I'll see if I can help.
Correct, this is no federal sales tax. That law is about states collecting sales tax they are owed under state law.
Since your premise was wrong, this sentence isn't valid anymore.
In most states (I say most but I'm not familiar with every state, but I'd bet it's every state) businesses **don't** pay sales tax on items they purchase (i.e. inventory) they buy for resale. Businesses only pay sales tax (called a use tax) on items they consume. For example, lets say a business sells computers and they by 200 computers for resale - they pay no sales tax on those computers. Now if that business pulls two computers from inventory and uses the computers for the business - then they owe the state the sales (or use) tax.
If individuals are selling, they have probably already paid tax on the item they are selling, the first time when they purchased it.
If an individual sells an item, they are not a business, they are not subject to this law.
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Hope that was helpful.
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That was helpful, but the reality is with interstate trade, there is no way for this to become a reality without it becoming a federal tax. The cost to administrate this as a state sales tax would be to much. Even though I agree with much of what you have said, I have been on this world long enough to know however, that not every decision is based on sound knowledge or sound reasoning especially when it comes to the government, so yes my initial reaction was one of skepticism . I still believe that taxing internet sales is ridiculous. This country does not have a deficiency in income, it has a logic deficiency in knowing what to properly do with the income it has,
I'm not sure that small business people would agree, that they aren't already heavily taxed.
The IRS has put EBAY in the middle on the last issue. EBAY is now requesting SSN if you sell over a certain amount in a given year, for tax reasons. Again fuzzy logic, just because someone sells a certain amount in a given year does not mean that they are a business or that they haven't already paid tax on the item before they tried to resell it.
Too much fuzzy logic is what got us where we are today!!
Just a couple of things...
That was helpful, but the reality is with interstate trade, there is no way for this to become a reality without it becoming a federal tax.
You are free of course to have any opinion you want, but the reality is that this is not a federal tax, it is a collection vehicle for tax by states. Tax laws that are already on the books which people are illegally evading.
The cost to administrate this as a state sales tax would be to much.
We'll see if the legislation passes, but consider. E-commerce sales in 2012 exceeded 220
Billion dollars, at an average 5% tax that is 11
Billion dollars in revenue for the states. Using Virginia as an example that is 285
Million dollars in tax revenue that is currently owed but only a fraction is collected. The cost to administrate this will be through the increased revenue. If Virginia can't administer their tax revenue out of the 285 Million dollar increase then my state has serious problems.
From a business perspective, small mom & pop shops are exempt already. Only business with 1 Million dollars in sales can be required to collect the taxes already due. My neighbor, runs a e-commerce business out of her garage. She sells jewlery/hobbie supplies on the net. She won't be required to change her business practices at all.
Now the reality is there will be some growing pains, but we're talking e-commerce. By it's very nature the business is run through marketing software for the website on the front end which connects to database software for accounting, bookkeeping, inventory, billing, and collections. E-commerce businesses ALREADY are required to collect and remit sales tax when the delivery address is in the same state as the seller. Amazon ALREADY provide a Tax Collections Service for e-commerce providers that provides tax collections across multiple jurisdictions.
What will probably happen is you will see an expansion of such services by major online retailers (like Amazon) for tax collections services. The suppliers of the software used by sellers that drives e-commerce will include the sales/use tax as normal functionality. Then you will see 3rd party providers, Banks, etc. that will collect the tax information from the sellers and will act as a clearing house that will interface with the individual states.
If the USPS, FedEx, UPS, etc. can provide software that calculates various shipping charges for any address in the United States, you can rest assured that programmers will be able to write the software that, based on tables the states will be required to supply for free, that they will be able to calculate the applicable tax based on delivery address.
Even though I agree with much of what you have said, I have been on this world long enough to know however, that not every decision is based on sound knowledge or sound reasoning especially when it comes to the government, so yes my initial reaction was one of skepticism . I still believe that taxing internet sales is ridiculous. This country does not have a deficiency in income, it has a logic deficiency in knowing what to properly do with the income it has,
I don't disagree with the fundamental concept. We do have a spending problem and that does need to be addressed. In the 2012 elections the Democrat position was we don't have a spending problem, they wanted to increase revenue by increasing taxes to fund increased spending. We (I'm a Republican) supported maintaining current tax rates and increasing revenue by closing loopholes and then cutting spending to shrink the deficit. The taxes exist, they are being evaded - this is closing a loophole which increases revenue without increasing rates.
I'm not sure that small business people would agree, that they aren't already heavily taxed.
Small business are exempt.
The IRS has put EBAY in the middle on the last issue. EBAY is now requesting SSN if you sell over a certain amount in a given year, for tax reasons. Again fuzzy logic, just because someone sells a certain amount in a given year does not mean that they are a business or that they haven't already paid tax on the item before they tried to resell it.
Here is an experiment for you. Buy yourself a hot dog cart, buy your products (on which you will pay sales tax) then go to any busy street corner and begin selling hot dogs on buns, sodas, and chips. When the policeman asks to see your business license - tell him you aren't really a business. Sure you are selling hot dogs in a commercial manner, but you aren't a business. Let us know if that works.
Now that's not saying that if you have an XBox that you don't need anymore and you sell it online that you are a business. However if you sell a million dollars in XBox's online (the threshold in this law), then ya - your state of residence will be considering that a business.
Too much fuzzy logic is what got us where we are today!!
What is "fuzzy" about the logic that States have sales/use tax on the books, collection methods in the past have required consumers to be honest and report themselves to the cognizant state and that consumers don't do so and thereby illegal commit tax evasion. Therefore the paradigm is shifting from backend collection after sale to front end collection at the time of sale.
Do you think states should end the practice of charging sales tax at the time of purchase for B&M stores and just require that consumers track their purchases and then send the state a check?
The collection method is being changed so that it is the same for e-commerce and B&M sellers.
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