AfterDawn: Tech news

Big News: Senate passes bill allowing states to tax online sales

Written by Andre Yoskowitz (Google+) @ 06 May 2013 20:50 User comments (33)

Big News: Senate passes bill allowing states to tax online sales The Senate has passed a bill that will allow states to tax online sales, even if the retailer does not have a brick-and-mortar presence in the state.
Passed by a margin of 69 to 27, the bill will now head to the House where it is expected to see bigger resistance despite a public backing by President Barack Obama.

Currently, states can only require retailers to collect sales tax if they have a physical presence, whether a retail store or a headquarters or a distribution warehouse. Online retailers (in most states) do not have to collect sales tax, including behemoths like Amazon and eBay and major online retailers like Newegg and TigerDirect.

The bill would require businesses with revenue above $1 million to collect taxes for all products they sell online, through radio and in catalogs. The sales tax would then have to be sent back to the state where the shopper lives.

Critics of the bill claim small retailers will have expensive obligations now to figure out sales tax rules for 50 states and collect and remit such taxes at varying rates. eBay has been a massive opponent of the bill. Says eBay president John Donahoe: "Giant retailers have a requirement to collect sales taxes nationwide because they have physical presence nationwide. Likewise, today small retail stores and online retailers collect sales taxes for the one state where they are located. That's a fair requirement."

"If the bill passes, small online businesses would have the same tax compliance obligations and face the same enforcement risks as giant retailers, despite the fact that they are usually located in just one state."


Last year, Internet sales in the U.S. totaled $226 billion, up 16 percent from 2011.

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33 user comments

16.5.2013 21:07

As a private individual, I sell an occasional item on eBay (for example). If I am required to start collecting sales tax, pay it to my state, and keep track of all this . . .

Well, I guess my selling days are over. Suspect many other individuals and small businesses will drop as well. In part or altogether. Did we notice how the economy sucks already? Probably will get worse as the various government entities squeeze all they can out of a little guy.

Hope they find it fulfilling.

26.5.2013 21:18

Not as an individual, but rather an e-tailer. So for instance, someone on eBay having a store would have to collect appropriate sales tax. I think it will invoke interstate commerce clause from way back in the day. They, the US gov',t did this some 150 years ago and it failed in court if my history lesson serves me right,

36.5.2013 21:46

Originally posted by rulisky:
As a private individual, I sell an occasional item on eBay (for example). If I am required to start collecting sales tax, pay it to my state, and keep track of all this . . .

Well, I guess my selling days are over. Suspect many other individuals and small businesses will drop as well. In part or altogether. Did we notice how the economy sucks already? Probably will get worse as the various government entities squeeze all they can out of a little guy.

Hope they find it fulfilling.
Nor do you make $1 million in sales per year. You will be okay.

46.5.2013 22:13

Originally posted by DVDBack23:
Originally posted by rulisky:
As a private individual, I sell an occasional item on eBay (for example). If I am required to start collecting sales tax, pay it to my state, and keep track of all this . . .

Well, I guess my selling days are over. Suspect many other individuals and small businesses will drop as well. In part or altogether. Did we notice how the economy sucks already? Probably will get worse as the various government entities squeeze all they can out of a little guy.

Hope they find it fulfilling.
Nor do you make $1 million in sales per year. You will be okay.

He may not make $ 1 million, but Ebay sure does. They will pass those fees back to the small seller. Trust me.

56.5.2013 22:38

& on the buyers.

66.5.2013 23:05

This bill probably won't make it through the House this time. -But it will eventually. That will be a sad day, indeed.

77.5.2013 7:37

MY problem is that it is WAY TOO much bother for the pittance made on my part. Not worth the effort!!

