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New Bill Would Require Online Retailers to Charge Sales Tax to All Customers

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New Bill Would Require Online Retailers to Charge Sales Tax to All Customers

 

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By Ashley Davis, Sun, May 05, 2013

A new law that is likely to pass in Congress on Monday will make it so all retailers have to charge their customers tax, even those who live in a different state.

Many sites like Amazon and eBay have private sellers who only charge tax to those who live in the same state as them. Under a law, states can only require stores to collect sales tax if the store has a physical presence in the state. That means many online retailers do not charge the majority of their customers a tax fee.

This new law will make it easier for states to collect sales taxes on online purchases. Most larger retailers are happy about the news, but for small-business owners, the law is worrisome.

"It's a huge burden for a company like ours," Sarah Davis said, co-owner of Fashionphile.com. "We don't have an accounting department, we've got my father-in-law."

In 1999, Davis started the company. Now, she runs it with her brother-in-law. It is a small business but makes $10 million a year in sales, mostly online.

The company sells lightly used designer handbags and purses from its website and on eBay. They also have three stores, in Beverly Hills, San Diego and San Francisco.

While the law says companies like Fashionphile don't have to charge sales tax to out-of-state customers, it does require those customers to pay the taxes when they file state tax returns.

They're called "use taxes" on state income tax returns. They apply to purchases made over the Internet, from catalogs, television and radio ads.

Officials admit that very few people pay these taxes.

"I do know about three people that comply with that," Sen. Mike Enzi, R-Wyo. said. He is the main sponsor of the bill.

The bill empowers states to require businesses to collect taxes for products they sell online, in catalogs and through radio and TV ads. The state the shopper lives in would be sent the sales tax.

Businesses that make less than $1 million a year in out-of-state sales would be exempt.

In total, states lost about $23 billion last year because they could not collect sales taxes on out-of-state purchases. Around $11.4 billion of that was lost from Internet sales, the rest came from catalogs, mail orders and telephone orders.

"This is a sales and use tax which is on the books," Michael Kervcheval, CEO of the International Council of Shopping Centers said. "This isn't a tax issue. It's a tax collection issue."

Though the goal of the bill is to help the states, some believe it is limiting the freedom of the Internet.

Many young people are protesting the bill on Facebook, bombarding Enzi's page with messages asking him to not go forward with it.

Generation Opportunity, a nonprofit in Washington D.C., is one of the main opponents of the bill. The group represents people ages 15 to 30.

"We don't want federal or state governments taxing the Internet," Evan Feinberg, president of Generation Opportunity, said. "If the young people's voices are heard, it will tip the scales in favor of freedom."

Sources: Daily Mail, Trib

by on May. 6, 2013 at 8:46 AM
Replies (11-20):
stormcris
by Christy on May. 6, 2013 at 4:14 PM

I think it is unproductive and will be a red tape nightmare. If they want to make it single payer via the IRS somehow then it might work out better.

RandRMomma
by Maya on May. 6, 2013 at 5:47 PM
I don't think this is a good idea.

Of course big businesses are happy about this. But, I can see this being detrimental to small internet businesses. On a side note, I thought that Republicans were against taxes.

There goes those generalizations, huh? lol ;)
stormcris
by Christy on May. 6, 2013 at 5:48 PM

Only for very large corporations and the rich when it comes to income. They all back sales taxes.

Quoting RandRMomma:

I don't think this is a good idea.

Of course big businesses are happy about this. But, I can see this being detrimental to small internet businesses. On a side note, I thought that Republicans were against taxes.

There goes those generalizations, huh? lol ;)


RandRMomma
by Maya on May. 6, 2013 at 5:51 PM
Gotcha. lol

Quoting stormcris:

Only for very large corporations and the rich when it comes to income. They all back sales taxes.

Quoting RandRMomma:

I don't think this is a good idea.



Of course big businesses are happy about this. But, I can see this being detrimental to small internet businesses. On a side note, I thought that Republicans were against taxes.



There goes those generalizations, huh? lol ;)


1Giovanni
by Becca on May. 6, 2013 at 5:53 PM

Let's see if I understand it...so if your state has a sale tax they will have to charge you that tax. how about if your state doesn't have a sales tax? Do they still not charge you the sales tax?

GotSomeKids
by Silver Member on May. 6, 2013 at 7:12 PM

All the places I shop online already charge sales tax. 

fireangel5
by Gold Member on May. 6, 2013 at 8:14 PM

I think it will be a nightmare. I personally like buying on Amazon


Quoting romalove:


Quoting MsDenuninani:

It's about time.  Businesses should not be able to skirt state tax laws because they don't have a physical dwelling there. If they sell there, the taxes should be applicable.

I think it will have a chill effect on small internet businesses.

Amazon and Zappos don't have to worry so much, they have all kinds of ability to handle 50 different state tax laws and accounting.

I do.

So the big guys will flourish and the little guys will either have to stay or become little (I, for example, am launching an online site and was going to be for everyone, now I will only sell within my state).

I think it's not a good law.



Euphoric
by Thumper kid spanks on May. 6, 2013 at 9:47 PM

 bump

UpSheRises
by Platinum Member on May. 7, 2013 at 9:44 AM

But don't you think not paying taxes gives those who do business on the internet an huge advantage?

My husband owns a small business but it's a service...he can't sell it on ebay so he just has to pay his taxes. How is that fair for him?

Lots of business have been engaging in sales across the US for a century and have managed to pay sales tax, why, all of the sudden is such a burden?


Quoting yourspecialkid:

 I am from Wyoming....Enzi is an idiot that needs to retire or be replaced...we are working on that.

This is a horrible idea.  It will cost businesses thousands of dollars a year just to maintain the tax permits.  This is before the time is spent to make the monthly/quarterly filings/payments.  It will put a lot of places out of business..which in turn will reduce other tax revenue.

I am not opposed to collecting sales tax.  If they are going to do it, they should allow the state the store is in to collect tax for all sales...not allow multiple states to collect from a business with no vested interest in their states.

I am a Libertarian that votes mostly Republican............I am against most of the taxes we already pay and not exactly for a bunch of new ones.



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