Author Topic: Get ready to pay online sales taxes  (Read 3792 times)

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Offline CaseAgainstFaith

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Get ready to pay online sales taxes
« on: July 16, 2012, 09:12:28 am »
A price break for online shoppers may be ending soon, with growing support for sales taxes on purchases made on the internet. This means many online shoppers would pay at least 5 percent more than they do today. Republicans in Congress have joined Democrats to support a bill that would give states authority to force Amazon, eBay, and other online companies to collect sales taxes. Now, says The Wall Street Journal, Republican governors “eager for new revenue to ease budget strains, are dropping their longtime opposition to imposing sales taxes on online purchases.”  The Journal calls it “a significant political shift” that could lead to a change in federal law. Brick-and-mortar retailers have long argued that they face an unfair price disadvantage. But the change amounts to a tax hike for many consumers.[/blockqoute]

http://abcnews.go.com/blogs/business/2012/07/get-ready-to-pay-online-sales-tax/

I doubt online retailers will stand for this.  I hope that they stage another large protest like they did the last time this was brought up.
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Offline ironbite

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Re: Get ready to pay online sales taxes
« Reply #1 on: July 16, 2012, 10:19:05 am »
The better question is how do you enforce something like this?

Ironbite-cause I see this backfiring

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Re: Get ready to pay online sales taxes
« Reply #2 on: July 16, 2012, 11:25:05 am »
Law suits largely.

I believe NY and CA are already doing it, I fail to see how it's particularly impressive that the feds decided to close the loop hole.

Offline Yaezakura

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Re: Get ready to pay online sales taxes
« Reply #3 on: July 16, 2012, 12:00:50 pm »
Many online stores already charge you for sales tax if they have brick-and-mortar locations in the state the delivery is going to. For instance, buying products from Games Workshop's online store never charged me sales tax until they finally opened a physical store here in Florida. Now my purchases on their website are subject to Florida sales tax rates of 7%.

Does it suck? Absolutely. Am I mad if this happens? Not really. If sales tax is a thing, it does need a way to be fair--at the moment, there is very little reason to ever visit a physical store. The larger your online purchase is, the more money you'll come out ahead in the sales tax vs shipping charges struggle, especially with the number of sites that offer free shipping deals.

Online stores already have a ton of advantages over physical ones in terms of selection and convenience. I don't think it's going to seriously hurt their sales figures if people have to pay sales tax.

Offline Fpqxz

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Re: Get ready to pay online sales taxes
« Reply #4 on: July 16, 2012, 12:33:32 pm »
The better question is how do you enforce something like this?

Ironbite-cause I see this backfiring

It wouldn't be that hard to enforce if there is a federal law requiring the recording of online transactions for tax purposes, which the individual states would then have to collect.

I'm not happy about this either, but it is both constitutional and enforceable.  Whether it is economically prudent, time will tell.
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Offline ironbite

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Re: Get ready to pay online sales taxes
« Reply #5 on: July 16, 2012, 12:37:21 pm »
The better question is how do you enforce something like this?

Ironbite-cause I see this backfiring

It wouldn't be that hard to enforce if there is a federal law requiring the recording of online transactions for tax purposes, which the individual states would then have to collect.

I'm not happy about this either, but it is both constitutional and enforceable.  Whether it is economically prudent, time will tell.

Oh I'm not saying I won't pay the online sales tax on physical stuff, but if they start doing so for digital transactions there might be a problem.

Offline Fpqxz

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Re: Get ready to pay online sales taxes
« Reply #6 on: July 16, 2012, 12:51:13 pm »
Oh I'm not saying I won't pay the online sales tax on physical stuff, but if they start doing so for digital transactions there might be a problem.

It can still be done, provided that the proper recording and payment systems were in place.

Let's say you download MP3s or e-books or something from Amazon (I'm just using them as an example here).  Now, Amazon is based in WA and has distribution centers in KY, PA, AZ, and a couple other states.  Now let's say that you, the purchaser, are living in a state where the retailer has no physical presence--let's say Maryland or something.

So you put in your credit card info, etc. and when you do, you will have to provide a physical mailing address.  (I don't know if they make you do that now for digital downloads, but they could.)  They figure out that you are purchasing this stuff from MD, and charge you the appropriate sales/use tax.  You pay the purchase price (plus tax).  What Amazon could do is take the amount of tax you remitted and put it in some sort of escrow account to be paid over to the MD state revenue commission at a specified time, using a database to keep track of it all.

It's not impossible, but the record-keeping system would impose greater costs on online retailers, as well as forcing sales prices up.  Now, large e-commerce vendors such as Amazon, Overstock.com, etc. would easily be able to absorb such costs (which of course, would ultimately be passed on to customers).  Smaller merchants, however, could be forced out of the market if the cost burdens of following such new regulations increase their overhead too much.  (Note:  Think about the fact that big corporations don't always oppose regulations and taxes--they will support them if it hurts their competitors more than it hurts them, and/or increases their market dominance.)

TL;DR--Like I said, I'm not happy about it, and neither are the big online retailers.  But it can be done.
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Re: Get ready to pay online sales taxes
« Reply #7 on: July 16, 2012, 01:18:25 pm »
Typically sales tax is charged based on where the purchaser is, not the business itself.

But really, people can go to gamestop and buy cards for digital downloads and pay tax on those, why are electronic transactions supposed to be different?

Offline Shano

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Re: Get ready to pay online sales taxes
« Reply #8 on: July 16, 2012, 01:28:11 pm »
I agree that the loophole was pleasant. But it was unfair. It is better this way.
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Offline ThunderWulf

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Re: Get ready to pay online sales taxes
« Reply #9 on: July 16, 2012, 03:13:25 pm »
I live in Massachusetts and we already get charged a state sales tax on everything we order online.  Sounds like they want to basically make a national version of the same thing. Hope it doesn't get tacked on top of already existing state ones.
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Offline Smurfette Principle

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Re: Get ready to pay online sales taxes
« Reply #10 on: July 16, 2012, 03:31:23 pm »
I live in New Hampshire and we don't have sales taxes, period. Which makes things very confusing when I leave the state. I'd hope that the tax would be based on where the purchaser is, not the store.

Offline Fpqxz

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Re: Get ready to pay online sales taxes
« Reply #11 on: July 16, 2012, 03:34:41 pm »
I live in New Hampshire and we don't have sales taxes, period. Which makes things very confusing when I leave the state. I'd hope that the tax would be based on where the purchaser is, not the store.

I have to wonder how this proposed law would apply to online purchases made from foreign (i.e. non-U.S.-based) vendors.
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Re: Get ready to pay online sales taxes
« Reply #12 on: July 16, 2012, 03:35:36 pm »
I live in New Hampshire and we don't have sales taxes, period. Which makes things very confusing when I leave the state. I'd hope that the tax would be based on where the purchaser is, not the store.

I actually have a bit of experience in this, having implemented a system to track it. Everything I've seen is done based on the zipcode of the customer. That way you can track taxes(and if they're charged which is a bigger pain to track than the damn taxes themselves) down through the state, county and city levels. Didn't take all to terribly long as there are plenty of services out there to do it, I think we pay half a cent per zipcode checked.

Offline Meshakhad

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Re: Get ready to pay online sales taxes
« Reply #13 on: July 16, 2012, 04:37:16 pm »
I know that I pay sales tax when I buy games on Steam already. But that might have something to do with both Valve and myself being located in Washington State, which has a sales tax.
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Offline Vypernight

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Re: Get ready to pay online sales taxes
« Reply #14 on: July 16, 2012, 05:43:44 pm »
Didn't the same gov't just approve a tax break for themselves?
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