87.5.2013 9:03

I don't see such a bill really making it into law. If all online sales are taxed what about businesses overseas who sell to the US? There would be no way to enforce such a thing. That would give overseas businesses and unfair advantage over US sellers since they obviously would not impose taxes on their customers for one and for another they do not report to US agencies about their sales anyway. Plus what about US businesses who sell abroad? idk just doesn't seem feasible to me. The government needs to stop trying to find ways to squeeze more money out of the little guy and focus on stopping the absurd amount of government spending.

97.5.2013 14:07

Not that I am pro any of this but I have wondered...Why not change it around so you pay taxes not where the buyer is but where the seller is located? To me that seems to be where the sale is made. And much easier for smaller businesses to keep track. If I go to Vegas and buy something I would pay their tax then. Certainly my state has a "Use tax" that on my honor I would pay taxes on items bought outside the area but nobody pays that. Also I see how all those greedy localities got it through the Senate. Hopefully the different weight these small fry have in the house will stop this dead!


Just my $0.02,

dEwMe

107.5.2013 14:32

Originally posted by dEwMe:
Not that I am pro any of this but I have wondered...Why not change it around so you pay taxes not where the buyer is but where the seller is located?

That's how things work now. If a store has a physical presence in a particular state then it collects taxes (or is supposed to...) from people who buy from them who are also in that particular state. Now they are trying to make it so stores have to collect taxes even if the person who buys from them is in a different state where they do not have a physical presence.

117.5.2013 15:22

Originally posted by Ryoohki:
I don't see such a bill really making it into law. If all online sales are taxed what about businesses overseas who sell to the US? There would be no way to enforce such a thing. That would give overseas businesses and unfair advantage over US sellers since they obviously would not impose taxes on their customers for one and for another they do not report to US agencies about their sales anyway. Plus what about US businesses who sell abroad? idk just doesn't seem feasible to me. The government needs to stop trying to find ways to squeeze more money out of the little guy and focus on stopping the absurd amount of government spending.


Agree.
Most of the Govt. Spending money goes to the blood sucking leech contractors.
The U.S. Govt. & IRS should stay away from the penny jar of the little guys & put the rich people on check. They always get away with everything:
http://www.alternet.org/economy/rich-ha...etter834900&t=3
http://sphotos-e.ak.fbcdn.net/hphotos-a...081475342_n.png
This message has been edited since its posting. Latest edit was made on 07 May 2013 @ 15:25

Live Free or Die.
The rule above all the rules is: Survive !
Capitalism: Funnel most of the $$$ to the already rich.

127.5.2013 17:00

So how does this get past the Constitution?
Is it not illegal for one state to tax another?


Oh, Im sorry... Did the middle of my sentence interrupt the beginning of yours?

138.5.2013 16:30

Originally posted by ThePastor:
So how does this get past the Constitution?
Is it not illegal for one state to tax another?

The bill would allow an entity in one state to collect the tax for another state and forward it.

Your assumption in the first question is correct; It doesn't.
Article 1, Section 7 of the United States Constitution specifically states that all revenue bills (taxing) must originate in the House. This Internet Tax bill began in the Senate. So, even if the House were to pass it (it won't), in a couple of years when the suit reaches SCOTUS it will be struck down.
This is the Sword of Damocles, if you will, now hanging over Obamacare. SCOTUS ruled the mandate to be a tax, which obviously it always was. This opened the door to a new legal challenge, currently being pursued by Liberty University, et al, that the PPACA is unconstitutional because the bill originated in the Senate. At least that portion of the law will have to be struck down.
I have read several dozen select pages of the PPACA, and frankly it is a mess. This is what happens when the Apollo Alliance shoves a bill at one of their bought lackeys and says "Don't read it, just pass it"

1410.5.2013 9:52

Originally posted by rulisky:
As a private individual, I sell an occasional item on eBay (for example). If I am required to start collecting sales tax, pay it to my state, and keep track of all this . . .

Well, I guess my selling days are over. Suspect many other individuals and small businesses will drop as well. In part or altogether. Did we notice how the economy sucks already? Probably will get worse as the various government entities squeeze all they can out of a little guy.

