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Thread: Federal Sales Tax Bills Introduced

 
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  #1  
Old July 31st, 2011, 09:16 PM
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Federal Sales Tax Bills Introduced

"Senator Dick Durbin Friday introduced a bill that would require all retailers to collect sales tax. If passed, the bill would overturn a Supreme Court decision that prevents states from forcing Internet retailers to collect sales tax unless they have an in-state physical presence..............The bill was applauded today by both Amazon.com Inc. and the National Retail Federation, a trade group for bricks-and-mortar retailers."

Legal/Regulatory - Federal sales tax bill introduced - Internet Retailer
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  #2  
Old July 31st, 2011, 09:34 PM
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Have to admit - have mixed feelings about that. However if, in the long run, it proves to be beneficial to affiliates - I'm for it...
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  #3  
Old July 31st, 2011, 09:47 PM
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Trust - Thanks for sharing this news. I'm not surprised to see it being purposed. I have really mixed feelings on whether it's the answer to the tax issue we face. It will be interesting to see if the gov'ts need for money will overturn a Supreme Court decision.
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  #4  
Old July 31st, 2011, 09:59 PM
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Same here, not sure. On one side you have Amazon.com and the National Retail Federation then on the other Ebay and DMA (Direct Marketing Association) among many others.
  #5  
Old August 1st, 2011, 08:54 AM
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Democrats friday propose online sales taxes for all

A bill introduced Friday by Democrats in Congress would require a federal framework for collecting sales tax from online retailers, essentially providing guidelines for the states.

As it did during its earnings call, Amazon supported the "Main Street Fairness Act," co-sponsored by Sen. Dick Durbin (D-IL), Sen. Tim Johnson (D-SD), and Sen. Jack Reed (D-RI) as well as Reps. John Conyers (D-MI), Peter Welch (D-VT) and Heath Schuler (D-NC) in the House. The bill was endorsed by Sears Roebuck & Co., as well.

A collection of organizations opposed the bill, which they said would place an unnecessary cost burden on small businesses. Durbin said, however, that small businesses would be exempted from collecting online taxes, subject to the governing board of the agreement.

eBay led the opposition, which was joined by the the Electronics Retailing Association, the Computer and Communications Industry Association, TechNet, and the National Taxpayers Union, among others.

"Consumers shouldn't have to face the burden of reporting all of their online purchases," Durbin said in a statement. "Main Street retailers collect sales taxes on behalf of consumers, why shouldn't online retailers do the same? In 2012, states across the country, including Illinois, are expected to lose as much as $24 billion in uncollected state and local taxes on internet and catalogue sales. From 2005 to 2010 the state of Illinois estimated it lost $153 million each year. The Main Street Fairness Act doesn't ask anyone to pay a single penny more in taxes. Instead, it would help governors and mayors collect taxes that are already owed."

see the complete story at Democrats Introduce Federal Bill to Collect Online Sales Tax | News & Opinion | PCMag.com
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Old August 1st, 2011, 09:42 AM
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ecomcity, trust started this topic yesterday, so I merged your post from today into the existing discussion.
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  #7  
Old August 1st, 2011, 11:02 AM
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The bottom line on this, for affiliate marketers, is that it could truly help. I don't like sales taxes any more than the next guy - and in a perfect world I would argue every day that States simply don't have the right to do what they are doing.

However, they are still doing it ... and we need to find a solution to a problem which is causing 1000s of affiliates harm - every day.

This bill would help Affiliate Marketers by removing them from the equation - removing the idea of "nexus" entirely as it relates to sales tax. States would be allowed to enforce sales tax laws if they simplified their codes and joined the group... They would have the incentive to do so since the State-level bills don't work and the power they seek would be in their reach if they joined.

If your motive is to help Affiliates specifically, I think this is something worth supporting.
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  #8  
Old August 1st, 2011, 11:26 AM
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As I mentioned, if it does end up helping affiliates, I can support it.

However, on the flip-side, I believe that many smaller merchants will be shut down or will give up their affiliate programs. Just like in the B&M "Main Street", where the likes of Wal-Mart have destroyed the mom and pops, I feel the same will happen online - Leaving less merchants for affiliates to choose from...
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  #9  
Old August 1st, 2011, 11:27 AM
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I think the states will challenge this as they don't want the federal government getting their hands in the states sales tax cookie jar. I haven't read the article to see if there is a mechanism on how the money is collected.
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  #10  
Old August 1st, 2011, 11:32 AM
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Quote:
Originally Posted by Chuck Hamrick View Post
I think the states will challenge this as they don't want the federal government getting their hands in the states sales tax cookie jar. I haven't read the article to see if there is a mechanism on how the money is collected.
My take is States would have the authority to collect the sales tax directly - bypassing the Feds...
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  #11  
Old August 1st, 2011, 11:43 AM
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So what about states with no sales tax like Oregon (just there)? Does the federal bill require all states to charge a sales tax?
  #12  
Old August 1st, 2011, 11:51 AM
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Again, my take on the Bill is it gives the States the authority to collect sales tax from out of State merchants selling within their State. So, if a State has no Sales Tax there is nothing for them to collect...
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  #13  
Old August 1st, 2011, 12:05 PM
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Chuck,

It isn't a federal tax or a requirement...

