Online sales tax collection laws go into effect in 10 states

[Shawn Knight]

Bottom line: The Internet's tax-free advantage is going away and while many won't be happy with having to shell out more money for purchases, it's the right thing to do. What's surprising is that it has taken this long to rewrite regulations regarding online purchases.

The U.S. Supreme Court in a landmark 5-4 ruling this past June granted states the ability to require online retailers – including those that don’t have a physical presence in the state – to collect state sales tax. On Monday, regulations governing these new rules went into effect in 10 states.

According to Chain Store Age, the new laws go into effect today in Alabama, Kentucky, Illinois, Indiana, Minnesota, Massachusetts, Michigan, North Dakota, Washington and Wisconsin. Similar laws will be enforced in Iowa and Connecticut in the coming months, the publication notes.

Online retailers have long had an advantage over brick-and-mortar sellers in that they weren’t required to collect sales tax on items sold online in states where they didn’t have a physical presence like an office or warehouse. The responsibility to send in the sales tax on such purchases fell in the lap of consumers and well, most people simply didn’t bother, resulting in billions of dollars of lost tax revenue each year.

Earlier legislation on the matter was based on a 1992 case related to mail-order catalog purchases. Times have certainly changed since then with the Internet being a major driver for commerce. While some people won’t like the idea of having to pay more for online purchases, the new laws help level the playing field between online sellers and traditional retailers.

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https://www.techspot.com/news/76705-online-sales-tax-collection-laws-go-effect-10.html

 

[seeprime]

These laws are never really about leveling the playing field. They're solely written to raise taxes so states can keep spending with the lack of discipline that they're shown for decades.

 

[tipstir]

I just ordered something off ebay and wasn't charge any tax for the item. I don't think this state is effected but I know Amazon has to charge tax in certain markets.

 

[Evernessince]

"While some people won’t like the idea of having to pay more for online purchases, the new laws help level the playing field between online sellers and traditional retailers."

Must have forgotten the cost of shipping, which adds at 5% - 50% to the purchase price of online items. All this is going to do is place a massive burden on small sellers and add yet another tax on the middle class. Should take a note from China, which subsidizes the cost of shipping heavily because eCommerce creates jobs, a lot of them.

 

[cliffordcooley]

Must have forgotten the cost of shipping, which adds at 5% - 50% to the purchase price of online items.

I've seen $20 shipping on $4 items. You would be safe in making that "5% - 500%".

 

[p51d007]

If you want to "level the playing field", instead of forcing online retailers to charge tax, how about taking away the tax from "brick" stores? But...but...but...how will the federal/state/local governments run?
EXACTLY! Take away some of their money, maybe they will be more WISE with how they spend OUR money. Or, better yet, take all sales taxes away, repeal the 16th amendment, institute a fair/flat tax and make any increase, a vote of the people. Also, tie lawmakers salaries to a percentage of the GDP and how much debt/deficit we have. Watch them squirm.
The ONLY way that would happen, would be an article 5 convention of the states. God knows, our "lawmakers" would never cut THEIR own throat!

 

[gamerk2]

If you want to "level the playing field", instead of forcing online retailers to charge tax, how about taking away the tax from "brick" stores? But...but...but...how will the federal/state/local governments run?
EXACTLY! Take away some of their money, maybe they will be more WISE with how they spend OUR money. Or, better yet, take all sales taxes away, repeal the 16th amendment, institute a fair/flat tax and make any increase, a vote of the people. Also, tie lawmakers salaries to a percentage of the GDP and how much debt/deficit we have. Watch them squirm.
The ONLY way that would happen, would be an article 5 convention of the states. God knows, our "lawmakers" would never cut THEIR own throat!

Every country that's tried a flat tax has fallen into economic ruin. There's a reason you don't tax the poor at the same rate as the rich.

If you did NOTHING but undo the Bush and Trump tax cuts on the top 10%, the budget balances. That's it; all a flat tax becomes is a tax hike on 90% of the population and a tax cut for the top 10%.

 

[fktech]

The tax man cometh. Greedy legislators! IRS implements the laws passed by congress!

 

[p51d007]

Every country that's tried a flat tax has fallen into economic ruin. There's a reason you don't tax the poor at the same rate as the rich.

Apparently you do NOT understand how the fair tax works. It's a consumption tax. You are taxed, based on what you buy. I can hear the howls now! Oh, tax the poor on food, medicine, utilities, rent, etc....NOPE. EVERY person is given a "prebate" that refunds them the tax they paid on food, medicine, rent, utilities etc. If you read and really read how the fair tax works, the "rich" are taxed more than the "poor". A 23% fair tax (most goods purchase have an automatic 22% tax, based on raw materials to finished product taxes), on someone that spends millions of dollars on "bling" stuff is going to hit them harder than billy joe bob paying for his food, rent etc, with him getting THAT tax back. But...but...but...what if a retailer does not drop the price of his goods the 22%, so that a 1 dollar item before the tax, is still a 1 dollar item after the tax? Then his products will be 22% HIGHER than his competitors!
I doubt if you will, but here is a good read on the fair tax. It changed MY mind years ago.
https://fairtax.org/

To make it work, the 16th amendment would have to be amended/abolished, so it would effectively take the power to tax, so to speak, away from politicians...so unless we have an article 5, convention of the states....don't look for politicians to "cut their own throats" to fix the mess we are in.

