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Mon May 13 2013 14:04:25

Survey: How Would the Internet Sales Tax Affect You?

By: Julia Wilkinson

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The Senate approved the Internet Sales Tax proposal last Monday, and it is now headed to the House. EcommerceBytes would like to know how its readers feel about the measure, and if it would affect you, as the law would only apply to online sellers that have sales of at least $1 million outside of states where they have physical operations, like a store or a warehouse.

According to
one article, the bill will be a tough sell in the House, with Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, which would have jurisdiction over the bill, citing problems with the legislation but not rejecting it outright: "While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said, adding, "businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions."

We'd like to know how you feel about it both as a seller on the Internet, and as an online buyer. Please take our short survey below, and let us know how you feel.

Click here to take the survey!


Have a comment about the tax and how it may or may not affect you? Feel free to post it here!




Comments (29) | Permalink

Readers Comments

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: permacrisis

Mon May 13 14:34:18 2013

Randy Smythe has said, and I am in complete agreement, that the internet should be considered its own virtual 'state' which collects a 5% tax, that would them be divided among the actual States. It's the simplest approach possible, doesn't hamper ecommerce, and in that scenario everyone pays regardless of size. It's so EASY and I'm mystified why they don't just do it. His excellent article here:  http://bit.ly/FP2cU

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: Ming the Merciless

Mon May 13 14:41:53 2013

Don't do $1 million annually anymore (thank you, Ho!) but if and I when I do, I'll create another corporation.

In principle, I have no problem collecting sales tax and in fact do collect and remit sales tax when I make an in state sale.

In practice, however, the bill unnecessarily makes collection and payment an absolute nightmare.

If I drive across state lines and buy something, I pay whatever sales tax rate applies where that store is physically located.

Is this bill were to apply to brick and mortar stores, however, the amount customers pay in sales tax would be the tax rate where the customer lives.

Why are they imposing such an unworkable, cumbersome plan on online merchants that brick and mortar stores don't have to contend with?

Why not base online sales tax where the seller is? So much simpler. But it would require states to sign off on a fixed percentage.

Online sellers should have no more or less onerous tax collection requirements than brick and mortar stores.

That, IMO, is what makes the current bill overly burdensome.

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: bitbybit

Mon May 13 16:01:11 2013

Does not affect me and probably most sellers since not even close to SELLING $1 million. It's JD's precious favored retailers problem. Once and if this gets going, I foresee this coming back as a requirement in the B&M stores.

This actually could be good for those making under $1 mill since those who do have to pay the tax will have to raise their prices allowing smaller sellers to offer better pricing. Does this make sense?

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: iheartjacksparrow

Mon May 13 18:53:02 2013

I'm another person who doesn't sell anywhere close to $1 million, so I won't be affected. And I agree with "bitbybit" that JD's favored sellers will be the ones hit hard. But can the U.S. force sellers based in China to pay sales taxes?

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: Basset

Mon May 13 19:14:23 2013

Won't affect me - waaay under a million.

But I do wonder that once they tax collection toe is dipped in the pond if the million dollar limit will gradually get lower and lower as states realize it just may not be the goldmine they think.

Fees concern me. I don't sell on Amazon, but I did read in a news article (not here) that compared eBay and Amazon's reaction to an internet tax bill potentially passing. The article mentioned that Amazon is planning (or already has) a fee for collecting sales  tax???  IF that is correct, I'm sure ALL venues will find a new fee to pass on to sellers.

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: nobody This user has validated their user name.

Tue May 14 00:42:22 2013

It will be soooooooooooooooo fun!

Um, yeah... not.

Once they set the precedent with this bill, it's going to be across the board collection, even if you sell a one dollar squirt gun.

If those aren't found to be illegal, that is.

Absurd.

When it comes time for everyone to pay pay pay, I will reject online payments and begin to deal in alternative currencies.

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: billslistings This user has validated their user name.

Tue May 14 01:24:35 2013

A million now, lowered to $500,000 a little later, then lowered again to $50.
Once implemented and the gov receives a tax dollar and sees there is more income to be had, there'll be no stopping them.
Kinda like Greedbay

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: Joy This user has validated their user name.

