Market Place Fairness Act

[Midniteoyl]

I really don't see that as a big hurdle for the software folks. I think TurboTax is much more complicated than that already. I guess it really comes down to the brick and mortar question? In my case I am not shopping on the net to avoid taxes, but for convienince, I really like not having to drive all over to get stuff!

Ditto.. that and usually cheaper. Even if taxes are added in.

 

[quicksandfarmer]

I really don't see that as a big hurdle for the software folks. I think TurboTax is much more complicated than that already. I guess it really comes down to the brick and mortar question? In my case I am not shopping on the net to avoid taxes, but for convienince, I really like not having to drive all over to get stuff!

There are something like 15,000 jurisdictions in the US that charge sales tax. Not only does each one have its own rates, they each tax different things. An extreme example: Montgomery County Maryland charges a five cent tax on bags. There are some exceptions:

Retailers are not required to charge for the following types of carryout bags:

Bags used to hold prescription drug(s)
Bags which are sold for initial use as yard waste bags, pet waste bags, garbage bags, dry cleaning bags, or newspaper bags
Bags provided by a seasonal stand or street fair stall such as a farmer痴 market, yard sale or 登ccasional retailer (defined in the law as "...a retail establishment that engages in the retail sale of goods no more than 6 days in a year.")
Bags used to package a bulk item or to contain or wrap a perishable item
A paper bag that a restaurant provides to a customer to carry prepared or leftover food or drink from the restaurant

(Details are here: FAQ for Retail - Bring Your Bag)

Note that the tax is based both on the item's type and its intended use.

So not only do you have to know all 15,000 tax jurisdictions in the country, you have to know how the tax rules in each change depending on what you're selling, and in this case, what its intended use is. A "turbo-tax" type program would have to know about every conceivable good or service that could possibly be sold. It's a huge problem.

 

[McGeesEquip]

Joe (A) goes to web site (B) to purchase an item from Bob (c) that is listed on web site (B). Joe (A) pays Bob (C) for the product and also pays Bob (C) an internet sales tax (Example 6%) for the product. Bob (C) now has to pay the web site service company (B) a 6% tax for the service of selling the item on web site (B). Bob also has to pay to the state that the purchaser lived in the 6% sales tax.

 

[Bird]

In my case I am not shopping on the net to avoid taxes, but for convienince, I really like not having to drive all over to get stuff!

I only buy online when it's something I cannot find locally or, on very rare occasions, something is considerably cheaper online. Whether or not I am charged sales tax doesn't enter into my decision at all.

I don't guess any of us likes to pay taxes, but is it fair for your local store to have to collect sales tax while an online retailer does not?

 

[BXpanded]

So not only do you have to know all 15,000 tax jurisdictions in the country, you have to know how the tax rules in each change depending on what you're selling, and in this case, what its intended use is. A "turbo-tax" type program would have to know about every conceivable good or service that could possibly be sold. It's a huge problem.

I understand the states desire to collect the revenue. I think that if it has to happen, a single flat rate tax on internet sales would be more realistic. At most, remit to the Feds and let them distribute to the states. The state could then distribute to the counties, cities, etc.
If you purchase something from your local Sears Store, the clerk jut rings up the amount and the appropriate sales tax is added. They are always taxing at the same location, so it's quite easy. With the above mentioned 15,000 jurisdictions, it would be a much more difficult proposition and could really slow the process of just finding the "out the door" price.

If a jurisdiction in California, for instance, decided that a North Carolina company wasn't remitting all that is owed, the company would have to send a representative to California to attend a hearing. Lawyers would necessary be involved and we know how that cost spirals. That could happen dozens of times in different jurisdictions. Businesses can't handle that cost without price increases. Additional costs would be encountered for some regulatory groups to do audits and enforcement. As the proposed law is now, the consumer would be picking up the tab for the taxes, the cost of the software and maintenance, and the cost of at least, an additional employee to do the actual data entry and pay the bills.

 

[TCJatko]

As a general rule of thumb, I find that any congressional act generally results in the opposite effect, that is, the "Market Place Fairness Act" would result in LESS fairness in the marketplace (see Affordable Care Act).

 

[TerryR]

In theory I totally agree with the move to force sales tax collection for Internet sales. It makes no sense that buyers can evade legally owed taxes because the happen to buy it from someone who has no "physical presence" in the state, but do when they buy from someone who happens to have a warehouse in state, or actually maintains a store there and employs people there.

The details however are much more difficult. I have self-published a book that I sell on Amazon, selling $200-$300 worth a month across the country. I do pay sales tax for sales in my home state, which is a total pain because I have to figure out which city or county the buyer is in to get the tax right. What if I had to do that across the other 49 states? And deal with exceptions for certain items, tax holidays, etc. that differ by state?

Then it gets worse - I'd have to register as seller in each state where I might have a buyer. And the rules for that differ by state, and are ridiculous for a small seller. Like having to file quarterly reports, even when there are no sales in the state (in 50 states every quarter??). Some require deposits - I'd have to deposit $50 or $100 in some states to insure I'd actually pay the $2 or $3 I'd owe every two or three years when I had a sale in that state.

I'm all for forcing collection of sales tax, but there has to be some reasonable way to do that first.

Terry

 

[quicksandfarmer]

If a jurisdiction in California, for instance, decided that a North Carolina company wasn't remitting all that is owed, the company would have to send a representative to California to attend a hearing. Lawyers would necessary be involved and we know how that cost spirals. That could happen dozens of times in different jurisdictions. Businesses can't handle that cost without price increases. Additional costs would be encountered for some regulatory groups to do audits and enforcement. As the proposed law is now, the consumer would be picking up the tab for the taxes, the cost of the software and maintenance, and the cost of at least, an additional employee to do the actual data entry and pay the bills.

Having been in business, I can tell you it's even worse than that. If a jurisdiction has the right to tax you, they have the right to audit your books. The tax auditors will show up at your place of business to go on a fishing expedition. I once had an auditor show up, he had just finished auditing a customer, saw an invoice from us and thought he'd come over and check our books too. I once had a tax authority seize money in our bank account because we had a balance that wasn't due yet but they wanted to get paid early because they were in a budget crisis. These are not nice people. There is a reason the taxman is the second most reviled figure in western civilization after Judas.

If you run a brick and mortar business, every time you decide to operate in a new jurisdiction you open up your entire operation to audit by a new tax authority -- or in many places, several authorities, at the state, county, city, town, region, and tax district level. When you operate on line, you're taking on the full 15,000 at once.