[Georgie Peri]

"Report: Congress Set to End Tax-Free Online Shopping"

The free ride may soon be over.

For the past decade and a half, most Internet shoppers haven't been forced to pay sales tax while buying goods online.

But now, according to CNet News, an alliance of "brick-and-mortar" retailers and state governments has teamed up to end that — and they've crafted federal legislation that may be introduced in Congress as early as next week.

Source:
http://www.foxnews.com/story/0,2933,516988,00.html

[Georgie Peri]

"If a little-known but influential alliance of state politicians, large retailers, and tax collectors have their way, the days of tax-free Internet shopping may be nearly over.

A bill expected to be introduced in the U.S. Congress as early as Monday would rewrite the ground rules for mail order and Internet sales by eliminating what its supporters view as a "loophole" that, in many cases, allows Americans to shop over the Internet without paying sales taxes. " ....

Cnet Link:
http://news.cnet.com/8301-13578_3-10...eadlinesArea.0

[Merchant Consultant Team]

I don't believe the vast majority of online shoppers are trying to avoid sales tax.
They shop online for CONVENIENCE !

[affninja]

If anything, I view this as a positive for our industry. It could eliminate the issue of an affiliate nexus and will force merchants to come up with a viable long-term solution for their affiliate program, rather than just dropping affiliates in certain "internet sales tax states."

[Rhia7]

I agree with affninja. Sooner or later all the states are going to want affiliate tax revenue from affiliate sales [at least affiliates no longer would be discriminated against based upon state of residence]; I also agree with Merchant Consultant Team about the convenience factor.

[AffiliateHound]

One thing to bear in mind - Congress has no power to void any states' sales tax law. Congress may or may not have the power to impose a federal tax on internet sales, that could be considered a national "sales" tax, but each state would have to agree to accept a portion of the revenue from this tax in lieu of their own state sales tax for it to work on a national level.

A state like New York or California may say no, we have our own tax on internet sales, and we will keep it just like it is. The result could be double taxation in some states - a state and a federal "sales" tax on internet purchases.

[AffiliateHound]

Additional point - too late to edit:

Of course though, the constitutionality of a state-imposed internet tax has yet to weather an appellate court challenge, and there remains the strong possibility that the "nexus" states have claimed gives them the right to impose such a tax is illusory.

[CathyM]

I don't believe the vast majority of online shoppers are trying to avoid sales tax. They shop online for CONVENIENCE !

I think it's both price and convenience. I certainly consider the shipping charges and taxes (or lack thereof) to be part of the total price and make my decision based on that information. We're 9% sales tax in California, that can be a big amount to save on a large purchase.

If anything, I view this as a positive for our industry.

I partially agree, once it's settled, I think it will be a big positive because it gets rid of the absurd definition of nexus based on affiliates. However, increasing the cost of Internet sales (by taxing them) does get rid of one of the advantages of purchasing online. It may shift some sales back to the B&M which is why they favor this bill.

[Mr. Sal]

Originally Posted by affninja

If anything, I view this as a positive for our industry. It could eliminate the issue of an affiliate nexus and will force merchants to come up with a viable long-term solution for their affiliate program, rather than just dropping affiliates in certain "internet sales tax states."

I agree on that.

And who knows, but maybe after a while it could also put a dent on some of the big parasites out there... ( Like the more they steal from us, the more taxes they would be forced to pay.)

[net4biz]

I propose the following:

All CORPORATIONS pay 15% on their gross revenue less a standard COLS (Cost of Legal Services) of $60,000 plus dividends paid to shareholders. Eliminate all other write offs and tax subsidies. It's not the governments job to insure any corporation makes a profit or a loss. That's management's job. Basically, the tax is for the priviledge of eliminating personal risk and to do business in the USA.

Example: XYZ Corporation has $10,000,000 in revenue and it paid $440,000 in dividends to shareholders. So it would get a write off of the $440,000 plus the $60K
for having to deal with lawyers and forms and it's taxable income would be $9,500,000.
It pays 15% of this amount in Federal tax.

All INDIVIDUALS pay 15% of their gross revenue after taking a standard COLA deduction of $9,000.

20% of ALL Corporate & Individuals taxes collected goes toward Social Security & Healthcare. 10% of ALL Corporate & Individuals taxes collected goes toward Education.

