Senate Backs Bill to Force Tax Collection on Internet Sales(nytimes.com)
nytimes.com
Senate Backs Bill to Force Tax Collection on Internet Sales
https://www.nytimes.com/2013/05/07/business/senate-backs-wider-internet-tax-collection.html
80 comments
They don't expect that at all. This bill requires tax code simplification before a state may tax out-of-state sellers. There will only be one taxing entity per state, with one database of tax rates and boundaries, and one nationwide rule for determining the locality of the tax.
It's still going to be complicated (up to 50 returns, 50 possible audits, and in the worst case 50 subtly different definitions of what's taxable), but nothing like what you're describing.
It's still going to be complicated (up to 50 returns, 50 possible audits, and in the worst case 50 subtly different definitions of what's taxable), but nothing like what you're describing.
Interesting. I haven't actually read the bill yet. I assumed it wouldn't make it this far.
I guess if it actually results in tax code simplification, that's a decent silver lining.
I guess if it actually results in tax code simplification, that's a decent silver lining.
How they expect Joe Merchant to be able to charge all these taxes correctly without radical simplification (and unification) of tax codes is beyond me. Very far beyond me.
Amazon's just fine with it. That in itself should tell you which side the legislators' bread is buttered on.
Amazon's just fine with it. That in itself should tell you which side the legislators' bread is buttered on.
What astounds me about taxes in the USA is that we continue to print tax tables and booklets, and that the government has yet to create any useful software for filing taxes. Most of the tax filing process could be completely automated if rather than publishing booklets, the government just released software for computing taxes.
Of course, we are talking about the same government that used flat files to manage the entire country's tax data until recently.
Of course, we are talking about the same government that used flat files to manage the entire country's tax data until recently.
It wants to, but there's a vocal lobby against it -- Intuit, H&R Block, and 1.7 million accountants that would like to continue being paid to fill out the forms.
Do you happen to have a citation? I would like to know who in the government is pushing for this, and how they are proposing it be done (I do not want to see a Windows binary or some Flash applet; I am thinking more along the lines of Prolog or a similar declarative language).
Why does it matter? They aren't getting very far.
http://reporting.sunlightfoundation.com/2013/tax-preparers-l...
http://reporting.sunlightfoundation.com/2013/tax-preparers-l...
Entire businesses have been formed from the nuances of government state/local regulations.
I kid you not, http://www.sos.state.tx.us/ucc/forms/UCC1.pdf on that form section 1g and 2g there's an option to check NONE if you do not have an organization id. Well, depending on the state you file (this may have changed) you would either write none, check the box, do both, or do neither. Good times.
What I'm trying to say is, if you need to go into that much detail it sounds like you have an excellent business opportunity to sell your logic SaaS.
I kid you not, http://www.sos.state.tx.us/ucc/forms/UCC1.pdf on that form section 1g and 2g there's an option to check NONE if you do not have an organization id. Well, depending on the state you file (this may have changed) you would either write none, check the box, do both, or do neither. Good times.
What I'm trying to say is, if you need to go into that much detail it sounds like you have an excellent business opportunity to sell your logic SaaS.
Ever since the first time I had to do sales tax for an online store I've been wanting to create an online service to help sites calculate sales tax.
After reading your comment I've changed my mind.
After reading your comment I've changed my mind.
Add to this:
* 1M/yr in business with slim margins means this can apply to folks not even making enough to get by. Given the long tail of e-commerce, this will have significant impact on many small internet vendors
* The software provider catch-all means big wins for companies like Amazon to sell add-on tax calculations. Translate: more big walled gardens, less mom-and-pop businesses
* I'm still not sure who categorizes goods and services to determine taxation. The same good or service can be taxed differently by any one of those 23,000 taxing authorities (per your example of shipping and handling), but how is categorization information supposed to make it to the software provider (or merchant)?
* This complexity means that it's not a matter of merchants optionally using a software provider to compute taxes. For all intents and purposes, this legislation will require the use of a software provider to compute taxes
* Not only will the extra paperwork hurt small businesses, the added few percentage points will hurt poor consumers -- the people who can least afford it.
* 1M/yr in business with slim margins means this can apply to folks not even making enough to get by. Given the long tail of e-commerce, this will have significant impact on many small internet vendors
* The software provider catch-all means big wins for companies like Amazon to sell add-on tax calculations. Translate: more big walled gardens, less mom-and-pop businesses
* I'm still not sure who categorizes goods and services to determine taxation. The same good or service can be taxed differently by any one of those 23,000 taxing authorities (per your example of shipping and handling), but how is categorization information supposed to make it to the software provider (or merchant)?