Tue May 14 05:48:28 2013

It wouldn't affect me at all, as I would figure a way around it. Besides that, I am only going to collect sales tax for those who live in the same states as I sell. If you travel to my state by car and buy from me, then I collect sales tax.  If you purchase from me via the internet then you are using the internet as a form of transportation to buy from the state I sell from. To keep things simple, I should only collect sales  tax from the state in which I sell from.  

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: RWRINN This user has validated their user name.
Web Site

Tue May 14 06:08:08 2013

I fall below the proposed one million dollar sales level. But, I have a sales tax license for both brick and mortar and Internet sales.

Our government is unable to create anything that is simple and I hope their present online tax initiative fails.

I have a ''Fair and Simple Way to Level the Playing Field for Online Sales.''  

SUMMARY:

By eliminating sales and use taxes, using existing technology, and requiring EVERYONE to pay a Processing Fee (PFE); we simplify life for all retailers and generate needed income for individual states.

Apply this immediately to Amazon, Wal-Mart and all online sellers whose gross sales exceed one million dollars a year.  

Fine tune the process and then start reducing the annual sales level until EVERYONE who sells anything on the Internet is paying.  

THE PROCESS:

1. Eliminate all online sales and use taxes.

2. Impose a Processing Fee (PFE) on every sale made - no exceptions. (This is a fee not a tax.)

3. Every time an online sale is made by Amazon (Wal-Mart, Target, etc.,) a % of that sale is transferred into a holding account. Once the processing fee is deposited in the holding account, it cannot be reversed.

PFE is based on the total amount of the sale including processing fees, handling fees, etc.

No matter what Amazon calls it, PFE is charged for the total amount of money the customer pays for his or her purchase.

4. At midnight, the holding account is transferred to a Federal computer.

5. The Federal computer takes the money received and immediately transfers it, less an agreed upon processing fee that pays for the computer, to individual state computers based on a distribution formula agreed to by the individual states. (Individual states distribute their loot any way they want to.)

6. Once this works properly for Amazon, the one million in sales cutoff should be dropped to 500,000 and then to progressively lower amounts. Within a few years EVERYONE selling on the Internet will pay their fair share in processing fees. Since the PFE goes to a Federal computer, anyone trying to beat the system should be charged with a Federal crime and vigorously prosecuted.

If elected officials don't spend the money faster than it is collected, the % should be lowered as more and more businesses begin paying PFE. (Every business selling on the Internet, NO EXCEPTIONS, will pay a PFE.) If you object to paying PFE, for any reason, don't sell or purchase via the Internet.

Cost of collecting and processing PFEs should be minimal for both government and private businesses. You won't need lawyers and accountants to figure out how to beat the system. You sell anything on the Internet and you pay PFE. You try to beat the system and you deal with the IRS or another Federal agency.

Companies who work with affiliates (Amazon) and companies like PayPal who offer shopping carts, would collect a PFE for every transaction. This would eliminate everyone using these systems from the burden of collecting and disbursing PFEs for those sales. (And immediately start collecting revenue from small sellers who have avoided collecting and reporting sales taxes on their sales.)

BENEFITS:

No tax tables, of any kind, required.

Individual states have a daily stream of incoming revenue.

The Federal computer and its SMALL staff is paid for by an agreed upon processing fee.

Amazon and other big corporations pay their fair share and are prevented from playing games with their books to avoid paying PFE.

Each business decides whether to pass the PFE on to its customers or absorb the fee internally.

Customers choosing to purchase via the Internet would be subject to brick and mortar sales tax rules and fees. Everyone selling anything on the Internet would pay PFE. (Whether or not PFEs would be a business deduction would up to individual states and the Federal government.)

Everyone selling on the Internet should be subject to the same rules and fees; but, they have to be understandable, simple to administer and affordable for all businesses.  

This system is simple, easy to implement with our modern technology, and can operate independently of the current complicated sales tax systems that small and big business have to deal with on a daily basis.  

Small businesses are not asking for favors, we just want a fighting chance, a reasonably level playing field, and a collection process that doesn't cost more than we can afford.  

