It was only a matter of time: Congress considers taxing online sales
We've all known this has been coming, and now it's here. I have no idea if it will pass, but they're now seriously considering taxing ALL online sales of EVERYTHING. It was fun while it lasted...
Democrats Turn to Online Sales Tax for New Revenues Following Debt Battle
While the nation was captivated by the debt crisis – and whether tax increases would be part of any deal to reduce federal deficits – a group of Democratic senators and congressmen have rolled out legislation that would raise new revenues by targeting online sales from retailers like Wal-Mart and Best Buy.
These lawmakers say that states are losing billions in uncollected state and local sales tax on Internet sales and are touting the support of online retailers like Amazon who say they’re fine with an across-the-board system that would make tax collections simple.
But small businesses say the new legislation is unfair and puts them at a cost disadvantage at a time when they can least afford it.
The bill introduced by Sen. Dick Durbin, D-Ill., last week called the Main Street Fairness Act, has drawn support from several Democrats, including Sens. Tim Johnson of South Dakota, Jack Reed of Rhode Island, Reps. John Conyers of Michigan, Peter Welch of Vermont and Heath Shuler of North Carolina.
“Consumers shouldn’t have to face the burden of reporting all of their online purchases. Main Street retailers collect sales taxes on behalf of consumers, why shouldn’t online retailers do the same,” Durbin said in a statement Friday.
Durbin noted that states are expected to lose up to $24 billion in uncollected state and local taxes this year on Internet and catalog sales.
“This bill will level the playing field for local businesses, by ensuring that online retailers collect the same sales taxes that brick-and-mortar retailers already do,” Conyers said. “This will help our state and local governments avoid devastating layoffs and cuts to essential services vital to the well-being of our local communities.”
But several tech groups strongly oppose the bill.
“Congress often says that small businesses are the backbone of the economic recovery, but these new collection costs will break the backs of many small online businesses,” said Steve, DelBianco, executive director of NetChoice, a tech trade group.
“It’s a cruel irony to call this job-killing bill the ‘Main Street Fairness Act,’” DelBianco added. “Online sales are about the only way small retailers can survive being steamrolled by the big-box chains who are behind this bill.”
Retailers are only required to collect sales tax in states where they also have a physical presence under a 1992 Supreme Court ruling known as the Quill decision. The high court ruled that a sales tax on out-of-state sellers would be an unconstitutional burden on interstate commerce because of the complexity of states’ and municipalities’ sales tax rules.
That means out-of-state retailers can offer their customers a discount online, but consumers have to report the sales tax owed on online purchases on their tax returns.
In response to the Quill decision, 44 states and the District of Columbia are working with local governments and the business community to adopt a sweeping interstate system to simplify their sales tax rules and administrative requirements, called the Streamlined Sales and Use Tax Agreement. So far, 24 states have changed their laws in compliance with this interstate agreement.
But the Quill decision said Congress would have to authorize such an agreement, which supporters say the bill does.
Amazon.com Inc., the largest online Internet retailer, threw its support behind the bill.
“Amazon.com has long supported a simple, nationwide system of state and local sales tax collection, evenhandedly applied to all sellers, no matter their business model, location, or level of remote sales,” Paul Misener, vice president of Amazon’s global public policy, said in a letter to Durbin that the Illinois senator included in a press release.
“To this end, I am writing to thank you for your bill that would allow states that sufficiently simplify their rules to require collection of sales tax by out-of-state sellers,” he wrote.
The Retail Industry Leaders Association, which represents more than 200 retailers, also supports the bill, saying it would end special treatment for online-only retailers and relieve consumers of the tax-reporting requirement.
“For too long, U.S. tax policy has favored online-only retailers over the brick-and-mortar stores that creates the jobs and serves our communities,” said Katherine Lugar, a spokeswoman for the association.
“Government shouldn’t be picking winners and losers by giving a handful of companies a competitive advantage over everyone else,” he said. “It’s time to close this decades-old loophole and level the playing field for all retailers.”
But the Computer and Communications Industry Association opposes the bill, saying that taxing small Internet businesses with the most potential for economic growth is unfair.
“E-commerce has enabled businesses to broaden the scope of their activities beyond traditional geographical limitations,” said Ed Black, president and CEO of CCIA. “Sadly, this bill seeks to re-impose onto e-commerce businesses the very burdens that innovation has enabled them to overcome, and has given them a chance for success.”
Last edited by My_Two_Cents; 08-04-2011 at 02:18 AM.
I hate worrywarts, this is just as flimsy as the "streaming" bill and is unlikely to ever really pass.
I'm not "worried" about anything, but obviously you've not been keeping up on the constant talk and proposals over the past year or two to close the "internet no-tax loophole". The climate is right for this to possibly come to fruition.
Even if it would pass, it would still be cheaper to buy things online since you wouldn't have to use any gas.