Note: This does away with the social security tax based on wages set up, which is totally obsolete today due to demographics and actuarial concerns.

Sales tax is a state issue. However, the way around that mess, is to have block grants from the Feds to the various states based on the states representation in the senate and house.

For example: Nevada has 2 senators and 3 congresspersons, so if this block grant consisted of $1 Billion for each Senator and $100 Million for each Representative, Nevada would get $2.5 billion with this Federal Block grant.

In return states could not charge more than 6% in sales tax and all sales originating outside the state would be sales tax exempt.

Now the rate of 15% is not writ in stone ... but since Sinapore has the highest standard of living per capita and it's tax rate is 15% ... let's start there. Could be 12%
or even 9% ... Depends on what you need to balance social welfare with a high standard of living and a living wage.

But unless, the whole enchilada gets simplified, we are in for a big time depression of the first order and a repeat of the inflation of 1923 ala Germany.

[John Jupp]

Originally Posted by AffiliateHound

One thing to bear in mind - Congress has no power to void any states' sales tax law. Congress may or may not have the power to impose a federal tax on internet sales, that could be considered a national "sales" tax, but each state would have to agree to accept a portion of the revenue from this tax in lieu of their own state sales tax for it to work on a national level.

A state like New York or California may say no, we have our own tax on internet sales, and we will keep it just like it is. The result could be double taxation in some states - a state and a federal "sales" tax on internet purchases.

If this Federal Sales Tax is introduced and assuming all States receive a share of this tax proportionately, would its implementation be similar to Value Added Tax in Europe and the UK whereby all transactions resulting in goods or services being supplied are subject to VAT within the member area (namely the EU)? If so there already exists international rules regarding taxation and non US companies would have to amend their invoicing and online carts to charge tax at a specific rate for all US based transactions. At present tax on sales and invoices to the USA is exempt as VAT is not applied.

[JoyUnltd]

Originally Posted by CathyM

I partially agree, once it's settled, I think it will be a big positive because it gets rid of the absurd definition of nexus based on affiliates. However, increasing the cost of Internet sales (by taxing them) does get rid of one of the advantages of purchasing online. It may shift some sales back to the B&M which is why they favor this bill.

I also agree, it's a relief that this is going to be across the board. However, online mom & pops might be forced off...not necessarily good for small biz people already operating on a shoe string.

I see consumers flocking even more to coupon sites and coupon toolbars for a bargain. Some online merchants might jack up prices, then offer a "coupon" to save...an artificial sale technique B&Ms have used for decades.

[JoyUnltd]

Ahh, didn't realize that the Feds already have guidelines on such deceptive pricing: http://www.ftc.gov/bcp/guides/decptprc.htm

(c) The following is an example of a price comparison based on a fictitious former price. John Doe is a retailer of Brand X fountain pens, which cost him $5 each. His usual markup is 50 percent over cost; that is, his regular retail price is $7.50. In order subsequently to offer an unusual ``bargain'', Doe begins offering Brand X at $10 per pen. He realizes that he will be able to sell no, or very few, pens at this inflated price. But he doesn't care, for he maintains that price for only a few days. Then he ``cuts'' the price to its usual level -- $7.50 -- and advertises: ``Terrific Bargain: X Pens, Were $10, Now Only $7.50!'' This is obviously a false claim. The advertised ``bargain'' is not genuine.

But as it's still practiced, I guess it's not an easy one to enforce.

[crfbusiness]

If they do any type of online sales tax I would prefer that it be placed into a seperate fund to cover maintenance and development of the infrustructure online sales needs. That includes road and rail, bridges, electricity, internet and mail. Yes mail. While we take it for granted here, there is a reason eBay is not big in Mexico, unreliable mail service...

[CathyM]

In the news again:

States, Retailers Amp Up Call to Collect Taxes on Web Sales

There are estimates of billions of dollars in uncollected sales tax on Internet sales which is sure to get some attention.

[markwelch]

Interesting that the article reports that the law has passed in NY, RI, NC, and HI -- when in fact it was vetoed in Hawaii and I believe is still pending in NC.

More about the Streamlined Sales Tax Project: http://forum.abestweb.com/showthread.php?t=120421