinstate the law they just repealed last week to again allow them to use insider trading info for investments. They passed that very very quietly while everyone is looking at two marathon bombers.

Congress can cheat the system but all us serfs have to pay…

oryguncon on April 22, 2013 at 10:24 AM

The competitive disadvantage for brick-and-mortar stores is real

So was the situation between automobiles and horse drawn carriages. Are we in the “fair” business now? Please, no.

dogsoldier on April 22, 2013 at 10:24 AM

“The competitive disadvantage for brick-and-mortar stores is real”

(1) Sales tax difference is not why I shop online.

Brick-and-mortar are losing out because of convenience, product selection, lack of review information, lack of social media integration, lack of in-store search, etc. etc.

Get real. Amazon isn’t amazon because of sales tax, so stop repeating that its a competitive disadvantage.

(2)Its an issue of “fairness”

I find it so annoying when conservatives fall for framing of the question that is designed to make them agree to tax increases.

Bottom-line, we should oppose all attempts to increase taxes that do not have offsets of greater value in spending. It is a mistake. Even if we actually ran into a “fair” tax increase, so many others are not its OK if we oppose it without a reduction somewhere else.

(3) Online stores don’t get the same level of subsidy as brick-and-mortar

That free parking in the lot down the street from main street? The investments in infrastructure along the street? Events to draw shoppers in to downtown?

All of those “investments” subsidize retailers on taxpayer dime. Online retailers get none of those.

After all, those streets, etc. — the brick-and-mortar retailers didn’t “build that”.

C’mon, suckers, its a tax increase and we should fight it.

Ed M. – you should be ashamed for so mindlessly shilling for this thing. What, because an ‘R-’ legislator helped sponsor the thing its OK? Get real.

(4) It works against the little guy, the supposed beneficiary

C’mon, when politicians talk about protecting mom-and-pop store, watch your wallet.

The tax complexities that result from this will favor Wal*Mart and Amazon online, not the corner store, which will have to pay a higher percentage of revenue to be in compliance and will become even less competitive.

When states pile on out-of-state sales because its politically convenient, the complexity will grow for the little guys.

When will so-called conservatives ever wake up and realize an Internet power grab is always a bad thing?

C’mon Ed M., you can do better. This article was HORRENDOUSLY one-sided. Get the facts out there.

Think, man think!

PrincetonAl on April 22, 2013 at 10:20 AM

equanimous on April 22, 2013 at 10:26 AM

This will just push business to Craigslist type websites with a more local flavor to it and more cash transactions. It will be interesting to see how much of an effect that will be.

Dusty on April 22, 2013 at 10:21 AM

The fed gov will ban cash within 10 years if they pass stuff like this. That or make cash purchases so onerous by say making people report what they spent their cash on that most people will go electronic.

oryguncon on April 22, 2013 at 10:27 AM

Sales on Amazon and ebay and thousands of other internet sites are helping to keep a struggling economy barely afloat. Time to torpedo that sector by taxing all those transactions.

farsighted on April 22, 2013 at 10:30 AM

I prefer leaving internet sales tax free. However, if they “must” tax all sales, they should do so based on the seller’s location. Expecting a seller to collect, track, and submit payment of taxes to up to 50 different state taxing authorities is beyond ridiculous.

Daryl on April 22, 2013 at 10:20 AM

So how do you determine the seller’s location in Amazon’s instance? They have multiple distribution centers in multiple states. Where would the taxing jurisdiction be? And if you can even determine that, what’s the best way to make it “fair?” You’re going to have a lot of taxes going to the states in which Amazon has distribution centers (for instance), and not as much going to states without. I tell ya, this whole “fairness” thing is a red flag to me. A great big bright red flag.

gryphon202 on April 22, 2013 at 10:31 AM

We’re not talking about federal taxation here. We’re talking about 50 individual jurisdictions with their own respective taxing authorities.

gryphon202 on April 22, 2013 at 10:12 AM

Ah! but how much easier would a federal tax slapped on all internet purchases be once the mechanisms for collection of state sales tax are universal? Do you really see the rat-eared coward not demanding a tax of all internet sales to pay for wiring rural schools or something.

Happy Nomad on April 22, 2013 at 10:32 AM

Ah! but how much easier would a federal tax slapped on all internet purchases be once the mechanisms for collection of state sales tax are universal? Do you really see the rat-eared coward not demanding a tax of all internet sales to pay for wiring rural schools or something.

Happy Nomad on April 22, 2013 at 10:32 AM

That’s not what this proposed bill is talking about…yet. But I still do believe the fear that it may yet come down to that is legitimate.

gryphon202 on April 22, 2013 at 10:33 AM

If I travel to Delaware to shop, I will pay no sales tax. If I buy something online from Delaware, why should I have to pay the sales tax in my home state. Make it so that you pay the sales tax at point of origin. States without states sales taxes will become a mecca for e-tail. States with sales tax will rush to exempt e-tailers in their jurisdiction.

