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Distinguished Bibliophile
patgolfneb
Posts: 1,762
Registered: ‎09-10-2011
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Re: Website Complaint

[ Edited ]

RHWright wrote:

deesy58 wrote:

California is ahead of the other states.  It won't be long before the other states will be demanding sales taxes from Internet purchases. 

 

Most states I have lived in, including currently North Carolina, have required residents to report uncollected sales/use tax from online purchases on their annual income tax filing for some time. It's just that many people ...ummm ..."forget" to report those amounts accurately.

 

The real change is states (like California) going after the retailers to collect sales taxes.

 

It's just another complexity to manage as we become a more electronically connected world.


Most, or maybe all states require the customer to still pay the taxes. In this era of tax avoidence being the norm almost no one is paying. We have no one but ourselves to blame. I still contend that basic fairness demands all sellers be required to collect sales taxes. The shipping cost argument does not hold up. After all box retailers have to ship their merchandise also.

Distinguished Bibliophile
keriflur
Posts: 6,767
Registered: ‎01-05-2010
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Re: Website Complaint

[ Edited ]

patgolfneb wrote:

RHWright wrote:

deesy58 wrote:

California is ahead of the other states.  It won't be long before the other states will be demanding sales taxes from Internet purchases. 

 

Most states I have lived in, including currently North Carolina, have required residents to report uncollected sales/use tax from online purchases on their annual income tax filing for some time. It's just that many people ...ummm ..."forget" to report those amounts accurately.

 

The real change is states (like California) going after the retailers to collect sales taxes.

 

It's just another complexity to manage as we become a more electronically connected world.


Most, or maybe all states require the customer to still pay the taxes. In this era of tax avoidence being the norm almost no one is paying. We have no one but ourselves to blame. I still contend that basic fairness demands all sellers be required to collect sales taxes. The shipping cost argument does not hold up. After all box retailers have to ship their merchandise also.


I agree that sellers should collect.  IMO if the state isn't requiring that, then they should be out the taxes.

 

The burden to calculate this should not fall on the consumer.  The Govt should not expect every citizen to know every tax rate and tax law in every municipality in the Union.  Some states have destination sales tax, some have origin sales tax, etc.  My sales tax in Seattle is a combination of state, county, and city taxes that I would never expect someone out of state to know, or even someone on the other side of the state.

Inspired Bibliophile
deesy58
Posts: 2,486
Registered: ‎01-22-2012

Re: Website Complaint


keriflur wrote:
. . .

I agree that sellers should collect.  IMO if the state isn't requiring that, then they should be out the taxes.

 

The burden to calculate this should not fall on the consumer.  The Govt should not expect every citizen to know every tax rate and tax law in every municipality in the Union.  Some states have destination sales tax, some have origin sales tax, etc.  My sales tax in Seattle is a combination of state, county, and city taxes that I would never expect someone out of state to know, or even someone on the other side of the state.


The states would dearly love to be able to force the collection of sales taxes on all sales made from or into their states.  Unfortunately, the issue of which state should receive the revenues immediately arises.  Sales tax is a regressive tax that should be replaced by a more progressive taxing system through tax reform.  I won't hold my breath.  :smileyfrustrated:

 

Typically, the state receives the sales tax revenues from the collector (retailer), then distributes those taxes to the appropriate county or municipality.

 

In Illinois, it is required that retailers establish an account with the state's Department of Revenue and receive a unique account number that is different from the Tax ID number that is used for income tax reporting.  Collectors are required to report and forward collected sales taxes to the state on a quarterly basis.  Large retailers might be required to forward the collected taxes more frequently.

 

Technically, back when I had my small business in Illinois, I should have established sales tax accounts in Indiana, Iowa and Wisconsin.  I would then have been required to report and forward collected sales taxes to four different states every quarter. 

 

The paperwork burden can be overwhelming for small businesses.  Even if third party services are established and offered to small businesses, they won't be free, and must be paid for from profit margins, which might already be thin.  It could drive small retailers out of business.  It should be just great for the economy ...  :smileysad:

 

I don't believe that it is feasible to attempt to establish a single sales tax rate nationally.  Each taxing body has its own, legally established, tax rate, and it varies greatly across the United States.  It would be unreasonable to expect that the residents of North Dakota, for example, should pay the same rate as the residents of Chicago, New York or Los Angeles. 

