In California and elsewhere, efforts intensify to close online sales tax loophole

[alp227]

Source: San Jose Mercury News

WASHINGTON — Web-savvy shoppers can often save big buying online instead of at the local mall. But a chunk of the savings comes at the expense of state and local governments, in the form of sales taxes that are never paid on many Web purchases.

The losses add up for cash-starved state and local governments across the country: California alone loses out on more than $1 billion a year.

Now California and other states are starting to get serious about collecting that money. Options under consideration include rewriting the rules on which dot-coms have to charge sales tax — or even requiring online retailers to send their customer lists to the government.

And in an ironic twist, states are getting support from tax-wary business groups, which complain that online retailers such as Amazon and Overstock are exploiting a legal loophole to undercut the competition on pricing.

Read more: http://www.mercurynews.com/ci_15507730

[ProudDad]

1. It's too damn bad that the sheeple allow

regressive taxes like a sales tax...

Here in the New Mississippi, Arizona, sales and property taxes that hit poorer folk the hardest along with the smallest marginal income tax rate for the rich are the only way they use to underfund EVERYTHING IMPORTANT...

But this insane republican wet dream is really "business friendly" (if you're a large, multi-national corporation -- especially if your in the fucking war business!)

[ProgressiveProfessor]

2. Depends on how its done

No sales taxes on food and such really helps with the regressive part

[ProudDad]

6. Not when the goddamn tax rate has gotten near 10%

and we get shit for it...here in the New Mississippi -- Arizona...

Of course the war mongering fucks at Raytheon and the copper mine owners get their subsidies and tax breaks!

And the asphalt layers, they get their vigorish...

But not teachers...

[quakerboy]

10. Thats why I love Oregon

No sales tax. This state is pretty sweet. Dunno why anyone else puts up with it.

[county worker]

3. It would hurt Ebay sales if everyone who sold something had to collect tax and remit it to the state

This article makes it sound like someone is stealing from the state.

[Lorien]

13. Yep, but would help online retailers like Walmart

who already include sales tax because they're in every State. The little guy would get hammered by this-and that's the whole point.

[Frank Booth]

4. Good. Internet business is killing small businesses.

There's no reason internet retailers should have this additional advantage.

[David Zephyr]

5. It's true.

I would never buy from Amazon. I am a Californian. They do not contribute one dime toward our roads, our parks, our schools. But both Borders and Barnes & Noble do. So, if I'm not shopping a local small book store, but am on-line, I favor Barnes and Noble or on-line book stores that contribute to the State of California. New York and others are in the same bag.

These predator mega on-line stores want the golden markets of New York and California, but don't want to do any of the lifting while they undercut those that are doing their share.

Amazon is a monster. In many ways, worse than Wal-Mart.

[Frank Booth]

11. I agree. Just think of how many people who used to work at independent booksellers

have lost their jobs because of Amazon. Same with all those at Hollywood Video, Blockbuster and local video stores because of Netflix. Shoe stores, clothing stores, record stores, etc. Some of those jobs might not have been the greatest, but there are millions of unemployed people who'd be happy to have any type of work at all right now. And those jobs aren't coming back.

[SunnySong]

16. well that isn't a sales tax issue that is a better mousetrap issue. nt

[AtheistCrusader]

14. You pay sales tax on Amazon if you buy in Washington State.

Which is super-annoying to me.

[Tyrone Slothrop]

26. Umm...you have to pay sales tax to Amazon if you live in New York

Not sure where you're getting your info from, but Amazon has cooperated with NY since 2008 on this matter.

http://news.cnet.com/8301-10784_3-9944934-7.html

[Skink]

27. Yeah i've noticed doing returns at BN from online sales everybody is now paying sales tax.

Amazon needs to face a government lawsuit due to tax avoidance.

[Nye Bevan]

34. "Amazon needs to face a government lawsuit due to tax avoidance"

Why? What taxes is Amazon avoiding?

[Skink]

40. Sales taxes on new products.

I'm not for taxing used stuff like ebay items. For new items sales tax should be collected and payed to the state where the order was placed.

[Nye Bevan]

41. Amazon does not pay the tax.

So they are not "avoiding" anything. When I order from Amazon in CT I am required to calculate the 6% use tax on my purchase and pay this to CT when I file my tax return. Therefore CT benefits just as much from my Amazon purchases as from my purchases at actual stores. If people do not pay this tax, it is their fault, not Amazon's. There is no law saying that Amazon (a company in Washington with no presence in CT) is obliged to collect taxes for CT, so there is no basis to sue them.