Happy Nomad on April 22, 2013 at 10:35 AM

That’s not what this proposed bill is talking about…yet. But I still do believe the fear that it may yet come down to that is legitimate.

gryphon202 on April 22, 2013 at 10:33 AM

If there is anything we know about the left it is that they are incrementalists. They didn’t have to draft new anti-gun owner bills after the Sandy Hook shooting. They just dusted off the stuff they’ve been pushing for years.

Happy Nomad on April 22, 2013 at 10:38 AM

If I travel to Delaware to shop, I will pay no sales tax. If I buy something online from Delaware, why should I have to pay the sales tax in my home state. Make it so that you pay the sales tax at point of origin. States without states sales taxes will become a mecca for e-tail. States with sales tax will rush to exempt e-tailers in their jurisdiction.

Happy Nomad on April 22, 2013 at 10:35 AM

That’s what I’ve always maintained. I mentioned it up on the thread. The only logistically sound way to determine a taxing authority is to tax based on point-of-origin. In Amazon’s case, that would be a distribution center. But wait a second! Amazon doesn’t have distribution centers in every state. Tax revenue would go to the states that have distribution centers, and NOT to the states that don’t. That’s not “fair.” It’s logistically sound, but not fair. So there goes the whole “fairness” argument.

gryphon202 on April 22, 2013 at 10:38 AM

The competitive disadvantage for brick-and-mortar stores is real

I have to agree with some of the others here.

If we’re trying to “even the playing field” for businesses that can’t keep up in a changing world, we’re putting our thumb on the scale.

Not to mention that sales taxes are a silly regressive money machine that hurts everyone and helps only a bloated state,

KingGold on April 22, 2013 at 10:39 AM

You know, this will hit the handicapped hardest. Despite efforts to improve access to brick and mortar stores, sometimes to the point that “Mom and Pop stores” have gone out of business over related costs, it is still easier to purchase goods over the net than trekking to the stores. In any event, this doesn’t surprise me since the thinking in Congress seems to be that we don’t really “own” what we own, we’re just renting it from the government.

Zusnn on April 22, 2013 at 10:39 AM

Sales taxes are a states right issue, the US government has no collecting ability on those. Each state should make it’s own law and live with it.

Example: here in TX we have only state sales tax and I do believe internet transactions should be taxed just as a brick and mortor store is collecting taxes. The government shouldn’t pick and choose winners and losers.

Tater Salad on April 22, 2013 at 10:42 AM

Sales taxes are a states right issue, the US government has no collecting ability on those. Each state should make it’s own law and live with it.

Example: here in TX we have only state sales tax and I do believe internet transactions should be taxed just as a brick and mortor store is collecting taxes. The government shouldn’t pick and choose winners and losers.

Tater Salad on April 22, 2013 at 10:42 AM

There are states, such as my home state of South Dakota, that use sales tax to fund government primarily. We have no state income tax here. If Texas wishes to tax incoming Amazon purchase, that’s just jim-dandy, but given the multiple distribution centers in multiple states (and multiple municipal taxing jurisdictions in my home state), I have to believe that the only reason most sates don’t do it yet is simply because of the bureaucratic headache it would be.

gryphon202 on April 22, 2013 at 10:46 AM

The competitive disadvantage for brick-and-mortar stores is real

And we can’t just let the free market sort that out. Government intervention is required!

Rather than reduce taxes for brick-and-mortar stores we must tax the others more.

More taxes = more “fairness”.

farsighted on April 22, 2013 at 10:50 AM

gryphon202 on April 22, 2013 at 10:12 AM

It is far worse than just fifty different state sales tax rates. In many states the counties & cities can have additional sales taxes. So the state has a basic sales tax then add in the counties sales tax then add in the cities sales tax and you end up with 1000′s of sales tax rates internet retailers have to keep track of. That will shift the competitive edge back to the brick and mortars because the only need to keep track of their local rate.

chemman on April 22, 2013 at 10:52 AM

Why doesn’t anybody argue the counterpoint – namely, why states tax sales at all?

Steve Eggleston on April 22, 2013 at 9:28 AM

Actually, I would prefer sales tax only and the elimination of income and property taxes. Property taxes should be a violation of an individual’s basic rights.

LoganSix on April 22, 2013 at 10:54 AM

It is far worse than just fifty different state sales tax rates. In many states the counties & cities can have additional sales taxes. So the state has a basic sales tax then add in the counties sales tax then add in the cities sales tax and you end up with 1000′s of sales tax rates internet retailers have to keep track of. That will shift the competitive edge back to the brick and mortars because the only need to keep track of their local rate.

chemman on April 22, 2013 at 10:52 AM

Well yeah. I hear ya. I’m from South Dakota, where sales tax is our primary government fundage. That means that every incorporated city has a sales tax rate in addition to the state rate of 4%. In my home town, the municipal rate of 2%, or 3% for prepared foods, means a tax rate of 6-7% respectively, which will change if I go to another city.

gryphon202 on April 22, 2013 at 10:54 AM

And so dawns the universal tax.