* This complexity means that it's not a matter of merchants optionally using a software provider to compute taxes. For all intents and purposes, this legislation will require the use of a software provider to compute taxes
* Not only will the extra paperwork hurt small businesses, the added few percentage points will hurt poor consumers -- the people who can least afford it.
That first sentence really took me by surprise...
Our US State Sales Tax system was written by a Shopify employee?!?!
Our US State Sales Tax system was written by a Shopify employee?!?!
Hah. Not quite. Fixed the unclear wording ;)
"Given government, this will likely be a desktop Windows app"
Ah you misspelled COBOL on a AS/400.
I've occasionally wondered if an aggregator is legally possible. Simply remit an annually agreed upon 5% across the board along with full shipping records in electronic format and we'll take care of the rest. Some localities will charge 10% some 0% but you just remit 5% and we pay out roughly 4.95% and keep the last 0.05% which probably adds up to quite a bit.
The third point I would like to make is how this will be enforced overseas. I've bought stuff from dx, seeed studios, and overseas ebay stores, and if the shippers can get the price down in bulk the tax savings would be valuable. In the long run, the only real effect could end up being amazon's kindle store moves to Jamaica (or whatever) and shipping takes a little longer from warehouses in Canada.
I am old enough to remember when congress intentionally and methodically and thoroughly destroyed the american shipbuilding industry by social engineering the tax code. I have no idea why they wanted to do this other than the usual .gov goals of destruction of the middle class etc. I could totally see a repeat happening this decade with e-commerce.
Ah you misspelled COBOL on a AS/400.
I've occasionally wondered if an aggregator is legally possible. Simply remit an annually agreed upon 5% across the board along with full shipping records in electronic format and we'll take care of the rest. Some localities will charge 10% some 0% but you just remit 5% and we pay out roughly 4.95% and keep the last 0.05% which probably adds up to quite a bit.
The third point I would like to make is how this will be enforced overseas. I've bought stuff from dx, seeed studios, and overseas ebay stores, and if the shippers can get the price down in bulk the tax savings would be valuable. In the long run, the only real effect could end up being amazon's kindle store moves to Jamaica (or whatever) and shipping takes a little longer from warehouses in Canada.
I am old enough to remember when congress intentionally and methodically and thoroughly destroyed the american shipbuilding industry by social engineering the tax code. I have no idea why they wanted to do this other than the usual .gov goals of destruction of the middle class etc. I could totally see a repeat happening this decade with e-commerce.
How do you currently keep all this up to date?
We pay an external service provider for the raw zipcode-to-rate mappings. Their company exists solely to manually aggregate all these rates in a mostly-machine-friendly format. We developed all the peripheral logic through skimming documents and talking to customers, and it changes very rarely.
It's not hard to google for the rate provider services, but they don't give you all the information you need to handle all the inane edge cases properly (at least, not the ones I've investigated)
It's not hard to google for the rate provider services, but they don't give you all the information you need to handle all the inane edge cases properly (at least, not the ones I've investigated)
How does this approach handle zip codes that are split between two municipalities? I happen to live in one of those, and there is a 0.25% difference between the two cities.
We don't deal with that case adequately right now. It's up to chance which one you get charged. For customers (ie. one-time sales), we unfortunately lump this into "get it close enough and the taxation bodies won't really care". For merchants located in these two-rate zips, we can usually work around it, targeting the correct rate with some ugly hacks.
This is something I'd like us to do better on. I have an idea for how to improve without adding an intolerable amount of complexity or expense, but I haven't had a chance to implement it yet.
This is something I'd like us to do better on. I have an idea for how to improve without adding an intolerable amount of complexity or expense, but I haven't had a chance to implement it yet.
Here's the vote on today's bill: (http://www.senate.gov/legislative/LIS/roll_call_lists/roll_c...)
Boxer: yea
Feinstein: yea
Silicon Valley sucks at politics, even our own senators are selling us out.
