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  1. #1
    Advocate mellie's Avatar
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    Interesting Florida Internet Tax Bill
    Last week I posted on Affiliate Advocacy about 2 Internet sales tax bills pending in Florida. Totally new twist as it seeks to automate the collection and remittance of sales tax. Would impact every online sale.

    I find the bills rather interesting and have followed up with legislators' aide to learn a bit more about it.

    http://affiliateadvocacy.com/2010/fl...another-twist/
    Melanie
    President - Affiliate Advocacy 2008 ShareaSale Performance Industry Advocate Award, 2009 Affiliate Summit Pinnacle Award - Affiliate Advocate
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  2. #2
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    Interesting, but I think it sounds better in theory than it will be in practice.

    I think they have overlooked the technical details. Off the top of my head, here are some:

    1. Not all items are taxed, and the credit card companies don't get the item detail.

    2. If the tax is calculated by the credit card companies, then it is after the customer has been shown his order total. "Your total for this order is $11.99 plus an undetermined amount of sales tax", which the merchant will then report back after it is passed to the credit card company and the order is placed. (And, if the order is processed in one step, as a "sale", the money is transferred). Customers will love that.

    3. Credit card companies have no way of knowing if a customer is exempt, and no way of recording the tax exemption number. Merchants would have to pass that information too to the credit card companies.

    I'm sure there are more difficulties, but that's what comes to mind so far. Yes, I have a merchant account to sell products (for others), so I am well aware of how the process works.

    Makes an interesting law, but it has a lot of implementation issues. I hope Florida doesn't naively pass it, because it can't be implemented any time soon even if the credit card companies agree to assume the tax collecting and reporting task. Tell me again what their motivation is? Oh, right. Charge higher rates.

    Seriously, this isn't a "quick fix", and may not even be a slow one. Every merchant would have to reprogram to pass along information that they do not pass along today, and taxes would be computed after orders are approved by the customer.
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    Valerie Magee
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  3. #3
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    Quote Originally Posted by shuvee View Post

    I'm sure there are more difficulties, but that's what comes to mind so far.
    4. Oh, yes, ... and the credit card companies do not have the shipping address. It is the destination that controls sales tax, and not the billing address.
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    Valerie Magee
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  4. #4
    Advocate mellie's Avatar
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    At the time of purchase the sales tax is collected (and yes based on destination not billing) that is not changing. What is changing is that the process and timing of remitting what is collected,; it will be more automatic.
    Melanie
    President - Affiliate Advocacy 2008 ShareaSale Performance Industry Advocate Award, 2009 Affiliate Summit Pinnacle Award - Affiliate Advocate
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  5. #5
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    Did you miss my point? That this bill would require major changes in what data is requested from the customer, and what data is sent to the credit card company and in what format? Changes that will require significant coding on the part of every merchant - to data interchange standards that have not been written yet (or even understood, in all likelihood). Not to mention that - like international currency exchange - the actual total amount charged would not be known to merchant or customer unless they figure out how to pass that information back to the merchant's system. This is not trivial and behind the scenes, and probably can not be implemented in any reasonable time-frame, even assuming that it isn't challenged.

    But, hey, I don't live in Florida, so I won't let it worry me.
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  6. #6
    Moderator MichaelColey's Avatar
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    I bet the credit card companies are as opposed to this as we are to affiliate taxes. It makes using a credit card much less desirable.
    Michael Coley
    Amazing-Bargains.com
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  7. #7
    Defender of Truth, Justice and the Affiliate Way
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    I had many of the same thoughts as you Valerie regarding the actual logistics. I'm not sure if the lawmakers really understand the process. I can just imagine both consmers and merchants trying to reconcile their accounts under that system. I cringed whenever my merchant statements came in as it was, but I don't see how the amounts charged would match the merchant's totals. Not to mention that systems between the different credit card companies differed. AmEx showed a separate merchant fee for EACH charge, MC/Visa gave one lump sum. How would the amount of sales tax charged be shown to merchants and consumers?

    Aside from the logistics, this approach opens up a whole can of privacy issues IMO. There is a software developed by (or at least for) the government being interjected into the stream of consumers using their credit cards. I'm not a big "Kilroy Was Here" kind of person, but that just has a level of creepiness to me. I think there are privacy issues they will have to address.

    I don't see the credit cards going for this one unless the state of FL has some pretty good leverage.

    But, hey, I don't live in Florida, so I won't let it worry me.
    Except the aide said FL hopes to sell the technology to other states as well!!

    I don't oppose states trying to collect sales tax, espcially if they have laws already on the books saying residents are supposed to be paying it (many do, it just isn't feasible for the states to collect it themselves).

    But online sales tax has an interstate commerce aspect to it & that's the part that's coming up with all this legislation. That makes it turn into a Federal issue. The Supreme court has been very clear on that. States need to work towards a solution that abides by the existing laws of our country.

    States trying to circumvent the constitution and states rights are what is leading to all this really goofy legislation. Why can't they just push for the Streamlined Tax? FL has signed onto that anyway.

    Whew...I've been wanting to say that!

  8. #8
    ABW Ambassador Daniel M. Clark's Avatar
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    Quote Originally Posted by Kellie aka Ms. B View Post
    I don't oppose states trying to collect sales tax, espcially if they have laws already on the books saying residents are supposed to be paying it (many do, it just isn't feasible for the states to collect it themselves).
    Neither do I. I've been saying all along that we're going to keep seeing schools closed, keep seeing essential services cut off as long as the internet remains tax-free. I'm not opposed to sales taxes on online purchases, I'm opposed to using affiliates as the method to implement them because all it takes is a merchant ditching their affiliates to avoid collecting. Bad for us, bad for the states because when affiliates don't make money, we don't pay as much income tax and we don't have money to spend that can result in sales tax revenue.

    Year after year, we as an industry brag about how much more people are spending online than they were the year before. Like it or not, the hard truth is that we, affiliates and online merchants, are not blameless in the reasons for the budget shortfalls across the nation.

    My brother in law bought a $2,000 TV online. He didn't do it to avoid sales tax, he did it because it was the best price available for the TV. The side effect is that the state of Texas lost out on about $160 in sales tax. That's $160 that could have gone to a school, to a road project, to a number of state programs.

    We need online sales taxes. We just can't afford to use affiliates as the method to implement them. I'll leave it to those more lawyerly to figure out if it needs to be on the state or federal level, but one excuse I will not accept is that it's too hard (or that it requires different programming, or that the merchants would be required to do more work to get them implemented). This is all technology based. There are no limits. We need it done, get it done.

    My two cents.
    Daniel M. Clark
    Tech Manager
    Greg Hoffman Consulting

  9. #9
    Newbie lookstare's Avatar
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    How is this tax bill moving along. Haven't heard much about it lately.

  10. #10
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    I live in South FL and never even heard of this bill till now

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