All it is is basically the "permission" for States that so choose, to go after out-of-state retailers for sales tax collection.

The Quill ruling said that the law was an undue burden on out-of-state retailers... for a specific set of reasons. It also allowed that if those reasons were countered with solutions - that Congress could act to counter the ruling.

That's what they are trying to do - basically - solve the problems identified in Quill. By doing so (simplifying tax stuff) they could remove the undue burden and States would be able to force collection from out-of-state retailers.

Certainly, it isn't perfect - and Convergence is correct to be concerned about smaller retailers (in my opinion). There is a small business exemption clause which hopefully will assist in that - but the limits have not been set as of yet.

It isn't a federal tax, and isn't even a new tax - it is just giving States the power to do what they already have been trying to achieve thru "Nexus" laws.
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  #14  
Old August 1st, 2011, 12:24 PM
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I guess I will have to see how this fleshes out. I am in favor of this even if it takes away the current tax advantage to pure online retailers. Would like to see this get settled so we can move on to making a living.
  #15  
Old August 1st, 2011, 03:11 PM
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Happy to see this coming through, specifically because it may benefit me in the long run. (I'm a good guy, but not completely altruistic).
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  #16  
Old August 1st, 2011, 03:32 PM
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While this may be a good thing to the affiliate world (no small thing, including for us as we are in the process of relocating back to California from the no sales tax mecca of Oregon), the idea of Federal anything imposed on states isn't very exciting to me. I'd imagine the taxation infrastructure this would entail would facilitate an expansion to include a federal sales tax of some sort. For the record, I actually think there are some positives to a consumption based VAT of sorts along with a flat tax but that's an issue a bit too afield for this discussion.
  #17  
Old August 1st, 2011, 03:54 PM
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Quote:
Originally Posted by Convergence View Post
As I mentioned, if it does end up helping affiliates, I can support it.

However, on the flip-side, I believe that many smaller merchants will be shut down or will give up their affiliate programs. Just like in the B&M "Main Street", where the likes of Wal-Mart have destroyed the mom and pops, I feel the same will happen online - Leaving less merchants for affiliates to choose from...
This bill would totally REMOVE affiliate programs from the equation. Having affiliates or not having affiliates would no longer be a factor in whether or not a merchant is required to collect sales/use taxes.
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  #18  
Old August 1st, 2011, 04:02 PM
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Point I was making was this:

Currently small merchants have a little more wiggle room in price wars. Not having to charge/collect sales tax gives them a more equal footing. Consumer compares xyz merchant with sales tax/shipping and compares abc-smaller merchant's price with just shipping. If both have to collect/charge sales tax then the smaller merchant will probably lose out.

Also, smaller merchants, unless given some sort of exclusion, may not be able to afford software and/or manpower to collect and remit sales tax to the appropriate States. Has yet to be determined if local taxes will be required as well (suspect not).

So profit margins / price advantages being diminished would likely cause the merchant to have to drop their affiliate program to pocket the extra percentage that would have been paid to an affiliate...
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  #19  
Old August 2nd, 2011, 02:16 PM
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If this proposed bill ends the disgusting situation where affiliates are dropped from programs solely because of where they live then I applaud it.
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  #20  
Old August 2nd, 2011, 07:24 PM
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I certainly hope the tax submission process will be severely streamlined & consideration given to small merchants. The focus has been so much on Amazon & the big brands, that those making the laws don't seem to realize that millions of small Main Street retailers & work-at-home craftspeople have an online store which enables them to sell nationally & internationally.

There seems to be a bit of a disconnect between what it takes to collect taxes locally vs. collecting taxes nationally.
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  #21  
Old August 3rd, 2011, 12:37 PM
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This post refers to the following article from Internet Retailer:

Legal/Regulatory - Federal sales tax bill introduced - Internet Retailer

As a small retailer in a sales tax free state, I shudder when I think about this.