Eventually all taxes will be replaced by a single tax on individuals:

The Human Existence Tax.

“I think, therefore I am obligated to pay the tax”

BobMbx on April 22, 2013 at 10:55 AM

It will kill internet sales. Who will want to pay shipping and taxes and then wait for their purchase when they can go down to the store and get the same thing today.

melle1228 on April 22, 2013 at 9:36 AM

Too often, I find that the brick and mortar stores don’t have the particular model, make, etc. of the relatively common item I’m looking to buy and if I really want it, I have to buy online anyway. This goes for the big box stores particularly — any number of items at Walmart, Kmart, Target, etc. are billed as “online sales only.”

I live near several malls and I would dearly love to walk into a store and buy what I am looking for right then rather than ordering online and reading how many days to delivery or how I can track my package.

Remember Borders Books? I can’t tell you how many times one of their sales staff told me to go ahead and order a book I was looking for from Amazon, since they weren’t ever likely to carry it, even from their paltry and pitiful online store. Which was one of many reasons they’re no longer in business.

PatriotGal2257 on April 22, 2013 at 10:56 AM

So how do you determine the seller’s location in Amazon’s instance? They have multiple distribution centers in multiple states. Where would the taxing jurisdiction be? And if you can even determine that, what’s the best way to make it “fair?” You’re going to have a lot of taxes going to the states in which Amazon has distribution centers (for instance), and not as much going to states without. I tell ya, this whole “fairness” thing is a red flag to me. A great big bright red flag.

gryphon202 on April 22, 2013 at 10:31 AM

Good question and good points. I’m sure there are many ways to determine the diversified sellers taxable location. Warehouse, HQ, nearest warehouse, nearest facility, etc. Or, in the case of large sellers with multiple locations, default back to the state of the purchaser. Large companies can handle the paperwork nightmare. It’s the small sellers that can’t handle this mess. Most online sellers are only in one state but may sell to all.

Of course, as I stated earlier, I’d prefer to leave online sales tax free.

Daryl on April 22, 2013 at 10:56 AM

Eventually all taxes will be replaced by a single tax on individuals:

The Human Existence Tax.

BobMbx on April 22, 2013 at 10:55 AM

Yup. And if your parents can’t pay the tax on-conception, you are aborted summarily and forthwith.

gryphon202 on April 22, 2013 at 10:56 AM

Most online sellers are only in one state but may sell to all.

Of course, as I stated earlier, I’d prefer to leave online sales tax free.

Daryl on April 22, 2013 at 10:56 AM

I am not aware of any online sellers that only have one distribution center (and feel free to correct me if I’m wrong on that, folks). If you tax based on where that corporation’s headquarters is, then you are taxing on a different basis than in-state, and once again, there goes the whole “fairness” argument. For instance, on that basis, I would be paying Arkansas sales tax every time I shop at Walmart. I do not. I pay based on the point of origin, which is the retail store in my hometown.

gryphon202 on April 22, 2013 at 10:59 AM

The Human Existence Tax.

“I think, therefore I am obligated to pay the tax”

BobMbx on April 22, 2013 at 10:55 AM

…Patient Protection and Affordable Care Act

equanimous on April 22, 2013 at 10:59 AM

It will kill internet sales. Who will want to pay shipping and taxes and then wait for their purchase when they can go down to the store and get the same thing today.

melle1228 on April 22, 2013 at 9:36 AM

Then there are the brick and mortar stores where I could reliably buy an item that I use often, only to find one day that they’ve abruptly stopped carrying it, that their online store doesn’t carry it, and none of the other box stores or drugstores do either. So I’m stuck having to order online, in perhaps a bigger quantity than I wanted, and spending more money than I intended.

PatriotGal2257 on April 22, 2013 at 11:03 AM

It’s not about government getting money, it’s about a fair business environment.

ninjapirate on April 22, 2013 at 9:42 AM

When the word ‘fair’ is used in a political or economic situation it means you’re going to be screwed over .

EnglishRogue on April 22, 2013 at 11:05 AM

The Human Existence Tax.

“I think, therefore I am obligated to pay the tax”

BobMbx on April 22, 2013 at 10:55 AM

…Patient Protection and Affordable Care Act

equanimous on April 22, 2013 at 10:59 AM

Plus a coming carbon tax to be allowed to exhale.

ThePrimordialOrderedPair on April 22, 2013 at 11:11 AM

The Human Existence Tax.

“I think, therefore I am obligated to pay the tax”

BobMbx on April 22, 2013 at 10:55 AM

Liberals, as the unthinking mob, are automatically exempt.

Steve Eggleston on April 22, 2013 at 11:12 AM

You are an idiot. Business should be treated like sports… no competitor should be given an unfair advantage from the government.

