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Internet and Sale Taxes
Dialectic
Before you panic that your online purchases will be
tagged with the added cost of state sales tax, rely on the complexity of reporting sales to all the jurisdictions as your
prime safeguard from forking over a percentage on every purchase. The Senate bill, Summary: S.336 provides a succinct description of the requirements. For a comprehensive resource on all you want to know
about Marketplace Fairness Act Information, check out the details. House Judiciary Chairman Bob Goodlatte in the article, Online sales tax bill may be dead on arrival in House, identifies concern that the practical difficulties remain with implementation. "I do not believe legislation
like the Marketplace Equity Act is sufficiently simplified yet. While it attempts to make tax collection simpler, it still
has a long way to go."
An illustration of this worry is evident in the maze of collection for
Internet Sales Tax: A 50-State
Guide to State Laws. "If you are selling goods or products online, you need to be aware of Internet sales
tax rules. The issue of whether to require online retailers to collect sales tax in states where they have no physical presence
has been a matter of significant debate in many states and at the federal level. Some states have enacted legislation that
will require large online sellers to collect sales tax. These laws, sometimes referred to as "Amazon laws," have
been enacted in a number of states and are being considered in many others."
Up
to now, the penalty for circumventing the collection and reporting process seems to be so burdensome that effective enforcement
was impractical. The article, Internet Sales Tax: Here
Come the Auditors, describes the intended abidance measures in the proposed Marketplace Fairness
Act. "There are more
than 9,600 state and local taxing jurisdictions in the U.S., and small businesses would be required to send the appropriate
number of tax dollars-state and local-to every one where they sell. And
if the business owner makes a mistake? Or if the state thinks that the business owner makes a mistake? The bill provides for
"a single audit of a remote seller for all State and local taxing jurisdictions within that State." This provision is intended to streamline the process, but it still means every business
could face 46 separate audits (from the 45 states that collect sales taxes plus the District of Columbia)."
Now if you are one of those tax objectors that go to great length to
evade paying state sales tax, you may applaud the latest effort in Congressional conflict to nix compliance with existing
statutes. Hitherto, not everyone shares this disdain. The argument for equity and fairness is made in the essay; Online sales tax bill could crash
in House. "Groups like the National Governors Association have said that states could
badly use the roughly $23 billion in lost revenue they're currently missing out on, and the National Retail Federation and
the Retail Industry Leaders Association say the proposal would simply roll back the unfair advantage that online shopping
outlets have on brick-and-mortar stores. The bill, supporters
stress, would have no affect on federal revenues, and would simply allow for the collection of sales taxes that consumers
already owe but rarely pay."
This reliance
on playing the fairness card to extract more revenue by closing the collection and accounting loophole assumes that the consumer
is duty bound to just keep paying the burden for ever-expanded government budgets. Completely absent from the debate is whether
the existing sale tax rates are excessive to begin with. This dialectic trap has government tax collectors avoiding any reevaluations
of the formula for revenue enhancements. The logical alternative
for implementing an internet sale state tax is to reduce the existing individual state sales taxes, on brick-and-mortar businesses,
to maintain a revenue neutral offset. States have the ability to impose their own sale tax rates. However, the notion that
internet sales receipts need to be taxed to increase the coffers of state treasuries, does nothing to reduce the rate of increases
in public budgets, much less reducing expenditures in real dollars. The potential for such a reasonable approach to fiscal sanity is entirely out of whack, with the nature of political
parasites. Tax collection has little fiscal relationship with raising funds to run government. Taxation is primarily about
behavior control.
"This means that under the Marketplace
Fairness Act, some online transactions could conceivably escape the Internet sales tax if bitcoins are the medium of exchange.
Here's how. Retailers like Amazon charge sales tax for certain jurisdictions already, based on your shipping address. Bitcoins, however, aren't associated with any address at all-that's the whole
point. If you pay for a book in bitcoins but have it shipped to your house, calculating the tax would be easy. But we regularly
buy all sorts of digital goods now that don't get shipped anywhere-music and software, to name two examples.
None
of this is to suggest that bitcoin-based transactions are or should be exempt from online sales taxes-just that collecting
them presents a new challenge. On the one hand, this could play out badly for Bitcoin if the ambiguity discourages retailers
from adopting the tender. On the other hand, it also creates the possibility of a loophole. "Oops," the businesses
will tell the states. "We can't collect this tax for you because the customer paid in bitcoins and we don't know where
he or she lives."
If public
consumers and taxpayers accept sale tax as a legitimate structure of payment to their respected state governments, the inclusion
of internet sales seems to be a reasonable inclusion. All the same, the federal government has limited jurisdiction into the
collection practices of individual states. Allowing careerist politicians and bureaucrats, free reign to add layers of complexity
and punitive penalties that tracks personal purchasing patterns is another nail in the coffin of personal privacy. Overall,
S.336 is a bad bill. James Hall – May 1, 2013
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