Internet Sales Taxes

[David Farber <dave () farber net>]

Begin forwarded message:

> From: Gordon Peterson <gep2 () terabites com>
> Date: May 21, 2008 5:17:11 PM EDT
> To: David Farber <dave () farber net>
> Subject: Re: [IP] Internet Sales Taxes

> One of the many big problems about collecting sales taxes on Internet
> purchases is the issue of "nexus".  WHOSE sales taxes are to be
> collected?  How are they to be remitted?
>
> It clearly is impractical to expect an online seller to register and
> file a sales tax return in every jurisdiction to which they ship any
> sold items.
>
> It is ridiculous to even expect them to know which sales taxes are
> appropriate to anyone, everywhere in the USA.  Who, for example, is
> subject to stadium taxes, mass transit taxes, and other local tax
> surcharges?  So how much tax is even DUE?
>
> This problem is NOT new to the Internet... it has been an issue for  
> mail
> order purchases for a century or more.  Nobody has ever been able to
> come up with a practical and successful method for sales taxes to be
> collected by businesses without a real physical business "presence" in
> proximity to the customer where the sale was made.
>
> The waters get even muddier when one starts to consider foreign  
> sales...
> both export sales by US companies, and foreign companies selling to US
> customers.
>
> The argument about local governments being somehow "cheated" out of
> sales tax money to fund parks, schools, and other local services  
> (which
> they would have made if a local brick-and-mortar business had made the
> sale) is ridiculous too.  If I bought a product by mail order from a
> company in New Jersey (and I live in Texas), what makes someone think
> that it's fairer to collect the taxes in Texas than in New Jersey?
>
> It gets stickier still... consider something like some E-bay or Yahoo
> stores.  Is the tax basis where the SERVER (and then WHICH server?   
> The
> one hosting the images, the one hosting the shopping cart, or what?)
> resides?  Where the Yahoo Stores service company is based?  Maybe  
> where
> the web hosting company is based?  Where the "seller" (company, or
> individual) lives?  How about for sales by a foreign company which
> drop-ships merchandise to US purchasers from a US warehouse or  
> shipment
> center?
>
> At least once upon a time, the sales tax in Illinois used to be  
> called a
> "Retailers Occupation Tax" and it was at least supposedly INTENDED  
> to be
> a tax on the seller, not on the buyer.  Retailers, perhaps  
> predictably,
> just added it as a line-item surcharge on their sales receipts...  
> making
> it painfully obvious to the buyer where the money they paid was going.
>
> Anyhow, in a global economy and where it is nearly impossible to  
> simply
> state where an online transaction was "done"... this issue of  
> "nexus" is
> at least incredibly difficult, if not impossible, to resolve.
>
> David Farber wrote:
> > Begin forwarded message:
> >
> > > *From:* Robert Atkinson <rca53 () columbia edu <mailto:rca53 () columbia edu 
> > > >>
> > > *Date:* May 21, 2008 10:07:38 AM EDT
> > > *To:* David Farber <dave () farber net <mailto:dave () farber net>>
> > > *Subject:* *For IP: Internet Sales Taxes*
> > >
> > > Dave,
> > >
> > > A call in Wall St. Journal for imposing sales taxes on internet  
> > > commerce:
> > >
> > > <http://online.wsj.com/article/portals.html>http://online.wsj.com/article/portals.html
> > >
> > > Excerpts:
> > >
> > > *Real World Needs 'Net' Taxes
> > > **/May 21, 2008; Page B9
> > > /
> > > *Do you think that billionaire Internet moguls should continue to
> > > benefit from a tax loophole that hurts parks and schools, and  
> > > makes it
> > > harder for your neighborhood bookstore to keep open for business?
> > >
> > > I didn't think you did.
> > >
> > > ***
> > >
> > > For starters, by giving online businesses a permanent advantage over
> > > their bricks-and-mortar competitors, it helps those who need it  
> > > least
> > > -- huge, profitable e-commerce companies -- at the expense of
> > > often-struggling local retailers.
> > >
> > > In addition, the tax policy is regressive. It disproportionately
> > > benefits the upscale citizens most likely to shop online. Worst of
> > > all, as commerce increasingly moves online, state and local
> > > governments are being deprived of the sales-tax revenues they rely  
> > > on
> > > to run schools, build roads, pay police and firefighters, and do all
> > > the other things they're supposed to do.
> > >
> > > A dozen years ago, one might have been able to make the case that a
> > > holiday on collecting sales tax would help the fledgling Internet  
> > > get
> > > off the ground. I don't think that was particularly true even in  
> > > 1996;
> > > it certainly isn't now.
> > >
> > > ***
> > >
> > > Opponents of the tax collection are fond of the effective but
> > > dishonest slogan that collecting a sales tax would amount to a new
> > > "tax on the Internet." But making Amazon collect sales tax on  
> > > books is
> > > no more "taxing the Internet" than requiring stores to collect taxes
> > > on Valentine's Day chocolates amounts to "taxing falling in love."
>
> --
>
> Gordon Peterson II
> http://personal.terabites.com
> 1977-2007:  Thirty year anniversary of local area networking



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