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1. So the problem of calculating and distributing use tax is complex... That sounds like a business opportunity for a new kind of web service.
2. I think the issue just comes down to online retailers dragging their feet because they want to enjoy their advantage as long as possible.
As 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.
On the other hand, online merchants with physical stores already have to charge for sales taxes if their online customers are within those jurisdictions.
Requiring online merchants to collect the correct sales taxes for every state and town is either a stupid attempt to increase revenue or a straight attempt to hobble online sales on behalf of physical retailers.
As 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.
Also, most internet sales are interstate commerce which the states have no business regulating. I can't believe the gall of the government to claim that using Amazon.com is not interstate commerce yet growing a plant in your basement for your own personal consumption is.
The SCOTUS is very clear that anything with the the potential to affect the interstate market for goods and services is interstate commerce.
Why can't the states respect that?
I'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.
Right now, from a municipal funding perspective, homes with children are revenue negative, homes without children are roughly revenue neutral, office/industry is profitable, and retail is VERY profitable. (all this is before you take into account tax incentives for relocation/retention.)
Why will cities fight over a mall, or a car dealership, or a corporate headquarters? A mall draws in shoppers from far beyond municipal borders and the (local part of the) sales tax stays with the physical location. When you pay tax on a new car, you're paying multiple years worth of sales tax on driving in one go. If you buy a car in a different city than where you live, it's like if you shopped in that city every single week for the entire time you own the car. Offices are the same as malls in that they draw from beyond municipal boundaries.
If all of a citizen's sales taxes went to the city they lived in, as opposed to where they shopped, then you'd see local (or at least small scale, localized) commerce boom because no city would want to deal with the traffic, road construction and maintenance costs, etc that come with huge retail developments.
Dude, this is blowing my mind. This will be a blog post soon.
I have two points: 1. So the problem of calculating and distributing use tax is complex... That sounds like a business opportunity for a new kind of web service. 2. I think the issue just comes down to online retailers dragging their feet because they want to enjoy their advantage as long as possible.
2. Of course, Amazon.com got CA to agree waiting before taxing bc they knew once people tried prime, they would be hooked and would pay the tax later since there will be no alternative.
I have two points: 1. So the problem of calculating and distributing use tax is complex... That sounds like a business opportunity for a new kind of web service. 2. I think the issue just comes down to online retailers dragging their feet because they want to enjoy their advantage as long as possible.
I wish it were that simple. This bill would have effectively shut down my small business (we're an online retailer). The overhead of paying taxes across many different states and municipalities is, frankly, impossible for smaller teams / startups to deal with. Even if we could outsource this, it would effectively reduce our margins to the point where we couldn't compete with brick & mortar. We already collect taxes and pay them to the states we operate in. This bill wouldn't cause us to pay more tax (we're based in California, so we'd probably pay less taxes as a result), but instead seems like it's more a result of anti-competitive lobbying efforts from B&M retailers.
Earlier 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." 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…
These 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 (mage…
I hope that doesn't happen. If the government is imposing this burden, there should be a free database available for everyone to allow compliance.
Earlier quoted context omitted.
"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…
What about taxing delivery services instead? If states charged a flat tax on UPS and Fedex, distributed proportionally to cities, would it be enough to fill the gap in state and city budgets?
Earlier quoted context omitted.
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.