[Skink]

43. So you mean all those books for a penny I have to start claiming.

In college we used to drive to New Hampshire to buy beer to avoid the sales tax.

[Nye Bevan]

33. Don't you know that you have to pay California Use Tax on your Amazon purchases?

I'm not sure why you claim that Borders and Barnes and Noble "contribute" to roads, parks and schools. They do not. Their *customers* pay the sales tax; Borders and Barnes and Noble just collect it and pass it on to the state. When you buy from Amazon, you are obliged to calculate the use tax and pay this use tax to California. Which would result in Calfifornia's roads, parks and schools benefiting just as much from your Amazon purchases as from your Borders purchases. So I don't understand why you avoid buying from Amazon, unless you are a tax cheat and just can't bring yourself to pay the use tax.

[Tunkamerica]

17. Of course there are no small businesses online.

[TommyO]

19. Many businesses that do internet sales are small businesses

[Recursion]

29. Most Internet retailers *are* small businesses NT

[SoapBox]

7. I will simply NOT buy stuff online OR in the state.

Get a grip vultures. I am sick and tired of Sacramento and every two-bit
local pol, trying to figure out how to rip a few cents out of my pocket. I
have to travel to Oregon (no sales tax) and if there is something that I
DESPERATELY need, I'll get it there and bring it back.

Make no mistake...I AM in favor of government.

I am NOT in favor of lining the pockets of pols and various HIGH paid government employees.

How do the citizens get some ballot measures in place to limit tacking on all sorts of taxes and fees?

...I'm tired of this bull.

p.s....Is the scam for "luxury" boat buyers still going on in CA? They buy the boat
here, park it in Mexico for a few weeks, and then bring it back, TAX FREE?

[juajen]

8. I agree. My daughter saved and saved so she could pay

cash for a good used car. Her taxes and title fees on this car were almost $650, which she had a lot of trouble paying as it took every penny she had saved for the car. She had to take the car at that time because she had been looking for it for over six months. As if taxes had not already been paid on this vehicle at least once, maybe twice.

But the rich rarely pay taxes. They buy it wholesale with their power and pull. I, too, am sick of the rich getting tax breaks that the poor desperately need. Additionally, their credit is sky high because they have no trouble paying their bills and spending lavishly, so they get break after break for having that great credit score, while the poor get penalized over and over again because they can't get by on the measly money they earn slaving away for our government and corporations.

We do know that the poor really need this break from taxes when they buy online. I have sympathy for the states who are losing revenue; but why the hell do they exempt the rich and corporations from paying their share. Did you know that Exxon-Mobil paid no taxes last year even though their profits were in the billions of dollars? There are so many huge corporations who pay not one penny for the roads they travel on or for the privilege of shipping our jobs overseas. So, now that we have finally found a way to save a small amount of money, the states want to deprive us of it. I'm sorry, let them tax the rich and corporate America and then I can sympathize is there is a shortage.

[Zenlitened]

9. In Massachusetts, tax filers are "required" to self-report tax due on such purchases.

In the era of filing via paper forms sent in through the USPS, this requirement was easily "overlooked."

But now it appears electronic filers must enter a figure, in order for the return to be accepted for processing.

Makes it tougher for people to skate on a tax that they likely feel is completely unfair to begin with.

And it's not a perfect system from the vantage point of a state wishing to collect revenue, either.

The one positive I can see is that it keeps the burden of tax collection and reporting off of smaller businesses that have no physical presence in the state. I don't think the burden would overwhelm a biz the size of, say, Amazon, though.

24. How do I compute Use Tax due?

Individuals who purchase taxable tangible personal property for use in Massachusetts from out-of-state businesses that do not collect Massachusetts sales and use tax must self-assess their use tax liability and remit the amount directly to the Department of Revenue. Examples of taxable items include computers, furniture, jewelry, cameras, appliances and any other item that is not exempt. The Massachusetts use tax is 5 percent of the sales price or rental charge of tangible personal property on which no Massachusetts sales tax was paid, where the property was purchased to be used, stored or consumed in the Commonwealth.

To compute the amount of use tax due, taxpayers may either:

* Compute the actual amount due with respect to such purchases by using the Form 1, line 33 or Form 1-NR/PY, line 38 worksheets; or

* Use a schedule to identify a "safe harbor" amount of use tax that they can self-assess when filing their income tax returns, based on the taxpayer's Massachusetts adjusted gross income. If this method is used, however, the estimated liability is only applicable to purchases of any individual item having a total sales price of less than $1,000. These purchases are not part of the safe harbor estimate and must be calculated separately.