Boxer: yea
Feinstein: yea
Silicon Valley sucks at politics, even our own senators are selling us out.
a) Silicon Valley doesn't have "its own senators"
b) Why should internet retailers get special privileges? Complexity sucks but that's life, and the law does require states to simplify the collection process.
b) Why should internet retailers get special privileges? Complexity sucks but that's life, and the law does require states to simplify the collection process.
b) This actually creates a burden on internet retailers that brick-and-mortar stores don't have; it makes things unfair rather than fair. A single retail store has to worry about only the taxes of the locale it resides in. At most, they are filing 3 sales tax returns and could potentially have their books audited by 3 entities. An internet retailer now has to comply with 50 separate sales tax rules, file 50 separate returns, and potentially be audited 50 times a year.
For an individual making $30k/year (3% net on $1m in gross), is that really levelling the playing field? How many of your aunts and uncles do you think have the time and the skill to locate, understand and properly comply with 50 states' separate tax codes? Contrast that to opening a brick-and-mortar shop on main street in their town, where if they need help, they can walk up to the town hall and ask the tax administrator in person, or hire a local accountant who already knows all the local rules. That's feasible, where getting assistance from 50 accountants to start a business is not.
For an individual making $30k/year (3% net on $1m in gross), is that really levelling the playing field? How many of your aunts and uncles do you think have the time and the skill to locate, understand and properly comply with 50 states' separate tax codes? Contrast that to opening a brick-and-mortar shop on main street in their town, where if they need help, they can walk up to the town hall and ask the tax administrator in person, or hire a local accountant who already knows all the local rules. That's feasible, where getting assistance from 50 accountants to start a business is not.
This argument is ludicrous. You are saying that you shouldn't have to pay the taxes you legally owe because it's hard for you to do the accounting? It's much harder to file taxes if you have to itemize returns, should that make you exempt from paying taxes?
You could avoid them entirely by only selling to the five states that don't have sales taxes, that's a vastly larger market than the area around a single mom & pop store.
I'd be all for some sort of scheme for streamlining tax collection for online purchases, but paying nothing at all is just rent-seeking.
> For an individual making $30k/year (3% net on $1m in gross), is that really levelling the playing field?
If they're making that $30k/year because they're dodging state taxes, then yeah, it's leveling the playing field.
You could avoid them entirely by only selling to the five states that don't have sales taxes, that's a vastly larger market than the area around a single mom & pop store.
I'd be all for some sort of scheme for streamlining tax collection for online purchases, but paying nothing at all is just rent-seeking.
> For an individual making $30k/year (3% net on $1m in gross), is that really levelling the playing field?
If they're making that $30k/year because they're dodging state taxes, then yeah, it's leveling the playing field.
Huh? Right now, internet retailers do not legally owe any sales tax to any state they don't have nexus in. The retailers aren't evading any taxes for any reason. This creates a new collection burden that didn't exist, and does not exist for brick-and-mortar, even if they have customers from all 50 states come by and make a purchase. Someone that opens a shop in their town does not have to file 51 returns a year and potentially be audited 51 times, while under this bill, someone opening the same store at the same place with a website does.
I didn't say there could or should be no tax, I said that this bill creates an uneven burden. How is that a ridiculous statement?
I didn't say there could or should be no tax, I said that this bill creates an uneven burden. How is that a ridiculous statement?
I wasn't talking about what's legal, I was talking about what's ethical and/or economically efficient. States didn't tax online sales because there was no legal framework for doing so, so online retailers were able to gain an edge over local businesses by locating outside the states, avoiding the taxes. That is inefficient because it means firms are taxed differently based on an arbitrary aspect of how their business is run.
You're claiming that' it's somehow treating them differently, but I call bullshit. Building an online retail site and marketing nationally is comparable to Best Buy building stores in all states, and of course one expense of doing that is having to pay sales taxes in all the states.
> even if they have customers from all 50 states come by and make a purchase
That is an edge case that is rare in practice and is difficult to exploit. If it was a huge problem then yeah I'd agree they should make a special tax setup for it (and this DOES exist: if you live in Washington and buy a car in Oregon, they will come for the sales tax: http://askville.amazon.com/Washington-State-resident-buy-car...). I would certainly agree that if they are delivering products to all the states then yes, they should have to pay sales taxes to all the states that they delivered to, and if this law doesn't handle that case then yeah, I think it should.
You're claiming that' it's somehow treating them differently, but I call bullshit. Building an online retail site and marketing nationally is comparable to Best Buy building stores in all states, and of course one expense of doing that is having to pay sales taxes in all the states.
