CHRIS TOMLINSON, Associated Press said:
States look to Internet taxes to close budget gaps By CHRIS TOMLINSON, Associated Press – Sun Jun 19, 7:37 pm ETAUSTIN, Texas – State governments across the country are laying off teachers, closing public libraries and parks, and reducing health care services, but there is one place they could get $23 billion a year if they could only agree how to do it: Internet retailers such as Amazon.com.
That’s enough to pay for the salaries of more than 46,000 teachers, according to the U.S. Bureau of Labor Statistics. In California, the amount of uncollected taxes from Amazon sales alone is roughly the same amount cut from child welfare services in the current state budget.
But collecting those taxes from major online retailers is difficult.
Internet retailers are required to collect sales tax only when they sell to customers living in a state where they have a physical presence, such as a store or office. When consumers order from out-of-state retailers, they are required under state law to pay the tax. But it’s difficult to enforce and rarely happens.
That means under the current system the seller is absolved of responsibility, buyers save 3 percent to 9 percent because they rarely volunteer to pay the sales tax, and the state loses revenue.
With sales tax revenue slumping more than 30 percent in most states between 2007 and 2010, lawmakers across the country are grasping for ways to collect those unpaid taxes. Retailers and lawmakers in several states have proposed ways to solve the problem, some with more support than others.
“The problem is that some out-of-state e-retailers openly flaunt the law, arguing that it doesn’t apply to them,” said Texas state Democratic Rep. Elliot Naishtat, who has offered a bill to require more Internet sellers to collect Texas sales tax. “It’s about potentially generating hundreds of millions of dollars for our state.”
Texas cut $24 billion in state services to cover its revenue shortfall. That included decisions not to fund the expected growth in the number of public school students and the expected growth in the caseload for Medicaid, the health care program for the poor and disabled.
Internet retailers cite a 1992 U.S. Supreme Court decision involving catalog sales, Quill Corp. v. North Dakota, which ruled that states could require only companies that had a physical presence within the state to act as tax collector.
Chris Tomlinson of the AP said:I think that Chris has it wrong, here. The customer is not required to pay sales tax. That tax is levied on the seller, which is why it is called "sales tax," not "purchase tax." The seller just passes it along to the purchaser, and we foolishly go along with the scam.
When consumers order from out-of-state retailers, they are required under state law to pay the tax.
Too bad I don’t have any pigs to clean.
Odd how government is never willing to say it’ll take less to get by on yet expects citizens to fork over more to keep the government the same size or larger in order to provide for an ever increasing segment of teet sucklers…
As I’ve always told my friends, government (local, state, federal) is not your friend and never will love you.
Wouldn’t it be nice to spend more than you earn each year ? And our govmint prints more money that’s backed by ?
I know the feds take offense if you print money for they don’t like the competition !
Still all in all, I like this country for better or worse. Said the same thing to my wife, for better or worse. She drew the short stick…
TOF in Hawaii
Steve Featherkile said:Bzzzzzzzt! Nice try, but WRONG! The tax IS owed. Either as sales tax or "use tax". By not paying it you ARE breaking the law. Just because you were supposed to voluntarily declare it (and didn't) doesn't mean it wasn't owed.
I think that Chris has it wrong, here. The customer is not required to pay sales tax. That tax is levied on the seller, which is why it is called "sales tax," not "purchase tax." The seller just passes it along to the purchaser, and we foolishly go along with the scam.
Ohio passed a law about 5-6 years ago requiring out of state vendors holding an Ohio tax license to collect the tax on all mail orders into Ohio. NY and NJ have had a reciprocal agreement on collecting taxes for each other for at least a decade.
Fact; The ONLY reason it hasn’t been strongly pursued before now is because it creates a paperwork nightmare for sellers and for the states themselves. Some states, like Ohio have different tax rates for different counties – various states tax some items, while others tax different ones – there are different due dates, some with really draconian penalties (File your NY sales tax paperwork 1 day late and there is a $50 fine - even if NO tax was due!)-- meanwhile the states would have to track and try to collect from sellers in all 50 states… Even with computers it’s no easy task.
The last time this came up, they wanted to force the credit card companies to collect the taxes… the banks balked.
In Massachusetts it’s true you owe the tax but it’s also true if your drive to another state and return with goods. ie if I go to NH, buy a TV, bring it home then I owe the tax to MA
Mik said:Wonder what percentage of the tax money would wind up being spent on people to manage the collection and accounting of the tax money?
Fact; The ONLY reason it hasn't been strongly pursued before now is because it creates a paperwork nightmare for sellers and for the states themselves.
Also, the Mass income tax form states you must declare out of state purchases and include the tax owed under penalty of perjury. This can get you a year in jail.
When you sign those ‘income’ tax forms, read carefully as they are attempting to collect non-income sales taxes!!! Can you afford the lawyer fees to beat this?
So, make sure you consume all of those out of state purchases out of state!!!
remember when the state sales tax went up recently from 5% to 6.25% here in Taxachusetts and folks who lived on the border of NH which doesn’t have sales tax drove over the border to buy booze. I heard of people with Mass plates being watched loading up their cars at the state run NH liquor store and then being stopped by Mass state police when they crossed the border and made to pay the tax or dump out the booze. Don’t know if it is true but who knows. What if the booze was heading to Rhode Island to be consumed there? Here is a sticky situation the cop has you dump out the alcohol but you can’t leave the bottle on the side of the road that is littering and having an open container in your car is a big NO NO ???