Conservatives don’t like the government picking “Winners and Losers” but when the government lets some businesses get away with not collecting sales taxes they are picking them as the winners.

ninjapirate on April 22, 2013 at 10:12 AM

This is rather ridiculous. What are you are going to call for next in the name of fairness? That all states be required to implement identical tax systems? The states always have competed with each other using their tax systems. This is really no different. If states want to shore up their economies they should be looking at reducing their taxes, not using the federal government to strong arm internet based vendors.

NotCoach on April 22, 2013 at 11:19 AM

Out of curiosity, is anyone actually shopping online to avoid the tax?

I shop online because there is a wider selection, I don’t have to go to the store to deal with crowds, I can easily research the item while I’m in the process of purchasing it, etc.

I’m in CA and sometimes what I purchase online has taxes added in and sometimes what I purchase doesn’t and I rarely notice because it’s just not high on my list of reasons to buy something or not.

Shipping is a much bigger expense and is much more likely to drive me from an online retailer to a store than taxes are to drive me from a store to an online retailer.

Of course, I’m a sample of one and your mileage may vary.

JadeNYU on April 22, 2013 at 11:19 AM

1) Amazon collects taxes in the locales in which it has a business presence, including California — probably the biggest online state marketplace in the USA.

2) When I price things, I price them using Amazon, Ebay, and local brick and mortar stores. Sometimes the brick and mortars come out ahead, sometimes one of the online retailers. The most interesting thing I’ve found is that even after taxes and shipping, Amazon is most often the lowest price. And for non-taxable items like food (I order all my breakfast cereal through Amazon), the price is often half that of the local markets, even after shipping is factored in. And, sometimes, Amazon taxes things from retailers who have a separate online present which does not charge tax to out of state purchasers — in those cases, bypassing the middleman (Amazon) makes sense.

3) Used items on Ebay — gently used ones — may be had for a fraction of the price of new items anywhere else. I just bought a used Martha Stewart tea kettle — the one with the 3/8″ metal plate on the bottom — for $0.98 with $7 shipping — and no tax because California doesn’t tax used items. The price at Macy’s — $38 plus tax. The kettle had no dings or dents, some minor heat discoloration, and merely needed a washout with vinegar to remove the lime; it works great.

Now, I’m not averse to paying taxes, but I am for fairness. Fairness would be that the tax collected be the tax of the vendor’s state — the State from which the item was sold, at the price the vendor would get if someone walked up to their door and tried to buy the item. Then we would see some real competition to lower taxes — for states who want online businesses to have a presence in their jurisdiction would work diligently to have a good tax environment. That would mean that the vendor doesn’t need some special software to charge exactly the tax demanded of a given buyer location — they only need the tax algorithm of their own location in their own state.

unclesmrgol on April 22, 2013 at 11:21 AM

As conservatives we generally believe in equal application of the law. We should never be for taxing one entity one rate and another something else for the same product. We can argue whether the taxes are valid or the rate too high, I just don’t think we need to be the party of “special treatment”.

Tater Salad on April 22, 2013 at 11:22 AM

Another bonus to this being introduced by a Republican: just wait until all those unemployable feminists who earn extra cash (in between SSDI checks) by selling beads and soup packets on Etsy hear about this. #WARONUNEMPLOYABLEWOMYN

Jeddite on April 22, 2013 at 11:27 AM

As conservatives we generally believe in equal application of the law. We should never be for taxing one entity one rate and another something else for the same product. We can argue whether the taxes are valid or the rate too high, I just don’t think we need to be the party of “special treatment”.

Tater Salad on April 22, 2013 at 11:22 AM

Well said. And I will say again. Eliminate income and property tax and put it all into a sales tax. It would be the sure way for the customer to see what is going on. The brick and mortar businesses have to pay the property and income taxes for their location, let them compete with the on-line stores on the same taxation level.

Then it will be down to the individual customer to wonder why their local and state taxes are so high.

LoganSix on April 22, 2013 at 11:29 AM

I am not aware of any online sellers that only have one distribution center (and feel free to correct me if I’m wrong on that, folks).

The internet is full of small businesses run from garages, living rooms, or small warehouses. Most of our personal and business purchases are made online, about half of that is from a few large businesses with multiple distribution centers. However, the other half of our annual online purchases are spread out among hundreds of small businesses with only one location. We also sell online to all fifty states and internationally. Our “distribution center” is our house.

Daryl on April 22, 2013 at 11:29 AM

melle1228 on April 22, 2013 at 9:36 AM

I’ll still buy my Jooo stuff online-because it’s not worth driving to Austin or Dallas-but that’s it.

annoyinglittletwerp on April 22, 2013 at 11:37 AM

I have a question specifically for Ed, as the commentator…

Ok, I have a very small Web Site Hosting and Design business. I currently have about 35 customers, spread out over 15 states. Obviously, this is not sufficient to provide for my family yet, so this is essentially a part time business; I have a full time job to pay my bills and put food on the table.

Let’s say this gets implemented. I now have to register and file in all 50 states, because I might, at any time, get a customer from anywhere in the country.