The worksheet and schedule are available in the Form 1 and Form 1-NR/PY Instructions.

A more in-depth explanation about Use Tax is available in the Guide to Taxes.

Link:
http://www.mass.gov/?pageID=dorterminal&L=4&L0=Home&L1=Individuals+and+Families&L2=Personal+Income+Tax&L3=Personal+Income+Tax+FAQs&sid=Ador&b=terminalcontent&f=dor_help_q_and_a&csid=Ador#25

[Jkid]

22. Computing use tax due?

Good luck enforcing that. :evilgrin:

[Zenlitened]

36. Electronic filing seems to be a kind-of-sort-of way to enforce it...

... or at least corral more people into using the "safe harbor" figure.

As I said, not perfect from the perspective of gov revenue collectors.

Nor that of many taxpayers, no doubt.


(ETA missing word)

[slackmaster]

23. That is also true in California, and possibly all other states

But it's impossible to enforce.

[Lorien]

12. That would kill small online sellers. Time to tax the Rich, corporations

and slash the Pentagon budget. No need to penalize the rest of us; we're squeezed nearly to death as it is!

[AtheistCrusader]

15. We could reduce that budget by 80% and still have more military spending than anyone else.

It's friggin' obscene.

[deacon]

20. You are 100% correct. n/t

[Hubert Flottz]

18. Somebody has to pay for those Bush tax cuts...

Better you than some poor cash strapped CEO, who owns a politician or three and can make them screw the "Little People" some more...

[droidamus2]

21. What's wrong with the way they do it now

As I understand it (at least where I have lived) if you sell within the state you live in you pay/charge sales tax, selling to any other state or country you don't. The problem with trying to tax internet transactions is which state gets to charge the tax? Is it the state where the product is being shipped or the state where it is being received? What if it is a drop-ship situation where the seller doesn't really have the product but just connects the actual producer with the buyer? Do we then collect taxes in the sellers state, the shippers state and the buyers state? Of course, I'm sure the states would love to tax all ends of the transactions because we wouldn't want the little guys to be making too much money now would we?

[slackmaster]

24. It's called "Use Tax"

Google it.

[Skink]

28. It should be a Federal sales tax.

then of course we'd know that red states would be getting an unfair precentage of it back but I digress.

[slackmaster]

30. There shouldn't be any sales tax. Sales tax is the most regressive tax possible.

It hits the poorest people hardest.

[Skink]

32. but now we have unfair competition between online and bricks and mortar.

I think sales tax is to high. It is nearing 10 percent where I live. But we pay a modest gas tax for roads. A modest sales tax could be used wisely.

[slackmaster]

25. It's not a "loophole". The requirement to pay Use Tax is quite clear.

The problem is the difficulty of enforcing it.

[Romulox]

31. If the States added value to these transactions at any point, they wouldn't find them so hard to tax

The States tell us, with a straight face, that we must inform them of the things we've purchased so that they can tax them? What right do they have to tax a transaction of which they have no knowledge? In other words, how can the States claim to "add value" to a transaction that they are unable to track or even identify for themselves? The answer is that the States add no additional value to these transactions--bureaucrats just really want to fund their own retirements by collecting a tax unrelated to any service they may or may not render to the taxpayer.

[Zenlitened]

38. Interesting point. :)

What right do they have to tax a transaction of which they have no knowledge? In other words, how can the States claim to "add value" to a transaction that they are unable to track or even identify for themselves?

[Heywood J]

35. There's a simple solution for this.

Doing away with the sales tax and adjusting the income tax accordingly (for businesses and consumers) seems a better option. It's also a better way of providing relief to the needy, as the worst-off pay no/limited income tax. There's less work done in having to chase down every consumer for assumed online transactions or forcing individuals to incriminate themselves. We already have income-tax evasion enforcement. It would also provide a temporary stimulus to retailers in states where this is done, until surrounding states also implement it, and by simplifying the sales procedure.

Double-taxing the public (when made and when spent) on the same money is unethical.

[slackmaster]

37. Mr. Jablowme make sense here

:hi:

[Milo_Bloom]

39. Use Tax.. lol.

Are their any idiots reporting their book purchases for extra taxing?

[Nye Bevan]

42. Income tax....lol

Are there any idiots who get paid in cash and report this income to the IRS to be taxed?

[Milo_Bloom]

44. They would be pretty stupid if they did.