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Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

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Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#61

Post by chrismaeda »

weds wrote: post #31
nateabele wrote: post #19

Earlier quoted context omitted.

Mail-order catalog businesses, which have existed for decades? You only pay tax in jurisdictions in which you're physically based (for an internet startup, this would be wherever you're incorporated). This axiom has held in US tax policy for about as long as there has been US tax policy. Kinda ties in with that whole 'no taxation without representation' thing. Edit: for clarity .

Sales tax is applied to the buyer, not the seller

Right. Companies with a physical presence in a state are required to collect sales taxes from buyers for all sales in the state. Businesses are not required to collect sales taxes for states where they have no presence (aka nexus); this is based on the Quill v North Dakota interpretation of the Commerce Clause of the US Constitution.

The problem with the proposed legislation is that counties, cities, and towns can each set their own tax rates. So the compliance costs are high because of the thousands of different rates. You cannot use something simple like state or zip code to determine tax rate; you have to use geolocation to get the exact jurisdiction. And governments typically levy penalties if you get your sales tax collection wrong. So who is responsible for paying the penalties if the third party tax collection service makes a mistake?

The way this was supposed to go down is that states were supposed to simplify the number of different tax rates before requiring out-of-state businesses to collect their sales taxes. You shouldn't need to subscribe to a sales tax compliance service to do business in the United States.

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#62

Post by jonpeda »

Glyptodon wrote: post #37
virmundi wrote: post #28

Earlier quoted context omitted.

So in general it's more complex than I opined in the three minutes it took to post, but it doesn't seem to be impossible. If anything it's complexity merits a service. This would require a few people and sme coordination, but should be doable. Who's with me? New start up.

Service for this == middleman effectively increasing the burden of any tax and wasting resources.

That's like saying "e-commerce == middleman effectively increasing the burden of any purchase and wasting resources"

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#63

Post by jonpeda »

dcgibbons wrote: post #21
legitsource wrote: post #10

Earlier quoted context omitted.

In my area, there are state, county, and city sale taxes. You would need a full address and a database of addresses within city limits in order to determine the proper sales tax.

There are many rural areas in the US where the physical address is not in the USPS database and as such "does not exist" (the USPS only has PO Boxes). That makes using any address neigh impossible for accurate tax calculations.

Are there multiple sales tax regimes operating within the span of one PO Box? Doubtful than anyone on either side will worry about that case

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#64

Post by jonpeda »

chrismaeda wrote: post #61
weds wrote: post #31

Earlier quoted context omitted.

Sales tax is applied to the buyer, not the seller

Right. Companies with a physical presence in a state are required to collect sales taxes from buyers for all sales in the state. Businesses are not required to collect sales taxes for states where they have no presence (aka nexus); this is based on the Quill v North Dakota interpretation of the Commerce Clause of the US Constitution. The problem with the proposed legislation is that counties, cities, and towns can ea…

> this is based on the Quill v North Dakota interpretation of the Commerce Clause of the US Constitution.

Note that this is a very old reading, and any modern court would likely wash that out, as everything related to human existence is considered interstate commerce by the modern court.

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#65

Post by Avshalom »

DanielBMarkham wrote: post #12

It's been a very busy news week. Reid picked just the right time to slide this in -- the air has been sucked out of the room by other stories. Congress had a hands-off approach to the internet for some time, and it took off like wildfire because of it. All that's changing now, it seems. I'm disappointed that there's so many avenues of attack for legislators that it's effectively impossible to cover all of our bases.…

> I want goods and services delivered to me as efficiently as possible.

You know what makes deliveries more efficient? State funded infrastructure.

now, how could we finance such a thing...

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#66

Post by Osiris »

newbie12 wrote: post #56
tejaswiy wrote: post #22

Earlier quoted context omitted.

I don't understand this line of thinking. People already pay sales taxes in big box stores, so in this case, it's more like the Government is artificially encouraging online businesses and penalizing physical stores. Both kinds of businesses being subject to the same rules is a good thing surely?

Problem is that my business is in VA, and I'm now subject to complying with taxing authorities in, say, California, where I don't have representation or a physical presence. It is unconstitutional in principle.

In what way? The constitution gives the Federal government the right to regulate inter-state commerce. If Congress passes a law says that states can tax inter-state purchases, isn't that simply exercising Congress's authority?

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#67

Post by Osiris »

bane wrote: post #27

1) There probably should be a sales tax, more and more of the economy is moving onto the Internet, and local state coffers are hurting for it 2) Figuring out local sales tax is hideously difficult, it opens lots of great opportunities for new startups as payment processors who "do taxes right" 3) Other bigger stories have consumed the media

Figuring out local sales tax is hideously difficult

The legislation specifically addresses this point by requiring states to use a simplified sales tax code. The article wasn't clear on the all the details but it made it sound like a single tax rate for the whole state so that merchants don't have to know the individual city/county tax rates.

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#68

Post by smacktoward »

Glyptodon wrote: post #38
avanderveen wrote: post #36

Because HN readers aren't idiots. We know that it is good and right for sales tax to be charged on sales. And, that the sale occurring on the internet does not make it an essentially different thing than any other purchase of a good or service. I think that, for HN readers, is very important: the internet is a different marketplace, not a different reality, and to treat it differently in some aspects can lead to lega…

I don't think we know that - I'm pretty sure more than 0 of us suspect that sales tax shouldn't exist at all.

Then go ahead and make that argument, if you believe it. But it has little to do with the status quo, which is that sales tax exists but is only collected from offline businesses. In other words, arguing for the continuance of the status quo isn't arguing that sales tax is immoral, it's arguing that online businesses somehow deserve a free ride offline ones don't.

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#69

Post by chrismaeda »

jonpeda wrote: post #64
chrismaeda wrote: post #61

Earlier quoted context omitted.

Right. Companies with a physical presence in a state are required to collect sales taxes from buyers for all sales in the state. Businesses are not required to collect sales taxes for states where they have no presence (aka nexus); this is based on the Quill v North Dakota interpretation of the Commerce Clause of the US Constitution. The problem with the proposed legislation is that counties, cities, and towns can ea…

> this is based on the Quill v North Dakota interpretation of the Commerce Clause of the US Constitution. Note that this is a very old reading, and any modern court would likely wash that out, as everything related to human existence is considered interstate commerce by the modern court.

Maybe, but Quill is the law of the land today.

Re: Ask HN: Congress is Passing an Internet Sales Tax: Why Doesn't HN Care?

#70

Post by runjake »

Avshalom wrote: post #65
DanielBMarkham wrote: post #12

It's been a very busy news week. Reid picked just the right time to slide this in -- the air has been sucked out of the room by other stories. Congress had a hands-off approach to the internet for some time, and it took off like wildfire because of it. All that's changing now, it seems. I'm disappointed that there's so many avenues of attack for legislators that it's effectively impossible to cover all of our bases.…

> I want goods and services delivered to me as efficiently as possible. You know what makes deliveries more efficient? State funded infrastructure. now, how could we finance such a thing...

No national sales tax currently exists, to my knowledge. So this is a new precedent. And to answer your question, we could finance such things by avoiding wars, shutting down needless agencies, and so on.

People are already struggling, burdening them with a tax that will generate revenue that is peanuts compared to what we're spending on our wars. Doesn't make sense to me.

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