> even if they have customers from all 50 states come by and make a purchase
That is an edge case that is rare in practice and is difficult to exploit. If it was a huge problem then yeah I'd agree they should make a special tax setup for it (and this DOES exist: if you live in Washington and buy a car in Oregon, they will come for the sales tax: http://askville.amazon.com/Washington-State-resident-buy-car...). I would certainly agree that if they are delivering products to all the states then yes, they should have to pay sales taxes to all the states that they delivered to, and if this law doesn't handle that case then yeah, I think it should.
I realized I should have clarified
> internet retailers do not legally owe any sales tax to any state they don't have nexus in
This is technically true but highly misleading. In almost all states, the receiving party is required to pay tax on out-of-state mail order. The problem is that the law is unenforceable because the states can't force the retailers to document and collect it. This law closes that loophole.
> internet retailers do not legally owe any sales tax to any state they don't have nexus in
This is technically true but highly misleading. In almost all states, the receiving party is required to pay tax on out-of-state mail order. The problem is that the law is unenforceable because the states can't force the retailers to document and collect it. This law closes that loophole.
a) Hollywood does, why doesn't Silicon Valley?
I wish this was paired with a provision that required states to simplify their sales tax codes.
I know in Seattle for example food is tax free, unless it's carbonated (which has a surtax), or prepared, or alcoholic, or coffee, or until recently a 'snack' which of course has a lengthy definition on page 3,641 section 4 subpart D...
Even if you make a million dollars in sales, it's hard to imagine keeping up with these regulations.
I'd be especially worried if I was a sharing based company (will Airbnb pay hotel rate taxes, RelayRide car rental rates? Who pays, the owner or the company?)
I know in Seattle for example food is tax free, unless it's carbonated (which has a surtax), or prepared, or alcoholic, or coffee, or until recently a 'snack' which of course has a lengthy definition on page 3,641 section 4 subpart D...
Even if you make a million dollars in sales, it's hard to imagine keeping up with these regulations.
I'd be especially worried if I was a sharing based company (will Airbnb pay hotel rate taxes, RelayRide car rental rates? Who pays, the owner or the company?)
This is paired with a provision that states must simplify their sales tax codes before they can collect from out-of-state sellers, though it's not hard to see how they could stay within the requirements of the bill and still have overly complicated rules.
I wrote a summary a few weeks ago:
http://www.dangrossman.info/2013/04/24/what-startups-need-to...
I wrote a summary a few weeks ago:
http://www.dangrossman.info/2013/04/24/what-startups-need-to...
It's not that simple.
http://online.wsj.com/article/SB1000142412788732362800457845...
It's very clear that remote sellers cannot be audited by any entity except that one per state which will be created.
> Such authority shall commence...after the date that the State...implements each of the following minimum simplification requirements: a single audit of a remote seller for all State and local taxing jurisdictions within that State
Local municipalities have no legal jurisdiction to tax entities outside their boundaries, and this bill does nothing to change that.
> Such authority shall commence...after the date that the State...implements each of the following minimum simplification requirements: a single audit of a remote seller for all State and local taxing jurisdictions within that State
Local municipalities have no legal jurisdiction to tax entities outside their boundaries, and this bill does nothing to change that.
"Local municipalities have no legal jurisdiction to tax entities outside their boundaries"
Neither do states, but that's not stopping them from trying.
Neither do states, but that's not stopping them from trying.
Your comment demonstrates a fundamental lack of understanding of the question at stake here.
The issue is not whether the state can tax entities outside their boundaries. The issue is when the state can ask companies headquartered elsewhere to assist in the collection of taxes owed to the state by citizens of said state.
In legal theory the taxes are owed regardless of whether third parties like Amazon assist in their collection. In practice they don't get collected unless it is done by those third parties. (Because people don't volunteer that information, and the state has no way to prove who bought what for how much without paying taxes.)
Until this bill, the question centered on how broadly states could define companies headquartered elsewhere as having a business presence in the state, and therefore within the state's power to compel. But this bill is being passed by Congress under the Commerce Clause, and there are no legal questions about whether sufficient legal authority exists for this purpose.
The issue is not whether the state can tax entities outside their boundaries. The issue is when the state can ask companies headquartered elsewhere to assist in the collection of taxes owed to the state by citizens of said state.
In legal theory the taxes are owed regardless of whether third parties like Amazon assist in their collection. In practice they don't get collected unless it is done by those third parties. (Because people don't volunteer that information, and the state has no way to prove who bought what for how much without paying taxes.)