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: Rexford

Tue May 14 07:57:07 2013

Can't wait to see how this works. Different counties in different states have different sales tax rates.  Surely it will be a nightmare.  Did the government even think of how this will be implemented?  I seriously doubt it.  They are just salivating over the potential revenue that it will bring in.

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: Carol This user has validated their user name.

Tue May 14 08:44:27 2013

I'm amazed to be the lone voice saying ''It's about time''.  

I've been selling online since 1996.  When I started selling online, I had a brick and mortar shop as well.  It took about 30 seconds to realize that online selling was:

1.  Far easier - no shelves to dust, shoplifters to watch out for, thieves ready to hit you over the head.

2.  Far cheaper - Ever heard of overhead?  As online sellers we do not pay rent, utilities, insurance, merchant account fees (unless we choose to have a merchant account), bad check losses, etc.

My ebay and paypal fees combined are 11 - 12% of sales.  No in-person retailer has overhead that low!

As online merchants, we have enjoyed an unfair advantage over traditional retailers for nearly 20 years.

The fly in the ointment is implementation.

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: kzeeman This user has validated their user name.
Web Site

Tue May 14 09:23:44 2013

Agree with  RWRINN. This just doesnt have to be that big of a deal and as we grow ecommerce it needs to be collected. KISS

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: Basset

Tue May 14 09:33:43 2013

From a BUYER standpoint:

If this goes through, I would like to see the total cost with taxes BEFORE I commit to buy.

If the total with tax does not appear until after a buyer commits - I can foresee a few howls from surprised buyers. I smell an implementation mess ahead.

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: Moonwishes This user has validated their user name.
Web Site

Tue May 14 09:45:43 2013

The problem that I see with this tax is that it doesn't distinguish the type of product being taxed. In my state the products that I sell aren't taxable. So I don't charge sales taxes for the majority of my goods sold. In PA regular clothing isn't taxed, so we have people coming from NY, OH and Canada to buy clothes in our state and avoid the sales tax. this new tax doesn't seem to take into account the variances in what is taxable in a state and what isn't. As a small seller, how am I supposed to keep us with these different state laws? People will be getting charged sales tax on goods that aren't taxable in their state and that isn't far either.

I think the whole thing will be very problematic to administer. To administer there will end up being many federal/state employees hired to deal with all this and you will get the usual inefficiencies and all the collected tax will most likely go to employees, office expense, etc. that run the program (just like every other government program) and in the long run I doubt if the states get very much of their anticipated 'windfall'.

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: racecarguy This user has validated their user name.

Tue May 14 10:16:55 2013

It won't affect the small seller, like me. If you are selling over a MILLION dollars a year, you are NOT a small seller.

I think it will actually make it a little BETTER for the small seller, as the large seller will have to raise their price a bit to cover the tax, helping the Ma & Pa operation.

I could have guessed that the House, long the protector of Big Business, would be against it.  

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: FREDDY This user has validated their user name.

Tue May 14 11:03:10 2013

@ RW
What do you do in the case of returns or not delivered?? 3. Every time an online sale is made by Amazon (Wal-Mart, Target, etc.,) a % of that sale is transferred into a holding account. Once the processing fee is deposited in the holding account, it cannot be reversed.
I would not like it if the deal fell through for whatever reason and yet still had to pay the fee. H@@l NO.  

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: FREDDY This user has validated their user name.

Tue May 14 11:18:33 2013

Gov't cannot make anything simple. It reminds me of the way Feds and states can collect billions in income tax. Thus creating a bill that required Amazon, ebay, etc to submit amounts to IRS.  Have not heard yet as to where all those billions have helped out. How much did that create in reality????  This sounds like the same.  
What will they come up with next when they still want more tax money???? Probably a tax on the internet- whether or not you use it at all. Just charge because they can. Or how about everyone paying a hundred per year just to live in your state and then another hundred for the right to live in the USA. Someone has to pay to keep the separate state of DC politicians going. You do realize that the politicians CANNOT live on the salary alone.

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

by: comet This user has validated their user name.

Tue May 14 12:39:21 2013

@FREDDY---

Truer words---

Yep these pols will now NEED more and more just because they CAN.  (Gee wonder where we have heard THAT before???)

