What is Internet sales tax, and will it cripple e-commerce?
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What is Internet sales tax, and will it cripple e-commerce?
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Re: What is Internet sales tax, and will it cripple e-commerce?
#2I'm familiar with the inter-state sales tax compliance functions at a number of firms and it is a tremendous burden. Not only most states, but numerous municipalities impose sales tax as well. As the article mentions, the problem is that Use tax[1] obligations are generally not paid by destination-state customers. This actually makes a great argument for why the federal government should collect a national sales tax, that is then distributed back to the states.
Regarding the legality of states attempts to collect sales tax on inter-state transactions, we can look to the commerce clause[2]. In the courts, one test that has been used is to ask whether a tax creates an unfair advantage for in-state commerce over inter-state commerce[3]. If you take into account the compliance demands created by an inter-state sales tax, I think the answer is almost always YES.
[1] http://en.wikipedia.org/wiki/Sales_and_use_tax
[2] http://en.wikipedia.org/wiki/Commerce_Clause
[3] http://law2.umkc.edu/faculty/projects/ftrials/conlaw/interst...
Re: What is Internet sales tax, and will it cripple e-commerce?
#3As a CPA with years of experience in specialized state and local tax issues. I can tell you that sales and use tax is very complex and burdensome. But, at the same time internet retailers have taken advantage of the the law's inability to keep up with new business models, so internet retailers have had an unfair advantage over brick and mortar companies.
Just giving the issue perspective from both sides.
Re: What is Internet sales tax, and will it cripple e-commerce?
#4I'll support this just as soon as B&M retailers are required to find out where their customers live and collect sales taxes accordingly as well.
Re: What is Internet sales tax, and will it cripple e-commerce?
#5These laws certainly will not help e-commerce shops, sales will decrease (or more likely continue to increase across the industry but not at such a rapid rate) because the e-comms will now be on a level playing field with brick and mortars.
All of this being said, the biggest problem will be simplicity. If there is not a service to easily distill all of these rules and plug into the bulk of shopping experiences (magento, atg, ep, shopify, etc) this will very much hurt small, up&coming e-comms.
I'd imagine there is very good opportunity for a company to create an API of all of this tax information and monetize it.
Re: What is Internet sales tax, and will it cripple e-commerce?
#6I'll support this just as soon as B&M retailers are required to find out where their customers live and collect sales taxes accordingly as well.
Out of interest, what's a B&M retailer?
Re: What is Internet sales tax, and will it cripple e-commerce?
#7Re: What is Internet sales tax, and will it cripple e-commerce?
#8Earlier quoted context omitted.
Out of interest, what's a B&M retailer?
B&M = Brick & Mortar, a reference to their physical stores.
Oh, that's a pretty silly comment then, it's where their store is. Given that people have to supply a card and/or delivery address when buying it's not going to be a massive pain for online retailers.
Re: What is Internet sales tax, and will it cripple e-commerce?
#9Earlier quoted context omitted.
Out of interest, what's a B&M retailer?
B&M = Brick & Mortar, a reference to their physical stores.
"Oh, that's a pretty silly comment then, it's where their store is. Given that people have to supply a card and/or delivery address when buying it's not going to be a massive pain for online retailers."
So why can't it apply the same way to online merchants? Where their business is located?
You obviously don't run an online store. It's not as easy as just charging them tax. There are so many different tax rates (that are constantly changing btw) that it's going to be very difficult for any small retailer to keep this up-to-date.
It would be much easier to just require the customer to claim it on their tax forms (which I believe is already a requirement).
To claim this is "lost revenue" is about the same as when the RIAA claims piracy is lost revenue.
Re: What is Internet sales tax, and will it cripple e-commerce?
#10Earlier quoted context omitted.
B&M = Brick & Mortar, a reference to their physical stores.
Oh, that's a pretty silly comment then, it's where their store is. Given that people have to supply a card and/or delivery address when buying it's not going to be a massive pain for online retailers.
And web retailers are willing to handle sales taxes where their stores are. The difference is that they're being expected to handle sales taxes for cities and states they don't actually have any presence in - ie, in every state and municipality that has a sales tax.