Until this bill, the question centered on how broadly states could define companies headquartered elsewhere as having a business presence in the state, and therefore within the state's power to compel. But this bill is being passed by Congress under the Commerce Clause, and there are no legal questions about whether sufficient legal authority exists for this purpose.
Oh, I understand the issue thoroughly, thanks, given that I pay Illinois use tax every year.
That's between me and Illinois, though. I don't see why some company that's not even in Illinois (and that thus receives no Illinois services of any kind) should have to take the hit to comply with Illinois law.
That's between me and Illinois, though. I don't see why some company that's not even in Illinois (and that thus receives no Illinois services of any kind) should have to take the hit to comply with Illinois law.
[deleted]
Its really just a software problem. The vast majority of products made in the US which you describe all have unique identification numbers called UPCs, Universal Product Codes. With the exception of in house made items like custom baked goods almost every product has a universal code. That code can easily be linked to a database which identifies its characteristics by state and county etc.
Once you have the characteristics by state/county/etc. (how the product is described legally), you can then cross reference it to where it is sold to and calculate a tax.
Is it a lot of data? Absolutely, but it is doable and the person/team who does it is sure to have a fairly large business charging companies who want their products sold online and companies using their system.
[ADDED] There will likely be multiple providers which should drive the price down and economic profits to zero. There is no reason why you would pick 1 tax calculator over another except price.
Most foods won't be an issue since they aren't sold as much online.
If you are a retailer of a new item with low volume, that is really where this is a problem. Once you make over a million a year in sales, you will likely have to hire an expensive consultant to figure out your tax implications.
[Additionally Added] I agree that it will be a challenging transition. But, in 10 years, this will be a non-issue.
Once you have the characteristics by state/county/etc. (how the product is described legally), you can then cross reference it to where it is sold to and calculate a tax.
Is it a lot of data? Absolutely, but it is doable and the person/team who does it is sure to have a fairly large business charging companies who want their products sold online and companies using their system.
[ADDED] There will likely be multiple providers which should drive the price down and economic profits to zero. There is no reason why you would pick 1 tax calculator over another except price.
Most foods won't be an issue since they aren't sold as much online.
If you are a retailer of a new item with low volume, that is really where this is a problem. Once you make over a million a year in sales, you will likely have to hire an expensive consultant to figure out your tax implications.
[Additionally Added] I agree that it will be a challenging transition. But, in 10 years, this will be a non-issue.
I work with UPCs a lot. We're regularly disappointed with how FEW things have UPCs. There are whole categories — foods, apparel, etc. — without UPCs, and other segments - old books, beer, wine - where UPCs aren't actually used for unique products, but instead for things like brands or prices.
Add to this that state and local laws change frequently, and that they aren't machine-readable (and, even if the rules were easily accessible, the rules frequently would require a lawyer to parse, and might change based on where the goods are sold). It is a very thorny problem.
Add to this that state and local laws change frequently, and that they aren't machine-readable (and, even if the rules were easily accessible, the rules frequently would require a lawyer to parse, and might change based on where the goods are sold). It is a very thorny problem.
Amazon will be fine, yes.
I'm more worried about the small retailer that sells $1m in goods and pockets $150k, who now needs to buy expensive tax calculation software and pay taxes in 50 states.
I'm more worried about the small retailer that sells $1m in goods and pockets $150k, who now needs to buy expensive tax calculation software and pay taxes in 50 states.
As a developer at such a retailer, all I can say is: ugh. I hope this dies or is vastly simplified in the house.
It will likely come bundled with the credit card software they're already paying for.
It's already a common feature of retail PoS software, at least. Retailers with many physical stores have to make sure different Safeway or Barnes&Noble stores charge the proper sales-tax rates for each location, and getting that right is often outsourced to the software provider.
To that end it's also a data problem. Getting 100% accurate unique identifiers like UPC, MPN or ISBN for such items can be a challenge for online retailers. Also the notion of smaller retailers who fall under this legislation having to (pay someone to) modify their systems to support these third party services to calculate the collect tax is also kind of a bummer.
These issues are mostly resolvable with time and money. Regardless, the transition is going to be rough, in my view.
These issues are mostly resolvable with time and money. Regardless, the transition is going to be rough, in my view.
[deleted]
Does this matter if the Republican-controlled house (generally anti-tax) will not pass it?
It sounds like the Ryan budget that was passed in the House back in '10 and was never going to pass the Senate.