Hope they find it fulfilling.
Did you read the article?

"The bill would require businesses with revenue above $1 million to collect taxes for all products they sell online"

Are you making $1 million in sales?

1510.5.2013 10:00

Originally posted by Blessedon:
Originally posted by ThePastor:
So how does this get past the Constitution?
Is it not illegal for one state to tax another?

The bill would allow an entity in one state to collect the tax for another state and forward it.

Your assumption in the first question is correct; It doesn't.
Article 1, Section 7 of the United States Constitution specifically states that all revenue bills (taxing) must originate in the House. This Internet Tax bill began in the Senate. So, even if the House were to pass it (it won't), in a couple of years when the suit reaches SCOTUS it will be struck down.
This is the Sword of Damocles, if you will, now hanging over Obamacare. SCOTUS ruled the mandate to be a tax, which obviously it always was. This opened the door to a new legal challenge, currently being pursued by Liberty University, et al, that the PPACA is unconstitutional because the bill originated in the Senate. At least that portion of the law will have to be struck down.
I have read several dozen select pages of the PPACA, and frankly it is a mess. This is what happens when the Apollo Alliance shoves a bill at one of their bought lackeys and says "Don't read it, just pass it"
Blessedon makes valid points. What is so irksome about Congress to me is not the partisanship, (we want things to move slowly) and not even the pile-on amendment procedures for bills, but rather that some Bills are passed knowing full well that they are patently unconstitutional, but their passage leaves us at their mercy until they wind their way through the courts where eventually a circuit, appeals, or on occasion, SCOTUS overturns them. *sigh*

1610.5.2013 10:18

The whole idea that it is a Fairness Tax is ridiculousness at best. But then put on top of that all of of rider stuff like if you move money in your 401K you get taxed or even worst stuff wrote in and how it is fairness when you pay shipping online which you don't pay in a brick and mortar site.

Also why would it take 2K to 4K pages to write this bill if it was full of stuff like Nancy Pelosi has famously stated as "You'll have to pass the bill to see what is in the bill", if one couldn't be dumber.... We've now seen how that works out, or we are really about too.

This is just another extortion scheme the Gov wants as a vehicle to wast more of OUR money as if the current regime isn't wasting enough as it stands.

How about cutting some of these programs:

1.
$11 Billion to $22 billion is spent on welfare
to illegal aliens each year by state governments.

2.
$22 Billion dollars a year is spent on food
assistance programs such as food stamps,
WIC, and free school lunches for illegal aliens.

3.
$2.5 Billion dollars a year is spent on
Medicaid for illegal aliens.

4.
$12 Billion dollars a year is spent on
primary and secondary school education
for children here illegally and they
cannot speak a word of English!

5.
$17 Billion dollars a year is spent for
education for the American-born
children of illegal aliens, known as
anchor babies.

6.
$3 Million Dollars a DAY is spent to
incarcerate illegal aliens.

7.
30% percent of all Federal Prison
inmates are illegal aliens.

8.
$90 Billion Dollars a year is spent on
illegal aliens for Welfare & social
services by the American taxpayers.

9.
$200 Billion dollars a year in suppressed
American wages are caused by the illegal
aliens.

13.
In 2006, Illegal aliens sent home
$45 BILLION in remittances to their
countries of origin.

14.
The Dark Side of Illegal Immigration:
Nearly One million sex crimes committed
by Illegal Immigrants In The United States ..

And these are just some of the waste and foolishness our Government does.

1710.5.2013 12:48

OK, so just how will the States enforce and collect this new online sales revenue? How will they monitor out of state sales? How will they audit the books of out of state companies? Lots of new legal issues to think about. I think this will turn out to be a big hassle for states to enforce on small retailers. Lots of opportunity for fraud here. Honor syster? Oh yeah. HaHa!!! I can see company "A" approaching one million in sales, so they just switch to their sister company "B" for the rest of the year.