 

[gamerk2]

Apparently you do NOT understand how the fair tax works. It's a consumption tax. You are taxed, based on what you buy. I can hear the howls now! Oh, tax the poor on food, medicine, utilities, rent, etc....NOPE. EVERY person is given a "prebate" that refunds them the tax they paid on food, medicine, rent, utilities etc. If you read and really read how the fair tax works, the "rich" are taxed more than the "poor". A 23% fair tax (most goods purchase have an automatic 22% tax, based on raw materials to finished product taxes), on someone that spends millions of dollars on "bling" stuff is going to hit them harder than billy joe bob paying for his food, rent etc, with him getting THAT tax back. But...but...but...what if a retailer does not drop the price of his goods the 22%, so that a 1 dollar item before the tax, is still a 1 dollar item after the tax? Then his products will be 22% HIGHER than his competitors!
I doubt if you will, but here is a good read on the fair tax. It changed MY mind years ago.
https://fairtax.org/

To make it work, the 16th amendment would have to be amended/abolished, so it would effectively take the power to tax, so to speak, away from politicians...so unless we have an article 5, convention of the states....don't look for politicians to "cut their own throats" to fix the mess we are in.

1: Your version of a "fair tax" is really just a national sales tax, which has it's own host of issues. For example, it's anti-competitive against startups due to increased startup costs (infrastructure, etc). You also end up punishing retailers, who often have to absorb multiple 22% cost increases due to the 22% kicking in multiple times over the course of a products creation. A Sales Tax certain has advantages over an Income Tax, but it also has problems; see the issues that Europe has with VAT's.

2: No Constitutional Amendment is necessary to implement a national sales tax. All the 16th Amendment did is make a tax on Incomes a Direct Tax for the purpose of making it Constitutional (The US Constitution bans Indirect Taxes, and the Supreme Court ruled in the early 1900's that a graduated Income Tax was an Indirect Tax). A flat National Sales tax is indisputably a Direct Tax, and well within Congresses power to implement under their broad power to tax (which is limited ONLY by not being allowed to create an Indirect Tax).

 

[p51d007]

1: Your version of a "fair tax" is really just a national sales tax, which has it's own host of issues. For example, it's anti-competitive against startups due to increased startup costs (infrastructure, etc). You also end up punishing retailers, who often have to absorb multiple 22% cost increases due to the 22% kicking in multiple times over the course of a products creation. A Sales Tax certain has advantages over an Income Tax, but it also has problems; see the issues that Europe has with VAT's.

2: No Constitutional Amendment is necessary to implement a national sales tax. All the 16th Amendment did is make a tax on Incomes a Direct Tax for the purpose of making it Constitutional (The US Constitution bans Indirect Taxes, and the Supreme Court ruled in the early 1900's that a graduated Income Tax was an Indirect Tax). A flat National Sales tax is indisputably a Direct Tax, and well within Congresses power to implement under their broad power to tax (which is limited ONLY by not being allowed to create an Indirect Tax).

But, if you DO NOT repeal the 16th, you think at some point they won't justify it somewhere to tinker more with the tax code? At the beginning, it was a "simple" document, but, now has grown to over 74,608 lines of tax code! That's about 186 times LARGER than the original document! Even with the "new deal" it was only 1,000 lines! It was just over 26,000 lines in the 80's and has gone to 3 times that since now! Since lawyers, accountants make up a lot of politicians & what not, it's not hard to imagine why the tax code is so complex & complicated.
And, a lot of the American people are SCARED OF THE IRS! To the point of overpaying, in hopes of staying "out of trouble". Get in trouble with the IRS, they can take your money, house, job, entire life away, and with what THEY call due process, it's up to you to spend all of your money, defending yourself with the unlimited resources of the government.
It's out of control and needs to be rectified. The IRS should be afraid of the people, (along with the rest of government), not the other way around.

 

[gamerk2]

But, if you DO NOT repeal the 16th, you think at some point they won't justify it somewhere to tinker more with the tax code? At the beginning, it was a "simple" document, but, now has grown to over 74,608 lines of tax code! That's about 186 times LARGER than the original document! Even with the "new deal" it was only 1,000 lines! It was just over 26,000 lines in the 80's and has gone to 3 times that since now! Since lawyers, accountants make up a lot of politicians & what not, it's not hard to imagine why the tax code is so complex & complicated.
And, a lot of the American people are SCARED OF THE IRS! To the point of overpaying, in hopes of staying "out of trouble". Get in trouble with the IRS, they can take your money, house, job, entire life away, and with what THEY call due process, it's up to you to spend all of your money, defending yourself with the unlimited resources of the government.
It's out of control and needs to be rectified. The IRS should be afraid of the people, (along with the rest of government), not the other way around.

I repeat: The ONLY thing the 16th Amendment does is make a tax on Incomes a Direct Tax for the purpose of Constitutionality.

The reason the tax code is bloated is twofold, but in related ways: Because Congresses power to tax is basically unlimited (aside from Indirect Taxes), the Tax Code is a good place for Congress to implement policies in a way that would otherwise be unconstitutional. For example: Forcing people to purchase medical insurance is blatantly unconstitutional, but Congress is well within it's rights to tax people for not doing so. So you end with with a tax code that becomes a vehicle to implement things that otherwise wouldn't be doable under the limits of the Constitution. Throw in some giveaways to various groups (such as some forms of income being taxed at different rates), and you end up with the tax code you have today.