Either it's inefficient politics, grandstanding, kabuki theater or all of the above. It's definitely not newsworthy.
It sounds like the Ryan budget that was passed in the House back in '10 and was never going to pass the Senate.
Either it's inefficient politics, grandstanding, kabuki theater or all of the above. It's definitely not newsworthy.
There's a not-insignificant chance this will pass. Republican opinion on it is split -- they can get away with saying they're not reneging on no-tax-increase pledges because it's merely enforcement of tax laws already on the books (consumers are supposed to pay use tax on their out-of-state purchases). There's strong pressure on them from brick-and-mortar businesses in every state since it makes them more competitive with online retailers.
So the republicans are in favor of closing tax loopholes now? Oh right, this is for consumers.
I thought I woke up in an alternate universe where congress wasn't bought and paid for.
I thought I woke up in an alternate universe where congress wasn't bought and paid for.
This has nothing to do with "Republicans" (or Democrats, for that matter). It's high sales tax states v. low sales tax states.
The money the states are losing to lost sales tax revenues pale in comparison to the money lost to esoteric corporate tax loopholes. Those loopholes were sacrosanct to the republicans in recent negotiations over the debt ceiling, tantamount to a tax increase. In this case apparently it's ok with (many of) them.
Not that it matters at this point, but "closing loopholes" was not President Obama's tax position during the debt ceiling negotiations. He cleverly made a big deal about a penny-ante change to private jet depreciation, but the meat of his proposal was a combination of higher rates and lower deductions for high earners. Neither of which could be properly described as loophole-closing.
The money lost to esoteric corporate tax loopholes pale in comparison to the money lost to entitlements.
The thing about money "lost" to entitlements is that it's not really lost. It's spent immediately and generally contributes a great deal to the economy. On the other hand, money lost to tax loopholes generally ends up enriching people who are already wealthy and are less likely to circulate the extra capital.
One of the Republicans constitutencies is small business owners, and they generally like the internet sales tax proposals, since it makes them more competitive with online stores.
True, but another republican core constituency is people who hate paying taxes, and I argue that it's a more important constituent group than the small business lobby. This might seem like a good move for the republicans now, but I suspect they'll regret it in primary season when their challenger can paint them as "the incumbent, who brought sales taxes to the internet."
There's also a not-insignificant chance that the Supreme Court will throw it out if it does pass. These issues aren't new; most of them were hashed out back in the heyday of the Sears Catalog and other mail-order operations. As far as I know, no state ever managed to collect taxes from out-of-state companies.
That's because the states had no jurisdiction over entities outside their boundaries with which to enforce tax collection. There's never been a federal bill giving it to them, and the federal government definitely has authority to regulate interstate commerce. On what grounds would the Supreme Court throw this out?
The SC rulings on out-of-state taxes have always specifically said that Congress is free to make changes that would enable tax collection. E.g. Quill v North Dakota:
> [O]ur decision is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve. No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions
The SC rulings on out-of-state taxes have always specifically said that Congress is free to make changes that would enable tax collection. E.g. Quill v North Dakota:
> [O]ur decision is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve. No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions
"the federal government definitely has authority to regulate interstate commerce"
Agreed, but that's not what they're doing. They're granting authority to one state to regulate commerce in another state. They might have the authority to enact a national sales tax paid to the federal government (but then again, they might not -- note that the income tax required an actual constitutional amendment), but I don't think they can make citizens of one state subject to the tax (or other) laws of another.
If they do have that power, how far does it go? Can the feds require that you abide by all the laws of (insert least favorite state) even though you've never set foot in it?
Agreed, but that's not what they're doing. They're granting authority to one state to regulate commerce in another state. They might have the authority to enact a national sales tax paid to the federal government (but then again, they might not -- note that the income tax required an actual constitutional amendment), but I don't think they can make citizens of one state subject to the tax (or other) laws of another.
If they do have that power, how far does it go? Can the feds require that you abide by all the laws of (insert least favorite state) even though you've never set foot in it?
No, they were quite clear in Quill [1] that Congress can do this.
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This aspect of our decision is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve, 10 but also one that Congress has the ultimate power to resolve. No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions. See Prudential Insurance Co. v. Benjamin, 328 U.S. 408 (1946). Indeed, in recent years, Congress has considered legislation that would "overrule" the Bellas Hess rule. 11 Its decision not to take action in this direction may, of course, have been dictated by respect for our holding in Bellas Hess that the Due Process Clause prohibits States from imposing such taxes, but today we have put that problem to rest. Accordingly, Congress is now free to decide whether, when, and to what extent the States may burden interstate mail-order concerns with a duty to collect use taxes.