I have often wondered if out of state companies really paid my state the extra money they collected from me, or if that just went into their pocket as extra profit.

And what if the little guy collects sales tax from me in anticipation of doing a million in sales, but falls short of this goal. What happens to this sales tax money they collected? You don't really think they are going to dispurse this money back to the states, do you?
In the end, I think a lot of online retailers will collect this sales tax money, but the states will not see this money returned to them.

1810.5.2013 16:36

i use ebay yes. But now i will stop using it, i make enough with my business that I dont NEED ebay, it was just for a little more money.

but yea if thats the case good bye ebay.
hell ebay and paypal are already bending us sellers over and ramming it up our ass deep enough.

1910.5.2013 16:37

pretty soon our worthless government is gonna tax us everytime we flush the shitter

This message has been edited since its posting. Latest edit was made on 10 May 2013 @ 16:38

For Sale:

Parachute, Used Once, never opened small stain.
Best Offer!

2010.5.2013 16:41

Quote:
The whole idea that it is a Fairness Tax is ridiculousness at best. But then put on top of that all of of rider stuff like if you move money in your 401K you get taxed or even worst stuff wrote in and how it is fairness when you pay shipping online which you don't pay in a brick and mortar site.

Also why would it take 2K to 4K pages to write this bill if it was full of stuff like Nancy Pelosi has famously stated as "You'll have to pass the bill to see what is in the bill", if one couldn't be dumber.... We've now seen how that works out, or we are really about too.

This is just another extortion scheme the Gov wants as a vehicle to wast more of OUR money as if the current regime isn't wasting enough as it stands.

How about cutting some of these programs:

1.
$11 Billion to $22 billion is spent on welfare
to illegal aliens each year by state governments.

2.
$22 Billion dollars a year is spent on food
assistance programs such as food stamps,
WIC, and free school lunches for illegal aliens.

3.
$2.5 Billion dollars a year is spent on
Medicaid for illegal aliens.

4.
$12 Billion dollars a year is spent on
primary and secondary school education
for children here illegally and they
cannot speak a word of English!

5.
$17 Billion dollars a year is spent for
education for the American-born
children of illegal aliens, known as
anchor babies.

6.
$3 Million Dollars a DAY is spent to
incarcerate illegal aliens.

7.
30% percent of all Federal Prison
inmates are illegal aliens.

8.
$90 Billion Dollars a year is spent on
illegal aliens for Welfare & social
services by the American taxpayers.

9.
$200 Billion dollars a year in suppressed
American wages are caused by the illegal
aliens.

13.
In 2006, Illegal aliens sent home
$45 BILLION in remittances to their
countries of origin.

14.
The Dark Side of Illegal Immigration:
Nearly One million sex crimes committed
by Illegal Immigrants In The United States ..

And these are just some of the waste and foolishness our Government does.
holy shit these are governement programs!!!!!!

omfg america has the worst government ever!!!! and i live here!!

2110.5.2013 20:28

Originally posted by ImaPerson:
OK, so just how will the States enforce and collect this new online sales revenue? How will they monitor out of state sales? How will they audit the books of out of state companies? Lots of new legal issues to think about. I think this will turn out to be a big hassle for states to enforce on small retailers. Lots of opportunity for fraud here. Honor syster? Oh yeah. HaHa!!! I can see company "A" approaching one million in sales, so they just switch to their sister company "B" for the rest of the year.

I have often wondered if out of state companies really paid my state the extra money they collected from me, or if that just went into their pocket as extra profit.

And what if the little guy collects sales tax from me in anticipation of doing a million in sales, but falls short of this goal. What happens to this sales tax money they collected? You don't really think they are going to dispurse this money back to the states, do you?
In the end, I think a lot of online retailers will collect this sales tax money, but the states will not see this money returned to them.
In Minnesota they have taxed the crap out of tobacco products and already have an internet taxing system in place. I know because when they started to over tax tobacco in the state I found a place in Missouri to get a friend cigars at about half the price of in-state. Two years after I started to purchase these cigars for my friend I got a nasty letter from the state dictating that I owed them all of the revenue plus PENALTIES for these online purchases.

