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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 (21-25):
UpSheRises
by Platinum Member on May. 7, 2013 at 9:45 AM
1 mom liked this

That is correct. This bill gives states the right to collect taxes on internet sales. If you don't have a sales tax your state will have nothing to collect.


Quoting 1Giovanni:

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?



yourspecialkid
by Platinum Member on May. 7, 2013 at 4:23 PM

 

Quoting UpSheRises:

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.

 

 

 I never said it doesn't create an advantage.  Honestly though, I don't shop online to skp the sales tax.  I shop online because I can't get it here or I can get the product cheaper.

I am not opposed to collecting taxes for the state of Wyoming.  I think if they are going to do an internet tax it should just be for the state in which the business is in..I would collect WY tax on all my sales.  If I bought something from Texas I would pay their sales tax.  The way they have it planned will create logistical nightmares....and cost thousands of dollars just to get the tax permits.

They set the threshold at $1,000,000 in sales...but we all know a million dollars in sales does not make a million in profit.  It just isn't realistic the way it is written.

acrogodess
by Silver Member on May. 7, 2013 at 4:31 PM
Amazon already charges me sales tax according to the state I am getting my items delivered to. I send something to my brother in NY, I pay tax. I order something delivered here to NJ, I don't pay sales tax. Sales tax here is much lower than in NY to begin with.

I don't think this is good for small businesses though.
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usmc0351wife
by on May. 7, 2013 at 4:33 PM

One if the major reasons I shop online is to avoid sales tax when I can.  I can see why they want to change it but it just means I probably won't buy as much now for luxury. 

PestPatti
by on May. 7, 2013 at 6:08 PM


  I live in NY, we are already paying sales tax on purchases.   Hell on my taxes they ask if make any purchases out of state.    I am not going to tell them I went shopping in "no sales tax on clothing Pennsylvania. 

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