Where, exactly, do you believe I will find (a) the time, and (b) the money to have someone manage it for me, to track all of this, and file all the neccessary paperwork?

If this goes through, I’ll likely have to close down the business, just as it’s starting to build. That means, the only people who could possibly wil are outfits like GoDaddy and HostGator, with deep pockets and large staffs.

Since, currently, a large percentage – possibly a majority – of hosting is done by small outfits like mine, how does this not lead to a “the rich get richer and the small entrepreneur gets scrod” situation?

And, for that matter, most of my clients are small shops themselves. If my costs go up significantly – and they will if I have to pay someone to track revenue from all 50 states – they will likely have to find hosting elsewhere (which would be just as expensive since all the other hosting companies have higher costs as well) or they will need to go out of business, since online marketing is the best way to guve them bang for the bucks.

How is this a good idea? In what way does it work for anyone – well, except the big guys who can afford to eat costs due to their high volume.

I love ya, man, but on this one, you’re absolutely wrong.

psrch on April 22, 2013 at 11:41 AM

The problem of ‘collection’ goes beyond what a particular state wants. What about county and city taxes. How are sellers supposed to know what to charge? The next town over from me has a sales tax 1/4 cent higher than my area.

So when do the towns and cities start bleating about their ‘lost’ revenue?

I travel out of state and make purchases of necessities while on the road. In some areas, that sales tax is less than what I’d have paid back home.

Am I supposed to make up the difference when I return to my home state?

When do I get to charge the state for my time in keeping records?

GarandFan on April 22, 2013 at 11:42 AM

Oh goodie, more taxes.

justltl on April 22, 2013 at 11:56 AM

Neat how this ties into gun control. States already have ”use” taxes. If taxpayers aren’t paying them, they’re breaking the law.
 
Enforce the law instead of making new ones.

rogerb on April 22, 2013 at 11:57 AM

If I travel to Delaware to shop, I will pay no sales tax. If I buy something online from Delaware, why should I have to pay the sales tax in my home state. Make it so that you pay the sales tax at point of origin. States without states sales taxes will become a mecca for e-tail. States with sales tax will rush to exempt e-tailers in their jurisdiction.

Happy Nomad on April 22, 2013 at 10:35 AM

That’s to rational. It will never fly.

Egfrow on April 22, 2013 at 11:58 AM

psrch on April 22, 2013 at 11:41 AM

This

SheVee on April 22, 2013 at 12:14 PM

We’re not talking about federal taxation here. We’re talking about 50 individual jurisdictions with their own respective taxing authorities.

gryphon202 on April 22, 2013 at 10:12 AM

If the federal government is mandating a tax be levied,to me that’s a federal tax.

Les in NC on April 22, 2013 at 10:22 AM

Actually there are many tax jurisdictions; States have local taxes too which vary a lot; Example: The Sales Tax rate for Zip code 55402-2040 is: 7.775% — MN State = 6.875%, Hennepin County = 0.15%, Minneapolis = 0.5%, Transit Improvement Tax = 0.25%

Dasher on April 22, 2013 at 12:18 PM

Utter idiocy…there already is a use tax.

jimver on April 22, 2013 at 12:21 PM

Here’s a place where I stick out like a sore thumb among my conservative brethren. I have no problem with this.

Chris of Rights on April 22, 2013 at 9:36 AM

I’m guessing you’re not faced with the prospect of now being a tax collector for 50 different states… with your time and costs being uncompensated?

If the states want money owed from their residents who are not paying their tax bill… the states can decide if it’s worth the time and money to go after their residents. But then again, it’s just easier to pass a law and shove all the costs and responsibilities off on the business community.

Wendya on April 22, 2013 at 12:27 PM

Utter idiocy…there already is a use tax.

In Calif., for personal internet transactions, that “use” tax is supposed to be paid by volunteering the total internet transactions done during the past tax year and included accordingly on one’s tax returns.

Its that “voluntary” bit that is troublesome to tax collectors, in that few people actually report the internet transactions nor include the “use” taxes, thus resulting in non or underpayment of what the state believes it is owed. A whole lotta potential tax revenue remains unreported and uncollected due to lack of volunteers in the state.

hawkeye54 on April 22, 2013 at 12:40 PM

Okay, I oppose additional taxes under almost all circumstances.

But does anyone seriously believe that if online purchases are suddenly charged sales tax, that Amazon will just fold?

I’m not saying they SHOULD be taxed. I’m just saying that arguing like the major advantage to buying online is avoiding sales tax is just foolish.

Shump on April 22, 2013 at 12:40 PM

the little web guys are going to get screwed if the bar isn’t raised.

ninjapirate on April 22, 2013 at 10:04 AM

Why would they raise the bar? The entire point of this bill is to screw the little guy. Amazon, walmart, best buy etc all have the infrastructe in place to collect 50 different state taxes, they have the software, the accountants, the lawyers to do this within their present costs. they don’t have to go out and invest money or hire additional people to implement this new tax. the little guys? they hav enone of it. They will be driven out of business as their profit margins are destoryed.