The "deal" with the IRS and PP etc sending the info to the Gov was (I feel) a prelim leading up to finding out how MUCH the IRS might expect to re-coup (or the State Tax Depts)  IF these taxes were suddenly to roll in.

This was a grab at the wallets of sellers making (I think) over $20,000 per year selling on line--I am not in that class sadly!  LOL!!!   But---I am not sure if this was "straight" sales or after expenses--surely some one else here knows this info.

But I think it was testing the waters.

Now you will see a host of needed services and personnel to co-ordinate ALL of these various county and local taxes--has anyone else ever seen a NY State Tax form that claims if you spent more than a night in NYC you are NOW A RESIDENT THERE AND NEED TO PAY TAXES on this?  No?   OF course no one who went to NYC for a few nights on vacation checks this off but the thing is---the way it is written if you avoid this it would seem that the IRS would be banging on your door tomorrow.  

This is what is going to be used to frighten people on this tax too.

I live on a state border--several of them in reality and shop regularly in Vermont---5% on somethings no clothing tax---New Hampshire--no sales tax;  Mass--varies.  NY--where I live--has County by County differences!

So now if I live where the tax rate is 7%--4% NY State tax and 3% County tax---and I go to Vermont--should I try and find some way to PAY a tax on clothing to reflect the fact that NY charges this--and VT does NOT?  Where do I pay the NH sales tax--oh wait--they don't HAVE one.

Hmmmmm---I see a way for a LOT of heartache to be avoided on this--everybody go rent a PO box in NH!  Bail yourself AND the PO out!!!!

But seriously--this is the LEAST thought out bill ever.  The pols are afraid to NOT vote on this as they have lobbys shouting in their ears--If WALMART has to pay so does MR. J.  Doe!!!!!   Even if he sold $50 worth of used sneakers!

Absurd.

   

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: Basset

Tue May 14 14:54:12 2013

Regarding getting the feds involved in collection -

Current news sounds to me like the IRS may have enough on their plate to deal with. They don't need the burden of additional duties at this time ; )

Survey: How Would the Internet Sales Tax Affect You?   Survey: How Would the Internet Sales Tax Affect You?

This user has validated their user name. by: Tula

Tue May 14 16:08:18 2013

As it stands now, it won't affect me, since I'm under $1 million, but I agree with others that it wouldn't be long before thresholds start falling. Our politicians never saw a pie they didn't want to get a piece of. As to those who claim online sellers have some sort of unfair advantage over B&M sellers, this is simply not true. Any perceived advantages are more than compensated for by the shipping and handling we have to deal with, especially now that more and more buyers are demanding free shipping (that we have to pay for). Rent? What about internet and web site costs? And let's not forget that many sellers pay for warehouse or storage space, along with personnel for pick, pack, ship, marketing, accounting, etc. This is mostly a ploy for the B&M sellers to get one up on the online sellers because we're taking sales from them and they don't like that. People do enjoy the convenience of online sales, after all, and nothing is stopping them from doing their own online selling.

Many proponents of this seem not to realize that it's also not just a matter of collecting a flat percentage on a sale. There are thousands of tax jurisdictions and as some have pointed out, each of those has its own rules. That means that we sellers have to code every item in our inventory and match it against rules that determine if it's taxable and how much that tax is. All of that takes a *lot* of work. I've seen what it takes when I worked in Amazon's financial group - we're talking multiple databases and a load of software just for this. Then there's reporting. My state requires quarterly tax filings, I believe, so that would be at least 50 filings every quarter. Not something your average mom-and-pop has time to handle or money to outsource.

There are 3rd parties who will jump in to manage this, but why should sellers have to pay for something like this, since it's not us who are not paying taxes, it's the consumers who aren't paying as they should? Why should we have to do the work of state tax collectors in places where we don't reside or derive any benefit of said taxes? And why should we be forced to have a 3rd party getting its hands on our confidential sales data if the process is too unwieldy to manage on our own?

I'm not opposed to some form of sales tax, since it's clear that most consumers are not going to pay what they owe to their states of residence. The only way this will really be "fair" is if they make it a single rate with a clearing house for reporting it (or something equally simple). Anything else will be a death knell for small sellers.

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