Indeed, even if we were convinced that Bellas Hess was inconsistent with our Commerce Clause jurisprudence, "this very fact [might] giv[e us] pause and counse[l] withholding our hand, at least for now. Congress has the power to protect interstate commerce from intolerable or even undesirable burdens." Commonwealth Edison Co. v. Montana, 453 U.S., at 637 (1981) (WHITE, J., concurring). In this situation, it [504 U.S. 298, 319] may be that "the better part of both wisdom and valor is to respect the judgment of the other branches of the Government." Id., at 638.
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[1] http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us...
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This aspect of our decision is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve, 10 but also one that Congress has the ultimate power to resolve. No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions. See Prudential Insurance Co. v. Benjamin, 328 U.S. 408 (1946). Indeed, in recent years, Congress has considered legislation that would "overrule" the Bellas Hess rule. 11 Its decision not to take action in this direction may, of course, have been dictated by respect for our holding in Bellas Hess that the Due Process Clause prohibits States from imposing such taxes, but today we have put that problem to rest. Accordingly, Congress is now free to decide whether, when, and to what extent the States may burden interstate mail-order concerns with a duty to collect use taxes.
Indeed, even if we were convinced that Bellas Hess was inconsistent with our Commerce Clause jurisprudence, "this very fact [might] giv[e us] pause and counse[l] withholding our hand, at least for now. Congress has the power to protect interstate commerce from intolerable or even undesirable burdens." Commonwealth Edison Co. v. Montana, 453 U.S., at 637 (1981) (WHITE, J., concurring). In this situation, it [504 U.S. 298, 319] may be that "the better part of both wisdom and valor is to respect the judgment of the other branches of the Government." Id., at 638.
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[1] http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us...
[deleted]
My problem with this as it stands: $0.42 in tax to remit, $42.50 to figure out where to send it.
The online affiliate industry should be happy about this. For the past few years states have been instituting laws stating online affiliates earning commissions on sales constitute a physical nexus. This first passed in New York and Amazon began collecting tax from New York residents. Many other states followed, but rather than collect the tax like they did in NY they started killing off their affiliates in each of these states. I know of one particular case where Fat Wallet moved out of state to avoid being severed by a majority of their affiliate partners. States have been trying everything they can to force online merchants to collect tax, but they've been failing miserably. Amazon even said they would start collecting tax if the federal government steps in. It looks like we've finally reached that point. There's a lot more history to this issue than it appears.
This is being flagged off the front page. Why does that happen to every mention of this bill?
I flag it because at this point, afaict all the productive HN discussion that's going to happen has happened. Check the previous submissions with comments and compare the comments to the ones here: A lot of words seem to be being re-spilled saying the same things on all sides, which indicates a stalled (or perhaps, cyclical) conversation.
Just the news itself I can get from elsewhere; the usefulness of something being on HN is if it produces good discussion, which repeated submissions of the same topic tend not to do, unless interesting new information comes to light between the submissions.
That said, it's still on the front page 8 hours after submission, so obviously most HN readers don't agree with me.
Just the news itself I can get from elsewhere; the usefulness of something being on HN is if it produces good discussion, which repeated submissions of the same topic tend not to do, unless interesting new information comes to light between the submissions.
That said, it's still on the front page 8 hours after submission, so obviously most HN readers don't agree with me.
My issue is not the complexity and methods of collection (although that is problematic); it's what it will be wasted on once collected.
See, this might be remotely tolerable if there was also a funded mandate to create federally-run queryable API free of charge for all online businesses to make use of. Alas, I doubt this will happen.
(And the first person to chime in with "hurr durr a chance to disrupt the state tax industry" can go fuck right off.)
EDIT: Reading Dan's summary above, it looks like states (not the feds) will be responsible for providing this API. Urk.
(And the first person to chime in with "hurr durr a chance to disrupt the state tax industry" can go fuck right off.)
EDIT: Reading Dan's summary above, it looks like states (not the feds) will be responsible for providing this API. Urk.
Why release an API? Just release the tax code itself as software. That is basically what it is, right? Instead of English, publish the tax code in Prolog or some similar declarative language (added bonus: contradictory tax codes will be caught early and automatically).