Distinguished Bibliophile
patgolfneb
Posts: 1,762
Registered: ‎09-10-2011
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Re: Website Complaint

Deesy, if you were replying to my post? The collection rate would be established for each state,not the same rate for every state. The state would be responsible for remiting cities with local sales taxes their share. Determining the formula is the issue. This would simplify the process for the collector, no need to verify whether someone in a zip code was in or out of the city etc. The expectation is that remittance accounts and such would be simplified under the  final bill as well. States will be giving up some of their audit power as well. States have to agree to do this, they cannot be forced. It is likely that states and cities might not receive 100% of the revenue the same local purchase would, but it would be much higher than the current system recovers.

 

You have voiced your concerns based on your past experience before. I believe you are failing to acknowledge the effect modern database programs and online banking could have on this process. I am convinced that small business are grossly exaggerating the time and expense involved because it would reduce the unfair cost advantage not adding the tax to purchases gives them. 

Distinguished Bibliophile
keriflur
Posts: 6,767
Registered: ‎01-05-2010
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Re: Website Complaint


patgolfneb wrote:

Deesy, if you were replying to my post? The collection rate would be established for each state,not the same rate for every state. The state would be responsible for remiting cities with local sales taxes their share. Determining the formula is the issue. This would simplify the process for the collector, no need to verify whether someone in a zip code was in or out of the city etc. The expectation is that remittance accounts and such would be simplified under the  final bill as well. States will be giving up some of their audit power as well. States have to agree to do this, they cannot be forced. It is likely that states and cities might not receive 100% of the revenue the same local purchase would, but it would be much higher than the current system recovers.


It seems like as the seller has the buyer's zip code for billing purposes, software could do the rest, without a need for a state rate.

Inspired Contributor
TaustinOC
Posts: 58
Registered: ‎08-25-2011

Re: Website Complaint


MacMcK1957 wrote:

Can you imagine the nightmare facing those really small businesses that operate out of their garages and spare bedrooms?

 

Frankly, those people are already using third-party software to handle their credit card processing, and it's not unreasonable to expect that the vendors offering those services would add tax processing fairly easily, based on the zip code of the recipient.  If every online seller suddenly needed the service, it would appear.


It's been a few years since I had a merchant account, but that's not really a service they offer. A payment portal might, and might get it right, but they're going to charge significant fees (at least compared to the merchant account fees) for their value added service.

Inspired Contributor
TaustinOC
Posts: 58
Registered: ‎08-25-2011

Re: Website Complaint


keriflur wrote:

patgolfneb wrote:

Deesy, if you were replying to my post? The collection rate would be established for each state,not the same rate for every state. The state would be responsible for remiting cities with local sales taxes their share. Determining the formula is the issue. This would simplify the process for the collector, no need to verify whether someone in a zip code was in or out of the city etc. The expectation is that remittance accounts and such would be simplified under the  final bill as well. States will be giving up some of their audit power as well. States have to agree to do this, they cannot be forced. It is likely that states and cities might not receive 100% of the revenue the same local purchase would, but it would be much higher than the current system recovers.


It seems like as the seller has the buyer's zip code for billing purposes, software could do the rest, without a need for a state rate.


It's far, far more complicated than that. first of all, there are 43,000 zip codes in the US. Each state (that has sales tax - I believe there are still a couple that don't) has their own tax rate. Some counties have their own sales tax. Some cities have their own sales tax. Some places have special tax districts that only cover part of a city. There are tens of thousands of different sales tax districts in the US.

Then you add in the insane variation of what's taxable and what's not. In some states, food isn't taxable, but junk food is. At one point, in California, if you bought a case of Twinkies individually at your local 7-11, it was taxable. But if you bought a whole case of them - the exact same product, but in a box., it wasn't. There are places where buying the exact same product at kind of store is taxable, but another isn't. There are places where if you by a bottle of Coke, it's not taxable, but if the clerk opens it for you, it is (because it's now being served, rather than sale of a food product.) When California first started taxing "junk food," for a period of a couple of years, Board of Equialization (the state office repsonsible for collecting sales tax) - published - policy was "we don't know what's taxable and what's not, but if you guess wrong, we'll fine the crap out of you for it once we figure it out."

 

And remember, it's different in every state.

 

It's possible for a small business, even an online one, to keep track of what their own states' requirements are. Keeping track of 50 states, plus DC, plus a couple of territories, is beyond the ability of a small business. You have to have a consultant, and the fines for getting it wrong will put you out of business. That means your small business is now that much less profitable. What may have been enough to support one person and their family may well then be unsustainable, and out of business.