This isn’t anything but big government picking winners and losers via Tax policy. I hope Enzi got a nice big check for stabbing Americans in the back for the sake of multinationals.

unseen on April 22, 2013 at 12:41 PM

Actually there are many tax jurisdictions; States have local taxes too which vary a lot; Example: The Sales Tax rate for Zip code 55402-2040 is: 7.775% — MN State = 6.875%, Hennepin County = 0.15%, Minneapolis = 0.5%, Transit Improvement Tax = 0.25%

Exactly the reason e-commerce participants cite as the reason none want to deal with so many tax jurisdictions and rates nationwide. Its difficult enough to deal with it in just one state.

hawkeye54 on April 22, 2013 at 12:42 PM

But does anyone seriously believe that if online purchases are suddenly charged sales tax, that Amazon will just fold?

Shump on April 22, 2013 at 12:40 PM

No amazon will not fold infact their profits will increase. It’s the little guys, the start up web companies that will fold. Amazon is more then likely pushing to have this bill made into law.

unseen on April 22, 2013 at 12:43 PM

Nah, it will just shift things around a bit. There are a handful of states with no sales tax. Orders placed within those states and shipped from those states will STILL not have any tax.

dogsoldier on April 22, 2013 at 10:20 AM

You are so very very wrong. If you live in a city with a sales tax of 11% then that is what you will pay if this passes. It has nothing to do with where you purchase the goods.

This tax is in no way fair. The State provides no services to the business that is collecting the tax. The business is expected to just do this for free for a State/City far far away from them. They are expected to keep track of thousands of different tax rates and transfer the money to thousands of jurisdictions.

This passes and you can kiss the next EBay or Amazon away. This will make it impossible for any new business to operate on the internet. I will not be able to set up shop and possibly comply with this law.

But that is the point. Establish EBay and Amazon as co-Monopolies and assure that they never face competition.

Steveangell on April 22, 2013 at 1:11 PM

…The State provides no services to the business that is collecting the tax….
 
Steveangell on April 22, 2013 at 1:11 PM

 
Johnny, tell him what he’s won!

rogerb on April 22, 2013 at 1:30 PM

But that is the point. Establish EBay and Amazon as co-Monopolies and assure that they never face competition.

Steveangell on April 22, 2013 at 1:11 PM

If you can’t force a level playing field, just remove the field.

Done.

BobMbx on April 22, 2013 at 1:54 PM

Steveangell on April 22, 2013 at 1:11 PM

Agree, with one minor caveat. EBay is not a retailer, they are in fact a clearing house for people actually selling the products (mostly smaller businesses looking for an online storefront). They will not benefit from this legislation; in fact, they just sent me an email asking me to contact my congresscritter to get him to vote against it.

The other big backer of this legislation besides Amazon is Walmart. With a physical presence in every state this will slightly improve their position vis-a-vis Amazon, but it will really crush their smaller competitors (as on EBay).

The major effect of this legislation will not be a putative improvement in “fairness” in the collecting of sales taxes, it will be the cost of compliance, which will crush smaller online businesses.

HTL on April 22, 2013 at 2:43 PM

We’re not talking about federal taxation here. We’re talking about 50 individual jurisdictions with their own respective taxing authorities.

gryphon202 on April 22, 2013 at 10:12 AM

You should really research that statement. Its not just “each state”, more often than not its counties within each state and even then city by city as well in some cases, each having their own amount of tax. Its more than a nightmare for any small business and will only leave large retailers standing in the end and in quick order.

And with less competition this scenario leads to guess which way prices will go at that point. Consumers loose yet again.

riddick on April 22, 2013 at 2:51 PM

Well, since we’ve opened the can of “fairness” already . . .

States cry about internet sellers not “paying for police and fire protection, roads and bridges, etc.” True enough – but neither the internet seller nor his customers USE any of those state services at all.

What is “fair” about that?

In fact, the whole “use tax” is blatantly unfair and possibly unconstitutional. Citizens are supposed to pay the state tax on goods bought elsewhere – does this not amount to an encumbrance on interstate commerce, in effect a tariff on out of state goods?

FACE IT: it isn’t about “fairness” or even giving the failing brick and mortar businesses one less excuse for poor performance, it’s about increasing taxes. PERIOD.

Once you can wrap your head around that, all becomes clear.

Adjoran on April 22, 2013 at 3:08 PM

Every time they pass a new tax, they try to disguise it as a Fairness Tax.

lonestar1 on April 22, 2013 at 3:14 PM

(3) Online stores don’t get the same level of subsidy as brick-and-mortar

That free parking in the lot down the street from main street? The investments in infrastructure along the street? Events to draw shoppers in to downtown?

All of those “investments” subsidize retailers on taxpayer dime. Online retailers get none of those.

After all, those streets, etc. — the brick-and-mortar retailers didn’t “build that”.

C’mon, suckers, its a tax increase and we should fight it.

