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Mojo
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From: Chicago
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States move forward on Internet Tax - 8/31/2005 17:32:13
It's getting closer to D-Day - a state tax on internet purchases. This is going to be HUGE if it goes through, I predict it will have the largest impact on ecommerce since SSL. Maybe the largest impact ever.
State Internet Tax Group
http://www.streamlinedsalestax.org/
Course, first they have to defeat a Supreme Court Ruling that "forbids states from forcing a business to collect their sales taxes unless the company has a physical presence in the affected state". But, I think if all the states get together and present a unified plan that doesn't burden businesses, the Ruling would be overturned.
quote:
They [the Streamlined Sales Tax Project] created software that will automatically calculate the different taxes for different states and for different items. They promised to pay for special "service providers" that could bill customers, file and pay taxes to the states, and free companies from audit liabilities.
It sounds like U.S. based businesses will have to report sales to a central service and this service will take care of everything else. The tax man comes will have new meaning when you get that end of the year tax bill for internet purchases.
Q1 - On many items sold on the net the tax difference is a major selling point. Will consumers slow down internet purchases if the price is closer to the store down the street?
Q2 - Will this cause an explosion of off-shore businesses who don't have to report their sales to the U.S.?
EDIT: forgot to add the link to the story.
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BeTheBall
Posts: 6381
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From: West Point Utah USA
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RE: States move forward on Internet Tax - 8/31/2005 19:05:59
quote:
Q1 - On many items sold on the net the tax difference is a major selling point. Will consumers slow down internet purchases if the price is closer to the store down the street?
Personally, I often calculate sales tax into the equation when deciding whether to go to the mall or buy online, although not wanting to get off my butt is usually the deciding factor. The sales tax savings is often offset by the cost of shipping.
quote:
Q2 - Will this cause an explosion of off-shore businesses who don't have to report their sales to the U.S.?
It certainly might.
I don't want to pay any more tax than I already do, however, I certainly see that the "physical presence" idea is probably not a sound argument in this day and age. Were I a business owner, I would resent the idea that a competitor from another state could eat away at my sales because he doesn't have to charge sales tax based on the fact that his business isn't "physically located" anywhere. That somehow seems like an unfair advantage.
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Starhugger
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RE: States move forward on Internet Tax - 9/1/2005 10:23:31
Hrmph. Try living in Canada. When mail order stuff comes over the border, we get slapped with both Federal and Provincial taxes...AND a $5 service fee for the privilege of being charged tax on a sale that originated outside the country! What a freaking ripoff. For this reason, I look for a Canadian source for purchases whenever possible. At least I won't have to pay $5 for the government to pick my pocket. Maybe it encourages people to buy Canadian but somehow I doubt it. For instance, most people I know just order from Amazon.com and don't bother with Amazon.ca (Canadian), so I guess there aren't that many people who have noticed the tax/fee charges or who care.
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dpf
Posts: 7126
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From: India-napolis
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RE: States move forward on Internet Tax - 9/1/2005 10:27:43
quote:
But, I think if all the states get together and present a unified plan that doesn't burden businesses, the Ruling would be overturned. Im not so sure of that...the constitution makes interstate commerce a strictly federal issue and the imposition of a tax obligation on a business entity that does not have a presence or a "statutory agent" in your state violates interstate commerce. since when does government or statutes give a da%m if they place a burden on business. just MHO
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Mojo
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RE: States move forward on Internet Tax - 9/1/2005 13:38:10
Dan, I hope you're right.
Starhugger - I have had many Canadian customers refuse products because of the incredible fines/tax they pay on things.
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Mojo
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RE: States move forward on Internet Tax - 9/2/2005 1:42:46
quote:
Your ClipIt site wouldn't seem to be affected by something like that.
Nah, not clipit. I run many sites and sell everything from bracelets, knives and auto parts to blankets, purses and baby bedding and many things in between.
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Larry M.
Posts: 2834
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From: Greenville, South Carolina, USA
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RE: States move forward on Internet Tax - 9/6/2005 12:01:38
quote:
the constitution makes interstate commerce a strictly federal issue and the imposition of a tax obligation on a business entity that does not have a presence or a "statutory agent" in your state violates interstate commerce.
A little help please,
I'm in the midst of a pi$$ing contest with Texas based, Mannatech (manufacturer/distributor of health supplements) who charged me 6% sales tax on my initial order.
My first call to Customer Service got me a standard "the computer did it" response; the second call netted "call the State of Texas Department of Commerce, we're doing what we're supposed to do" answer. The third call, informing Mannatech that, while they do have distributors in the State of South Carolina, I don't view this arrangement the same as having a brick and mortar presence, per se. Answer to that was the same as call #2.
What does the little guy do in this and/or similar situation. BTW, I like the product but may discontinue on principal - like most people I am willing to pay for value rendered but begrudge taking an in-your-face hosing for any amount.
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dpf
Posts: 7126
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From: India-napolis
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RE: States move forward on Internet Tax - 9/6/2005 12:14:01
quote:
I don't view this arrangement the same as having a brick and mortar presence, per se. but the law views it the same. If you have a single employee/sales rep in a state, you have a "physical presence" and are required to collect the sales tax.
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pctutor
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From: Roscoe, IL USA
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RE: States move forward on Internet Tax - 9/7/2005 13:19:53
This state tax thing is going to be a can of worms. In Illinois, we have a state tax of 6.25%, but some counties have tax levies of their own. My county has an extra 1% tax, so I calculate sales tax based on county too.
Our Governor, Rod Blagojevich, is proposing a tax on services as well. Kinda hard to explain to a customer that they need to pay tax to learn how to use their computer!
Plus, it's a tax collection/payment nightmare for small business people like me.
I hope is stays just an idea!
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yenski
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RE: States move forward on Internet Tax - 10/3/2005 15:46:02
If tax is on the way, then I suggest we support the Fair Tax Bill:
fairtax .org
This is a far better program than the IRS and any additional taxes brewing...
< Message edited by Mojo -- 10/9/2005 9:16:26 >
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dpf
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RE: States move forward on Internet Tax - 10/4/2005 10:30:02
that is a great plan to help the wealthy avoid taxes.
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ravenous_wolf
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RE: States move forward on Internet Tax - 10/9/2005 1:28:21
When it comes to taxes, every state has been salivating at the prospect of an Internet tax.
And some states have gone through extreme measures for taxing, not just on sales tax.
The most extreme taxing measure has been states that tried to levy state taxes on satellites that have a stationary orbit. California did it and I believe Virginia was the other state.
Naturally, the owners of the satellites contested this in court because they felt that they did not have a "true" physical presence in those states since they were in space. Obviously, California and Virginia didn't see it that way.
I believe the federal appellate courts finally overturned that however both states are adamant about taking it to the Supreme Court.
If the states ever do have their way with taxing the satellites, this will turn "physical presence" on its head because a number of "abstract" types of services that can then be taxed.
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