> And the first person to chime in with "hurr durr a chance to disrupt the state tax industry" can go fuck right off.
Especially as it's already been done by Avalara and a bunch of others.
Especially as it's already been done by Avalara and a bunch of others.
Who the hell cares if there are taxes collected.
But it's OBSCENE to exact the costs required to comply with every little tiny jurisdiction. Make a streamlined approach where tax is based on 1-10 plans laid out in federal statues, and able to be looked up via a city/state/zipcode lookup table
But it's OBSCENE to exact the costs required to comply with every little tiny jurisdiction. Make a streamlined approach where tax is based on 1-10 plans laid out in federal statues, and able to be looked up via a city/state/zipcode lookup table
I think the long term (5 years out) result of this tax is going to be faster distribution from Amazon (local warehouses, delivery infrastructure). I hate taxes, but this makes the short bet on Best Buy more interesting to me.
2 cents from an European here:
Why does the US not have VAT and instead have this big mess called sales tax? IIRC it's one of the only few developed countries without VAT.
Why does the US not have VAT and instead have this big mess called sales tax? IIRC it's one of the only few developed countries without VAT.
Because any given locality has at least three different governments that all have the power to implement taxes. There's not a chance that all of the ~10000 different governments in the US would agree to a single tax.
I'm really looking forward to same-day delivery from Amazon.
How will this affect purchase of digital goods?
Some states tax them, some don't, and that will continue to be. If this passes, once each state sets its new sales/use tax code, you'll have to check each one to see if what you're selling is taxable there.
I shorted Amazon in the after market on the news.
Is that because you think it's bad for them?
Have you considered the implications of the fact that Amazon is pushing for this?
Byzantine regulations favor the incumbents. Even sometimes ironically the complicated regulations designed to favor the little guy, who is unable to hire enough lawyer power to take advantage of them while the incumbents work out how to use the new loopholes.
Have you considered the implications of the fact that Amazon is pushing for this?
Byzantine regulations favor the incumbents. Even sometimes ironically the complicated regulations designed to favor the little guy, who is unable to hire enough lawyer power to take advantage of them while the incumbents work out how to use the new loopholes.
You do know Amazon is backing this?
Aren't you clever!
* There are over 23,000 distinct tax rates in the US. Most of these can be nicely pigeonholed as 'State', 'County', or 'Municipal'. Some can not.
* There are a handful of cities with multiple municipal tax rates. Most of these straddle counties. A small handful of them, perplexingly, don't.
* Most states charge tax based on the three(ish!) rates applicable at the sale's destination. Several charge based on the origin.
* Some states charge tax on shipping. Some states charge tax on shipping and handling. Some both, some neither.
* Three states only charge county and municipal level taxes if the destination is located in a county that the business has a phyiscal presence in. Of these three, one does something subtly different still.
* Figure the 5-digit zip code is sufficient to identify the applicable rates at a given address? Nope. You actually need to geolocate the street address to get it right sometimes.
* There are a nearly-unfathomable depth and breadth of exceptions on a type-of-goods basis (selling clothing in New York? It's exempt if it's under $110, but only from State tax, and additionally county tax if the destination is in one of 14 specific counties, unless it's in the cities of Norwich or Oneida, in which case the County tax applies again.)
This astounds me as a Software Developer and a Canadian (we have vastly simpler Sales Taxes). How they expect Joe Merchant to be able to charge all these taxes correctly without radical simplification (and unification) of tax codes is beyond me. Very far beyond me.
--EDIT--
After reading the full bill, it's not as bad as I previously thought (logistically, ignoring the more-taxes discussion). However, it is still pretty bad.
Salient points:
* One central authority per state means at most ~50 points of contact. This is better than 23,000, but not exactly good.
* Doesn't apply to merchants doing less than $1M/yr in business.
* States are required to provide a database of rates and boundaries. As worded in the bill, it's unclear whether this means zipcodes or bounding coordinates. Geolocation is not a cheap service at scale.
* Each state is required to provide software to calculate rates for a given sale. Given government, this will likely be a desktop Windows app that does not integrate cleanly with any server-side infrastructure, nevermind the fact that there will be 50 likely-distinct pieces of software.
On the other hand, with states actually being encouraged to publish their rates in a freely-available machine-friendly format for once, perhaps we'll see some startups pop up around this problem to ease the pain.