What will be next? Say I top off my gas tank with cheaper less taxed gas then go across the border? What about the food I ate would I have to pay a tax on that or stick my finger down my throat and give it up to the cops?
The way things are going in this country History will show us past Revolutions but when will the people have had enough??
Define “load up”? NY and PA state pohleese routinely monitor the reservations watching for folks buying lots of untaxed ciggies. One or two cartons is one thing. - they usually won’t bother you. 50 or 500 cartons is another story.
Honestly? I have no problem with them enforcing interstate commerce laws - especially when the intent is tax fraud. The guy who sets out to cheat the tax man is really no better than a thief. Every time somebody screws ‘the man’ it just means the honest folks have to pick up an even bigger share of the load.
Of course, they’ll always make up excuses for their behavior, and many even believe it. Don’t like the law? Then get a bunch of like minded folks together and work to get it changed. Or to block it before it takes effect. DON’T try to weasel your way around it then play the victim.
Todd Haskins said:I do believe that for sure. The CHP was stopping cars with Oregon plates awhile back at the Oregon-California border to see if the driver really lived in Oregon. Many Californians that lived along the border were licensing their cars in Oregon to save a bundle. For example when I moved here I had previously paid $550 for one year's license in California. The next year I paid $32 in Oregon (it's now gone up to an astounding $56 for ALL cars) and that was for two years, not one. Add to that no sales tax in Oregon and the savings are considerable to say the least (if they don't get caught). Also just a "shopping vacation" to the north for big ticket items yields significant savings as well. While I haven't heard of cars getting stopped yet to check for newly purchased contraband I wouldn't put it past them.
remember when the state sales tax went up recently from 5% to 6.25% here in Taxachusetts and folks who lived on the border of NH which doesn't have sales tax drove over the border to buy booze. I heard of people with Mass plates being watched loading up their cars at the state run NH liquor store and then being stopped by Mass state police when they crossed the border and made to pay the tax or dump out the booze. Don't know if it is true but who knows. What if the booze was heading to Rhode Island to be consumed there? Here is a sticky situation the cop has you dump out the alcohol but you can't leave the bottle on the side of the road that is littering and having an open container in your car is a big NO NO ??? What will be next? Say I top off my gas tank with cheaper less taxed gas then go across the border? What about the food I ate would I have to pay a tax on that or stick my finger down my throat and give it up to the cops? The way things are going in this country History will show us past Revolutions but when will the people have had enough??
Intrastate taxation is Nexus, and last August 43 states had signed up. When USA decided not to attend Seattle GR convention, the stated reason was they didn’t want to be forced into Nexus, but Mass already is signed up!
Been following it for some time, not going to be nice. Businesses will be required to join the Nexus “net”, have another terminal next to their credit card terminal, key in ZIP, amount, and invoice number, and the net will tell them how much tax to collect for, say, Ohio.
End of the month, you get a bill, and a service fee for the privilege of doing business and acting as a tax collector for the states.
Feds are stepping up their efforts…2008 Housing Accessibility Act had a rider, starting next year, all credit card processors (who is at the other end of your credit card terminal) will be required to report all transactions to the IRS, who will compare sales to what you report.
The Obamacare 1099 reporting for businesses is another…and business your business does sales with that is $600 or more will require you to obtain their federal Tax ID number, and send a copy to them, the IRS, and keep a copy, all at your expense.
I honestly expect to hear stories, once again in August, of the “tax man in NY” setting up shop on the border of NY & PA. As all those parents run to PA to aviod paying tax on the school clothes they purchased in PA tax free. (sigh) NY effectively shut down most of the cigarette shop on the reservation when they went after the credit card companines and the shipping services including the USPS.
Chas
California just passed an internet tax law…Amazon and Overstock.com have already said they will not enforce it.
Vic,
Amazon said they will not enforce? Read this article.
http://www.ocregister.com/articles/amazon-306409-affiliate-california.html
Well thats one way to not enforce it…
I heard on the news this a.m. that they wouldnt enforce it, cutting and running is what they have done elsewhere so not too surprised by that.
Jeff Bezos (Amazon) has stated he will not be singled out to collect and pay taxes. He has shut down contract distribution centers, and placed a whole lot of folks on those state’s unemployment rolls.
How does that work for state budgets?
In an interview, he has stated he is not against Nexus (intrastae taxation) based upon where the package is delivered, but ONLY when the law is such that everybody has to pay.
A lot of these laws are back-room referred to as “Amazon” laws, singling out the biggie.
Amazon aleady has a big warehouse in Nevada, which is one of the states that has so far stated they will NOT get on board with intra-state taxation.
Big business, Nevada Corporation locations and remailing centers.
And government constantly claims that the rich are greedy… jeez, these elected buggers use the power of the gun (force) to take our taxes (your money). Pot calling kettle black. At least the rich don’t take what belongs to others.
All I can imagine from California’s new stance is the loss of sales from California will kill off a whole lot of bisuness. Some brick-and-mortar depend on internet sales to keep the doors open…and even with shipping, folks would order. Add in California taxes, folks are going to go elsewhere, the brick and mortar can’t keep going, close business, employees on unemployment, no more revenue for the state…