 

That is the reason why the Supreme Court rules - decades ago, when mail order catalogs were big - that merchants couldn't be held accountable for collecting income taxes in other states. I'm not sure where Congress gets the idea that they have the authority to implement such a scheme. They don't. If they can get all states to agree on a single tax rate, everywhere (as in, no more county and local tax districts) - they won't - they might get past the inevitable challenge. As it is, good luck.

Inspired Contributor
TaustinOC
Posts: 58
Registered: ‎08-25-2011
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Re: Website Complaint


patgolfneb wrote:

Deesy, if you were replying to my post? The collection rate would be established for each state,not the same rate for every state. The state would be responsible for remiting cities with local sales taxes their share. Determining the formula is the issue. This would simplify the process for the collector, no need to verify whether someone in a zip code was in or out of the city etc. The expectation is that remittance accounts and such would be simplified under the  final bill as well. States will be giving up some of their audit power as well. States have to agree to do this, they cannot be forced. It is likely that states and cities might not receive 100% of the revenue the same local purchase would, but it would be much higher than the current system recovers.

 

 



Different tax rates in different states will not pass constitutional muster. That Supreme Court case law is probably a century old or more. And relying on states to pass on cities' share to them is, in California at least, guaranteeing that the cities will never see a penny, ever. (They're already forcing stuff like property tax, which is supposed to be to support local government services, like police and fire, to go through the state, where they mostly just keep it.)

flyingtoastr
Posts: 3,041
Topics: 55
Kudos: 2,975
Registered: ‎11-11-2009
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Re: Website Complaint


TaustinOC wrote:

That is the reason why the Supreme Court rules - decades ago, when mail order catalogs were big - that merchants couldn't be held accountable for collecting income taxes in other states. I'm not sure where Congress gets the idea that they have the authority to implement such a scheme. They don't. If they can get all states to agree on a single tax rate, everywhere (as in, no more county and local tax districts) - they won't - they might get past the inevitable challenge. As it is, good luck.


Interstate commerce clause.

 

They very much do have the right to intervene. If it crosses state lines, the feds have the right to set the law.

Distinguished Bibliophile
keriflur
Posts: 6,767
Registered: ‎01-05-2010
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Re: Website Complaint


TaustinOC wrote:

keriflur wrote:
It seems like as the seller has the buyer's zip code for billing purposes, software could do the rest, without a need for a state rate.

It's far, far more complicated than that. first of all, there are 43,000 zip codes in the US. Each state (that has sales tax - I believe there are still a couple that don't) has their own tax rate. Some counties have their own sales tax. Some cities have their own sales tax. Some places have special tax districts that only cover part of a city. There are tens of thousands of different sales tax districts in the US.

Then you add in the insane variation of what's taxable and what's not. In some states, food isn't taxable, but junk food is. At one point, in California, if you bought a case of Twinkies individually at your local 7-11, it was taxable. But if you bought a whole case of them - the exact same product, but in a box., it wasn't. There are places where buying the exact same product at kind of store is taxable, but another isn't. There are places where if you by a bottle of Coke, it's not taxable, but if the clerk opens it for you, it is (because it's now being served, rather than sale of a food product.) When California first started taxing "junk food," for a period of a couple of years, Board of Equialization (the state office repsonsible for collecting sales tax) - published - policy was "we don't know what's taxable and what's not, but if you guess wrong, we'll fine the crap out of you for it once we figure it out."

 

And remember, it's different in every state.

 

It's possible for a small business, even an online one, to keep track of what their own states' requirements are. Keeping track of 50 states, plus DC, plus a couple of territories, is beyond the ability of a small business. You have to have a consultant, and the fines for getting it wrong will put you out of business. That means your small business is now that much less profitable. What may have been enough to support one person and their family may well then be unsustainable, and out of business.

 

That is the reason why the Supreme Court rules - decades ago, when mail order catalogs were big - that merchants couldn't be held accountable for collecting income taxes in other states. I'm not sure where Congress gets the idea that they have the authority to implement such a scheme. They don't. If they can get all states to agree on a single tax rate, everywhere (as in, no more county and local tax districts) - they won't - they might get past the inevitable challenge. As it is, good luck.


I see nothing here that couldn't be housed in a database (FYI, I work with databases for a living).  If the data can be housed in a DB and pulled based on zip, then software can be built to provide the info.  The idea that it can't is a bit silly, given that companies like B&N calculate correct sales tax all the time.

 

I'm not saying that every business should build and track this data.  I'm saying that if there isn't a software company that provides this service, the market is ripe for it.