Now being it my first time for this infraction they waved the penalties but I had to pay double my original purchase fees since MN tax is at or over 100%. This is thanks to Skip Humphrey and our dominant Democrat congress.

So it appears that online companies are forced to turn over their customer records to the state of Minnesota on these types of purchases. Oh and by the way not only did they raise the tax on tobacco in the state on Minnesota but the Skipper extorted tons more of monies directly from the tobacco companies in a cancer based law suite, which of course none of us citizens saw one dollar from it.

You got to love big Government!
:D

2211.5.2013 0:13

Originally posted by ImaPerson:
OK, so just how will the States enforce and collect this new online sales revenue? How will they monitor out of state sales? How will they audit the books of out of state companies? Lots of new legal issues to think about. I think this will turn out to be a big hassle for states to enforce on small retailers. Lots of opportunity for fraud here. Honor syster? Oh yeah. HaHa!!! I can see company "A" approaching one million in sales, so they just switch to their sister company "B" for the rest of the year.

I have often wondered if out of state companies really paid my state the extra money they collected from me, or if that just went into their pocket as extra profit.

And what if the little guy collects sales tax from me in anticipation of doing a million in sales, but falls short of this goal. What happens to this sales tax money they collected? You don't really think they are going to dispurse this money back to the states, do you?
In the end, I think a lot of online retailers will collect this sales tax money, but the states will not see this money returned to them.
It will probably be up to the IRS to monitor this. Small businesses will be subject to IRS audits for sales tax compliance just as they are for paying income tax. Last I heard, the government was supposed to make software available "at no cost" to decide how much tax to pay based on the customer's location and also to pay it to the appropriate authority. No doubt this software will also generate records that the IRS will ask businesses to provide during an audit.

Don't know about the multiple businesses dodge, but I suspect the bill was written to prevent that. Obamacare, for example, has a minimum 50 full-time employee threshold before it kicks in on an employer. It specifically prevents for example somebody with a business employing 200 people to split it up into 5 businesses employing 40 people.

You do have a very good point about businesses that don't know whether or not they will cross the million dollar threshold in a given year. My guess is that businesses well under the million dollar threshold will be forced to comply as well or face severe penalties if they go over. Businesses are supposed to pay the sales tax as sales are generated, so they don't suddenly get to keep any money they collect if they fall under one million in sales.

2311.5.2013 0:23

Originally posted by ThePastor:
So how does this get past the Constitution?
Is it not illegal for one state to tax another?
It's not one state taxing another. It's one state taxing citizens living in that state, even when they buy out of state. The tax is not even on the out-of-state business -- every state with a sales tax has a law that forces its citizens to pay the tax when the out-of-state business does not pay it (almost nobody does, however, which is why we're getting this law).

What the federal government is doing is forcing out-of-state businesses to charge the tax and pass it on to the appropriate authority in the taxing state. The business is "not paying the tax", it's acting as an agent of the taxing state government. Before this law, one state could not force a business in another state to do this unless that business also had a physical presence in the taxing state. This was established by the Supreme Court in the early '90s. But in that case the Supreme Court specifically said that Congress could write an interstate commerce law that could force payment. Now we might get that law.

2411.5.2013 0:28

Originally posted by Ryoohki:
I don't see such a bill really making it into law. If all online sales are taxed what about businesses overseas who sell to the US? There would be no way to enforce such a thing. That would give overseas businesses and unfair advantage over US sellers since they obviously would not impose taxes on their customers for one and for another they do not report to US agencies about their sales anyway. Plus what about US businesses who sell abroad? idk just doesn't seem feasible to me. The government needs to stop trying to find ways to squeeze more money out of the little guy and focus on stopping the absurd amount of government spending.
The US government has no authority to force foreign businesses to pay the sales tax (though I suppose some day there might be a treaty where several national governments including the US agree to force compliance across national boundaries among businesses in their borders). One bad side effect of this bill is that many online businesses now in the US might move outside of the country (they couldn't have any physical presence in the US for this to work).