PrincetonAl on April 22, 2013 at 10:20 AM

equanimous on April 22, 2013 at 10:26 AM

…The State provides no services to the business that is collecting the tax….

Steveangell on April 22, 2013 at 1:11 PM

While I agree with both of these points (if you look at it as a tax on “business”), in reality all sales taxes are a tax on consumers (businesses are just the collection agents). States and municipalities presumably provide services to their residents through the medium of sales taxes, which makes irrelevant the question of where and how those sales are conducted.

Now, ask me if the services provided are worth the taxes being collected.

C’mon, suckers, its a tax increase and we should fight it.

AesopFan on April 22, 2013 at 3:18 PM

Don’t ALL tax/financial bills have to originate in the House?

So, the bill now in Senate is illegal to begin with, right? Same as HusseinCare, which was passed as TAX.

riddick on April 22, 2013 at 3:35 PM

If I travel to Delaware to shop, I will pay no sales tax.

Happy Nomad on April 22, 2013 at 10:35 AM

I think you’re supposed to, though…depends on the state, I guess. In Oregon we had a major retailer put out of business last year because the state of Washington realized that the business hadn’t been collecting sales tax on Washington customers. They hit up the business for past due revenue of about a million or so and the Oregon government stood by and watched it happen.

Of course, in that case the business (a bed store) delivered product for the customers so it might be different in that case.

Sockpuppet Politic on April 22, 2013 at 3:56 PM

Sockpuppet Politic on April 22, 2013 at 3:56 PM

Just to be clear, though, I thought that was incredibly stupid and shouldn’t have been allowed to happen, kind of like this thing here.

The only way I am okay with adding sales taxes is if it is matched by an elimination of income taxes.

Sockpuppet Politic on April 22, 2013 at 3:58 PM

This is what we need. A federal commerce tax.

They can’t leave it alone the greedy SOBs.

States cry about internet sellers not “paying for police and fire protection, roads and bridges, etc.” True enough – but neither the internet seller nor his customers USE any of those state services at all.

In fact, the whole “use tax” is blatantly unfair and possibly unconstitutional. Citizens are supposed to pay the state tax on goods bought elsewhere – does this not amount to an encumbrance on interstate commerce, in effect a tariff on out of state goods?
Adjoran on April 22, 2013 at 3:08 PM

Walmart is leading the push

on the bill last year, sponsored by Womack:

“This is Wal-Mart’s top issue, if not one of their top issues,” Womack said. “Wal-Mart is important to me because they are headquartered in my district.”

In 2011 and 2012, Womack was Wal-Mart’s largest recipient of political contributions, receiving $30,950.

The retailer gave presumed Republican presidential candidate Mitt Romney $21,500; President Obama got $20,119, according to OpenSecrets.

The chain spent $7.8 million on lobbying efforts in 2011, the most in its history, says OpenSecrets.org, a website founded by the Center for Responsive Politics, a watchdog group.

If you think they are doing this to help the little people you are dreaming. They are going to stifle the one bright part of the economy. walmart has a web presence too. Any pip squeak can also create a website, but none of the pip squeaks have the buying powerof Walmart.

Walmart is out to corner the market:
If you refuse to buy from your local Walmart, you will pay. If the internet tax goes through, Walmart could do to the web, what it did to Mainstreet. The pols dont care, they just want the pile of gold, goose be d@mned

entagor on April 22, 2013 at 4:04 PM

Amazon has been pushing (making donations and lobbying) to get this tax passed. Just like the big tech companies have been donating and lobbying for years to be able to hire non-citizens for domestic openings.

The bill introduced by Sen. Mike Enzi (R-Wyo.)

The Republicans suck, as usual.

Just like the Dems, the Republicans prefer to pass bills without their being read. To be fair, there are so many laws, no one could read them all anyway, even if she read full time 24/7 and lived to be 100.

kunegetikos on April 22, 2013 at 5:26 PM

Why would they raise the bar? The entire point of this bill is to screw the little guy. Amazon, walmart, best buy etc all have the infrastructe in place to collect 50 different state taxes, they have the software, the accountants, the lawyers to do this within their present costs. they don’t have to go out and invest money or hire additional people to implement this new tax. the little guys? they hav enone of it. They will be driven out of business as their profit margins are destoryed.

This isn’t anything but big government picking winners and losers via Tax policy. I hope Enzi got a nice big check for stabbing Americans in the back for the sake of multinationals.

unseen on April 22, 2013 at 12:41 PM

I agree. Mark Levin touched on this a bit this evening and said there are over 9,000 Taxing Jurisdictions in these 50 States. Also Cities, Township and Rural areas within the States are all different due to levies etc.

I disagree with this :” The competitive disadvantage for brick-and-mortar stores is real…” This is a Strawman. How many Brick & Mortar Stores don’t have a website one can order online from? Most all have both. The onlines, especially Amazon don’t have both.