If passed, the exemptions for small retailers won't last. That's money left on the table, and with the lousy budgeting going on in most states, they'd go after it. Somebody would come along with legislation to modify the law (supported by Amazon, I'm sure) and force even the smallest retailer to collect.

Quote:
Originally Posted by Durbin
The Main Street Fairness Act doesn’t ask anyone to pay a single penny more in taxes. Instead, it would help governors and mayors collect taxes that are already owed.
While not creating a new tax, this would shift the burden (and real costs) of sales and use tax collection off of the states who've imposed the taxes, and onto out of state retailers who had nothing to do with the legislative processes that established the taxes, and who gain nothing by their existence.

Quote:
Originally Posted by David French
This bill would end a situation where Internet sellers have held an unfair price advantage over local stores for far too long. Tax policy should be channel neutral and not favor one segment of an industry over another.
Regarding that unfair price advantage, do local stores have to charge shipping or do they have a price advantage there? Do they also have the product in hand, ready for the customer to take home? This legislation is not about leveling a playing field, or making tax policy channel neutral. It's about states, incapable of enforcing their own tax policies in-house, getting a Federal green light to pass the buck...

Quote:
Originally Posted by Brian Bieron
Forcing small businesses to take on the same costs and tax burdens as national retail businesses is unrealistic, unfair and will unbalance the playing field between giant retailers and small business retailers on the Internet.
Exactly. Amazon, Wal-Mart, etc would be free of Nexus concerns, and therefore free to open distribution centers across the country, giving them huge advantages over smaller retailers. Mom and Pop shop on the corner would become little more than an Amazon showroom, and smaller niche competitors like myself, saddled with the brand new costs of collecting and remitting sales tax would be in a world of hurt. Again, I don't believe the exemptions would last.

I truly appreciate the affiliate side of this issue, but as a merchant, I have to admit that this scares me silly.
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  #22  
Old August 3rd, 2011, 12:59 PM
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In order to fill in the Internet Info highway's pot holes the part where smaller etailers are spared the costs of collecting and paying the 7500 sales tax authorities ( States & Cities)... is amended. Only organic grown lemonade stands run by those under age 14 are exempt.
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  #23  
Old August 3rd, 2011, 01:38 PM
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Quote:
Originally Posted by Eathan View Post
As a small retailer in a sales tax free state, I shudder when I think about this.

...

While not creating a new tax, this would shift the burden (and real costs) of sales and use tax collection off of the states who've imposed the taxes, and onto out of state retailers who had nothing to do with the legislative processes that established the taxes, and who gain nothing by their existence.

...

I truly appreciate the affiliate side of this issue, but as a merchant, I have to admit that this scares me silly.
I hear ya on this as we are in Oregon (no sales tax) and I do the merchant thing too (I don't have an affiliate program as of yet given a) too many other projects; b) pretty small overall sales; c) not a good feel for where/how to get the ball rolling; procrastination; etc.).

I've been wondering if this all happens if there would quickly (??) be cart plug ins that would automatically calculate all the myriad of tax issues. Even better -- a cart plug in that can also remit to State and Federal agencies and have forms filled out/ready to go.

Thoughts??
  #24  
Old August 3rd, 2011, 02:04 PM
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Quote:
Originally Posted by OTProf View Post
I've been wondering if this all happens if there would quickly (??) be cart plug ins that would automatically calculate all the myriad of tax issues. Even better -- a cart plug in that can also remit to State and Federal agencies and have forms filled out/ready to go.

Thoughts??
I'm pretty sure that's all available now. I did a little research a few weeks ago, and while I'm not sure about the plugin part, there are companies that offer carts that not only calculate the tax for every jurisdiction but that also prepare the forms and returns to transmit the tax to each agency.
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  #25  
Old August 3rd, 2011, 02:13 PM
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Quote:
Originally Posted by ecomcity
In order to fill in the Internet Info highway's pot holes the part where smaller etailers are spared the costs of collecting and paying the 7500 sales tax authorities ( States & Cities)... is amended. Only organic grown lemonade stands run by those under age 14 are exempt.
So long as we can still write off our corporate jets...

Quote:
Originally Posted by OTProf View Post
I've been wondering if this all happens if there would quickly (??) be cart plug ins that would automatically calculate all the myriad of tax issues. Even better -- a cart plug in that can also remit to State and Federal agencies and have forms filled out/ready to go.
Something would surely be developed, and the big cart providers would probably consolidate their lead, but I'd rather not be forced to rebuild on an out of the box cart just because sales tax states don't want to handle their own collection burden. I'd much rather reinvest that time, energy and money into growing my business.

BTW, we're not far South of you. If you're ever down this way, feel free to stop in and say hi.
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