2511.5.2013 0:28

Originally posted by mscritsm:
Originally posted by ThePastor:
So how does this get past the Constitution?
Is it not illegal for one state to tax another?
It's not one state taxing another. It's one state taxing citizens living in that state, even when they buy out of state. The tax is not even on the out-of-state business -- every state with a sales tax has a law that forces its citizens to pay the tax when the out-of-state business does not pay it (almost nobody does, however, which is why we're getting this law).

What the federal government is doing is forcing out-of-state businesses to charge the tax and pass it on to the appropriate authority in the taxing state. The business is "not paying the tax", it's acting as an agent of the taxing state government. Before this law, one state could not force a business in another state to do this unless that business also had a physical presence in the taxing state. This was established by the Supreme Court in the early '90s. But in that case the Supreme Court specifically said that Congress could write an interstate commerce law that could force payment. Now we might get that law.
That is true which is what makes this new taxing such a mess. If I'm buying from a NY store online and they want me to pay tax, it should be NY tax not the state I reside ins tax.

2611.5.2013 0:31

Originally posted by Mr-Movies:
That is true which is what makes this new taxing such a mess. If I'm buying from a NY store online and they want me to pay tax, it should be NY tax not the state I reside ins tax.
Oddly enough, New York or any state you don't live in has absolutely no authority to make you pay a tax levied in that state (obviously they can make you pay taxes if you physically travel to that state and are temporarily under its jurisdiction). This principle is deeply embedded into the Constitution and the federal system of states.
This message has been edited since its posting. Latest edit was made on 11 May 2013 @ 0:37

2711.5.2013 7:07

Originally posted by mscritsm:
!
...nice to see more level-headed people here who actually studied in school.

2811.5.2013 20:06

People can not read and comprehend, you only pay sales tax if your a online retail business that collects a million dollars or more in sales. The rest of you small time eBayer's have nothing to worry about. Another redneck Republican false panic attack of "Obama is an Alien and he is gonna' take all our guns away'!" Wake up people and get into reality please......for once.

2911.5.2013 20:26

Originally posted by aarowsmith:
People can not read and comprehend, you only pay sales tax if your a online retail business that collects a million dollars or more in sales. The rest of you small time eBayer's have nothing to worry about. Another redneck Republican false panic attack of "Obama is an Alien and he is gonna' take all our guns away'!" Wake up people and get into reality please......for once.
That's not true the bill is 4,000 pages just like the healthcare crap and is full of riders and loop holes!

3011.5.2013 21:08

Originally posted by aarowsmith:
People can not read and comprehend...
you small time eBayer's....
Another redneck Republican....
Wake up people and get into reality please...for once.
Name-calling liberals; just look under any rock...

3112.5.2013 0:08

Originally posted by Blessedon:
Originally posted by aarowsmith:
People can not read and comprehend...
you small time eBayer's....
Another redneck Republican....
Wake up people and get into reality please...for once.
Name-calling liberals; just look under any rock...

you mean look under a rock and find a trouble making World economy ruining so called conservative ??? I thought so.....

3212.5.2013 0:14

Originally posted by aarowsmith:
Originally posted by Blessedon:
Originally posted by aarowsmith:
People can not read and comprehend...
you small time eBayer's....
Another redneck Republican....
Wake up people and get into reality please...for once.
Name-calling liberals; just look under any rock...

you mean look under a rock and find a trouble making World economy ruining so called conservative ??? I thought so.....
You wouldn't understand, your not capable.

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