Will there be a internet tax collection service?---------

[Stephen Tashiro]

If online businesses are required to collect state sales taxes and the small merchants are correct that this is too complicated for them to handle, I wonder if PayPal or banks will sell a service to small merchants that collects and pays the taxes for them. The merchant would have to funnel all online payments through the provider of that service before the merchant got his share. It seems to me that there would be nothing illegal about providing such a service.

Another alternative would be for small merchants to cease to be independent sellers and only be sellers on sites like Amazon or Ebay, which may do the tax collection.

[Mike Henderson]

Remember that right now, the bill only requires merchants who do $1,000,000 or more in sales per year to collect sales taxes. If you're selling more than a million dollars of goods, you should be able to handle collecting the taxes.

The bill also requires states to provide software to determine the taxes in the state.

But even given that, I expect companies will provide services to determine the taxes (for a fee).

Mike

[John Coloccia]

Thank God. I'm so sick and tired of hearing all my friends complain about the lack of sales tax on internet purchases. We can finally all breathe a sigh of relief.

[Leo Graywacz]

I think it's going to have a hard time getting through the house, which is a good thing by me.

I truly think this is just the states way of over reaching and trying to tax you for something you shouldn't owe. If they wanted to make the taxing correct you should have to pay the tax in the state that you are buying the item from. So if you are in Ohio and you purchase something on the internet in Texas then you would pay Texas sales tax, just like you would if you walked into the store and purchased it from them.

Collecting sales tax from the state you are purchasing the item in doesn't make sense. Except of course to the politicians in that state.

[Gary Hodgin]

Tennessee already taxes internet sales, as well as any other out-of-state purchase. Problem has been in collecting the tax. The tax is called a "Consumer Use Tax."

The state has an agreement with Amazon where Amazon reports to the state and to the consumer how much was purchased during the year. I've received a report at the end of each of the last two years and sent it in. My sales tax is 9.75 percent (includes state and local). Here's the form.

https://apps.tn.gov/usetax/

[Mel Fulks]

I'm seldom in favor of any new taxes. This one is going to happen the only question is how soon.There is just such a glut of vacant commercial property causing a lot of problems and atracting vandalism and other criminal activity.I'm concerned about how people are driving ,there is little enforcement around here. Maybe they will hire some policemen.

[Larry Whitlow]

Tennessee already taxes internet sales, as well as any other out-of-state purchase. Problem has been in collecting the tax. The tax is called a "Consumer Use Tax."

The state has an agreement with Amazon where Amazon reports to the state and to the consumer how much was purchased during the year. I've received a report at the end of each of the last two years and sent it in. My sales tax is 9.75 percent (includes state and local). Here's the form.

https://apps.tn.gov/usetax/

California has this same use tax, and apparently the same collection problems. Don't know about Amazon reporting purchases though.

[Rick Christopherson]

Remember that right now, the bill only requires merchants who do $1,000,000 or more in sales per year to collect sales taxes. If you're selling more than a million dollars of goods, you should be able to handle collecting the taxes.

You're thinking about sole proprietorships. $1 million is not very much for a business with employees and expenses. The margin on a product is typically 30%, so out of that $1 million, it leaves only $300,000 for employee salaries and other expenses. That constitutes a pretty tiny company.

The bookkeeping necessary to track every sale made and account for each state/local tax pretty much demands a full time employee. So subtract that from the $300,000, and you don't have much left.

California has this same use tax, and apparently the same collection problems. Don't know about Amazon reporting purchases though.

I've seen this mentioned a couple times elsewhere. However, a state does not have the legal authority to impose law on a person or business in another state. That is the reason why this new law is being considered in the first place. It has to be a federal law in order for it to impact businesses outside of state borders. States can only impose law within their borders.

[Leo Graywacz]

I don't think "sales" includes salaries. But if it means gross sales that is still pretty easy to get if you are running a store type business. Especially if you are selling high dollar items.

[Chris Rosenberger]

The internet tax will be another nail in the coffin of this economy. It will be a bookkeeping nightmare for any company. There are not just 50 states with different sales tax rates, there are thousands of localities with different sales tax rates. In some states you do not only have to file a return with the state, you also have to file a local return with each locality.

There was a group several years ago that was try to get the states to agree on one rate for for each state. Then companies would only have to file a return for each state & the states would have to deal with the localities. It never got worked out. If it had, there would have been an internet tax years ago.

[David Weaver]

Thank God. I'm so sick and tired of hearing all my friends complain about the lack of sales tax on internet purchases. We can finally all breathe a sigh of relief.

Mine, too. My friends also hate to pay less. They feel so guilty...almost as guilty as they would if they stepped on a kitten by accident.

[Howard Garner]

And you can not do it by zip code. Many zips cover both in town and rural areas with different tax rates.
Then what is taxable in one state is not taxable in others.
Then is SC there are some things that are not tax, food at 1% and others things at 5% plus many towns or counties with and additional 1%.

As others have said, this is a bookkeeping nightmare.

Howard Garner
Pickens, SC

[David Weaver]

If there aren't software packages that do it already (calculate the tax independently for each zip code), I'm sure there will be. And it will cost more to do and we'll get to pay the tax plus the cost of administering it.

[Phil Thien]

First, I have to wonder why some larger online outlets are in favor of this, or at least aren't very outspoken against. Could it be that they see it as a barrier to entry for new players?

Second, the Supreme Court has previously stated that legislation like this would be okay, as long as it doesn't place a burden on businesses. Well, it is going to be a HUGE burden. Even for businesses doing $1 million. I've collected state sales taxes for 25 years, in a business that at times does more than $1 million a year, and I've undergone one sales tax audit.

The audit was a massive pain in the butt, and in the final analysis the taxing authority sent two people for about 1.5 weeks (wasting my time and effort, too) and walked away with a check for I think less than $400 (because I didn't know I was supposed to collect taxes on the SHIPPING CHARGES for in-state shipments).

But I simply cannot imagine having to undergo an audit for other states. And there will be audits, otherwise there won't be compliance. And that will be a huge burden for a small business.

Third, and not finally, is the law of unintended consequences. This isn't a zero sum game. This isn't a case where the guy that wants the table saw will buy it locally instead of Grizzly because now the sales tax issue is moot. He may not purchase the table saw at all! That's right, folks, this will reduce (possibly substantially) commerce, at least for a while. The taxes collected will increase. But it will actually cost jobs at least in the short term. At a time when this country can least afford to give up any jobs.

[Matt Meiser]

Some enterprising software developer/accountant team could come up with a web service that determines tax for an address and remits it. Probably more complicated as you also need to know what the item is to determine if its taxable. Provide an API to hook into shopping carts and allow the merchant to pay the service company the tax who would remit it. As it would be highly automated, it should be cheap to run--couple accountants to keep up to date on tax codes and some programmers on the labor side.

I think the easy solution is to tax the item based on where its shipped from. From an economic development perspective, New Hampshire would love that. Cook County, IL would hate it. Over time I'd bet you'd see sales taxes level out. States will adjust taxes over time to balance revenue from non-constituents vs. economic development.

Or allow the states to develop some kind of revenue-sharing--tax it at the shipping point's rate, half the revenue stays local, half goes to the state its shipped to. NH residents would hate that, Cook County residents would love it.