Bottom line in this is just another money grab by the Feds to mandate and collect money. How much are they going to charge the States and Taxing Jurisdictions for “handling” charges? LOL

Oh, and yes Amazon & Walmart will be the ones having the Advantage by shutting down or preventing any online start up business.

The Stupid Party at work again working with the Administration and the Dems.

bluefox on April 22, 2013 at 10:06 PM

I presume someone has already posted, but here goes.

It is not a “sales” tax but a Use tax (at least it is called that here). We also don’t have a sales tax either but something slightly worse, a general excise tax.

A sales tax is a tax at the retail sale. The money collected is a tax and belongs, technically, to the taxing authority not the vendor.

A general excise tax (GET) is a tax on the gross revenues of a business. If the business were to collect the GET the amount of GET collected would also be subject to the GET tax rate so for a 4.5% GET the business has to collect 4.712%. The GET is levied here applied to a much wider range of businesses than a sales tax.

Russ808 on April 22, 2013 at 11:12 PM

There is nothing redeeming about conservatives supporting new taxes.

Especially now. In an economy this bad, this is another depressor, and the result will be predictable. Less commerce, less jobs, more bankruptcy, more dependency.

Oh yes, … and less Sales tax revenue. Thanks, Washington, for another lose-lose proposition: nobody gets what they want

virgo on April 23, 2013 at 3:31 AM

If the House doesn’t kill this, this will kill internet sales. What the wizards of smart in the Senate fail to mention is that shipping costs usually approximate the sales tax being avoided. There usually is no savings on an internet purchase….it’s just a matter of convenience and assurance of an item being in stock. (Ever go to the store and they’re out of stock? Been there, done that)

If I have to pay shipping costs AND sales taxes, I’ll either go to the store or forego the purchase. Fedex and UPS, prepare to layoff a lot of your workers!

olesparkie on April 23, 2013 at 7:52 AM

As I understand sales tax, ALL purchases are currently required to be claimed by your home state. Any purchases made out of state you are to report with your yearly taxes. This is the LAW as it stands right now. So tell me again why our dear leaders need to pass a new law, rather than just enforce the old ones? This is so much a pattern with everyting that comes out of Washington. Don’t enforce existing laws(that you may not like), rather just write some new laws. Pretty soon, everyone is a lawbreaker, placing the entire population under the thumb of big government.

‘A law abiding citizen is not a slave to the government, therefore it is imperitive to legislate away that possibility.’

If this does go through, I will be curious how certain states will come after business’s in other states for not remiting taxes ‘owed’. I live in Oregon, and run an online business. We do not have a sales tax, and never have. As an example, say we sell a bunch of stuff into KalifoЯnia. My online business would be supposedly be subject to this tax, but Walmart down the road is not? Perhaps the Agricultural station on I-5 should inspect for fruit as well as new price tags or fresh receipts?
And how exactly is the PRK going to force my online business to pay that tax? There can be no recriprocal agreement with Oregon because there is nothing to recriprocate. Funny thing, we once received a tax bill from the PRK, which had our accounting all wee-wee’d up. After it went in the round file, everyone felt much better.

brn2rde on April 23, 2013 at 11:25 AM

Somebody tell me again about this repub party that is against tax and spend. I remember hearing something about it but I don’t remember where or who told me about this party.

johnny reb on April 23, 2013 at 12:59 PM

Senate to vote on bill to end sales-tax exemption on Internet commerce

This measure would:

1. DESTROY FEDERALISM by sticking the Federal government’s nose into each and every transaction.

2. DESTROY Small Internet Businesses, because compliance costs would be totally unaffordable. Federal registration would be required for EVERY business. This is impractical, so many business will simply be forced “underground”!

3. INCREASE PRICES for practically everything. I estimate that this price increase will be about 10%, as the “low tax” states will all stampede to raise their tax rates: using the excuse that they “don’t want to lose out”. This false and dysfunctional view is based on the cynical and anti-capitalist assumption that the government owns all the money, and that the citizenry is supposed to bow low and beg the government for its livelihood.

There are many other huge reasons why this measure MUST BE DEFEATED: these are just among the top three.

landlines on April 24, 2013 at 12:15 PM

This is actually a move to squeeze out the smaller vendor by the big retailers. They already have staff to collect and report sales tax. Smaller vendors do not. Over 9000 different sales tax districts in the US. Non-uniform definitions of what is taxable. (This is really a problem when you sell custom items and services.)

The vendor is exposed to the cost of collection, fines and penalties for any mistakes in assessment. And now every state which charges sales tax can send their auditors into your business to give you the financial colonoscopy. And if you didn’t collect enough, you, not your customer, upon who the tax is levied, gets to pay the shortage. And, if by some strange fate you incorrectly assessed a sales tax on a customer, you don’t get that back, unless you first refund the customer. Then the state will refund to you in 60 days, without interest.

So you get to be the tax collector for the state and for that they pay you NOTHING.

I hate sales tax collection.

MTinMN on April 24, 2013 at 3:31 PM

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