This is not as big a factor for me as it is for some people. I get about 34 MPG. I may change my shopping habits if it did pass. If something is on sale for $9.99 at BB, and Amazon price matches it, I go to Amazon. But if this passed, then I would probably go to BB because I could get the item right away, vs. having to wait. I also wonder how many people would cancel their prime subscriptions if this passed. I have a year of Amazon student prime, and they offered me another year for $39. I intend to buy it, but if this just happened to pass before then, then I probably would not renew it.
This is not as big a factor for me as it is for some people. I get about 34 MPG. I may change my shopping habits if it did pass. If something is on sale for $9.99 at BB, and Amazon price matches it, I go to Amazon. But if this passed, then I would probably go to BB because I could get the item right away, vs. having to wait. I also wonder how many people would cancel their prime subscriptions if this passed. I have a year of Amazon student prime, and they offered me another year for $39. I intend to buy it, but if this just happened to pass before then, then I probably would not renew it.
I get what you're saying, but I get good enough gas mileage too (mid to upper 20's per gallon) and I'd probably still keep my Prime even if this passed. It saves me the time going down to Best Buy or Target, plus any money I can save on gas is always a good thing no matter how little it is. The lack of taxes is a nice bonus, but it's still nice to have things delivered to my door either way.
If this were to pass, it has potential to really mess with small time people like the article said but didn't elaborate. I resell some things online, nothing full time or even part time but make enough to pay for my entertainment purchases. I pay my taxes on that. Now if I had to fill out individual tax forms to 50 states for this, that would be a nightmare. It's pain enough to do 1 for the state i live in.
Ideally, ebay/Amazon/Half would do the collection for me but who knows if that would happen.
I'll try to steer clear of politics, but if this kind of thing was going to pass it would have happened between 2008-10 when Congress was run by one party. With the way Congress/White House are currently composed something like this tax simply would not pass. Not even close to passing.
This, like so many other proposals, is just a selfish attempt by greedy and irresponsible people in the U.S. government, who want an "easy way out" of our country's debt, that doesn't involve them losing any of their own money. They have no problem taxing anyone else to death, but does anyone think these "suit" types would be forced to abide by the same rules with their own purchases? Not very likely.
So let me get this straight if I buy from amazon I would have to report all of my taxes owed on my tax return. That is complete and total bull ****.
Most likely, you are required by your state to do this now (assuming your state has a sales tax). The problem is that most people either aren't aware of the requirement or simply ignore it, as there is no easy/cheap way for states to police this. What is being proposed is to require all online retailers to collect sales tax from their customers based on the state the product is being sold/shipped to.
I'm probably one of the biggest opponents of onerous taxation, but this really is only a way for states to get the money they should have been getting all along. Like it or not, it gives an unfair advantage to many online retailers that don't charge sales tax.
Besides gas mileage, you also save on time and the risk of having to drive with people who are more concerned with eating or putting on makeup than driving...but in the end, it is only fair that all sales pay taxes, regardless of where they originate from.
Besides gas mileage, you also save on time and the risk of having to drive with people who are more concerned with eating or putting on makeup than driving...but in the end, it is only fair that all sales pay taxes, regardless of where they originate from.
Most likely, you are required by your state to do this now (assuming your state has a sales tax). The problem is that most people either aren't aware of the requirement or simply ignore it, as there is no easy/cheap way for states to police this. What is being proposed is to require all online retailers to collect sales tax from their customers based on the state the product is being sold/shipped to.
I'm probably one of the biggest opponents of onerous taxation, but this really is only a way for states to get the money they should have been getting all along. Like it or not, it gives an unfair advantage to many online retailers that don't charge sales tax.
I never knew about it until now. Honestly I wouldn't be opposed to the sales tax for online purchases as long the retailer will collect it at the time of the order and payment. Yes it is an added charge that I really don't want to pay but that's the way life is. It would still be cheaper for me to shop Amazon and pay the tax then to drive a half hour to get to my nearest Beast By and take the hit in the cost of gas.
Most likely, you are required by your state to do this now (assuming your state has a sales tax). The problem is that most people either aren't aware of the requirement or simply ignore it, as there is no easy/cheap way for states to police this. What is being proposed is to require all online retailers to collect sales tax from their customers based on the state the product is being sold/shipped to.
I'm probably one of the biggest opponents of onerous taxation, but this really is only a way for states to get the money they should have been getting all along. Like it or not, it gives an unfair advantage to many online retailers that don't charge sales tax.
+1, I don't like it either, but you speak the truth Ricshoe.
I get what you're saying, but I get good enough gas mileage too (mid to upper 20's per gallon) and I'd probably still keep my Prime even if this passed. It saves me the time going down to Best Buy or Target, plus any money I can save on gas is always a good thing no matter how little it is. The lack of taxes is a nice bonus, but it's still nice to have things delivered to my door either way.
Very true. I love to save money, but I am very impatient, so I probably would start to shop at BB and Target more if this happened to pass.
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It was only a matter of time: Congress considers taxing online sales
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