August 16, 2010
We couldn’t agree more with this response to PC Mag’s editorial blog post last week. American Programmers Independent wrote this brief commentary response to John C. Dvorak’s mis-characterization of HR 5660.
We too have been longtime fans of Mr. Dvorak’s work, and were disappointed by his clear lack of understanding (or even any basic attempt at understanding) this matter. As an editorial, we understand and respect that it is merely his opinion, but we expect more journalistic integrity from the Ziff Davis editorial board.
Our attempts at outreach to Mr. Dvorak and PC Magazine since this editorial was published have not been responded to.
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Issues, News, Rants | Tagged: Dvorak, FedTax, HR 5660, hr5660, Internet Sales Tax, Internet Tax, Main Street Fairness, PC Magazine, PCMAGm Dvorak, sales tax, TaxCloud | 
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Posted by Fed-Tax.net
August 3, 2010
There is a good article in the San Francisco Chronicle today by Bill Dombrowski, the CEO of the California Retailers Association.
The article does a nice job outlining the need to change the current state of affairs related to internet retailers refusing to collect local sales taxes, while all other retailer are required to do so.
Oddly, the article does not mention the Main Street Fairness Act (HR 5660) now before congress – an omission which can only be related to printed page layout constraints. We commented to add this important detail for the readers of the Chronicle. Naturally, we also pointed out that TaxCloud can now calculate the accurate local sales tax for every jurisdiction in the country — for free!
Leave a Comment » | Issues, News | Tagged: California, Internet Sales Tax, streamlined sales tax, TaxCloud | Permalink
Posted by Fed-Tax.net
July 15, 2010
Just an FYI, if you haven’t seen it already, you need to read this article by Janet Novack of Forbes.
It describes a study “Do eBay Sellers Comply With State Sales Taxes?” just published in the National Tax Journal (a quarterly publication only available to National Tax Association members).
The study monitored 21,000 eBay listings posted by 7,000 sellers with 9,300 buyers over a 24 hour span and saw $755,905 worth of consumer electronics sold, but only $60,249 of those sales were made between a seller and buyer in the same state. The study goes on to note that only 18% of sellers bothered collect sales tax at all (in-state or otherwise).
eBay may be a little concerned, which may explain why they are opposing the Main Street Fairness Act so forcefully. eBay has taken a position in the press that the requirements of the Main Street Fairness Act would impose a crushing burden on small businesses. This is very surprising coming from a company whose business model is to provide turnkey services that enable anyone to operate a storefront with very little effort. It is hard to believe that sales tax calculation is beyond the ability of eBay to provide.
Naturally, we would be happy to help eBay easily bring their sellers into compliance with all local sales tax laws, at absolutely zero cost to eBay or eBay’s sellers.
Leave a Comment » | Issues, News | Tagged: Complex Nexus, eBay, Internet Sales Tax, Main Street Fairness, TaxCloud | Permalink
Posted by Fed-Tax.net
June 30, 2010
Originally posted 1/22/2010 – Last UPDATED 6/30/2010 – Wow, there has been a lot of activity in individual States over the last few weeks after the State of New York reported generating $53 million in new sales and use tax revenue from the 30 companies ensnared by their Complex Nexus legislation (often referred to as the “Amazon” Tax – as we have written about before). While Rhode Island and North Carolina passed similar legislation last year, they have not reported how successful their efforts have been. Amazon.com ceased all affiliate operations in RI & NC based upon their adoption of these laws. Amazon has not ceased affiliate operations in New York, but has been engaged in an ugly court battle to challenging the validity and constitutionality of the law. California and Hawaii also considered (but did not pass) similar legislation late last year.
41 States have already identified significant budget shortfalls, projecting the worst budget shortfall ever! Our friends at The Center on Budget and Policy Priorities just released a detailed (and terrifying) report outlining a projected $194 billion deficit for 2010, and another $180 billion deficit for 2011.
As of this writing four states five states (just added Vermont) seven states (just added Maryland & Illinois) eight states (added California) nine nineteen states (just added Connecticut) added a bunch more have considered some sort of sales (use) tax legislation:
| STATE |
BILL |
INTRODUCED |
EFFECTIVE |
TYPE |
SUMMARY |
STATUS |
| ALL (FEDERAL LEGISLATION) |
HR5660 |
7/1/10 |
|
Main Street Fairness Act |
Gives states the right to require remote sellers to collect sales tax. States must be members of the Streamlined Sales and Use Tax Agreement. |
Introduced into Congress by Rep. Delahunt (D-MA). Has supporters from both the Democratic and Republican parties, as well as support from states. |
| Arkansas |
|
|
|
Entity Isolation |
Existing legislation prohibits merchants from practicing entity isolation (i.e. claiming that web operations and store operations are unrelated). |
Entity isolation legislation in effect. |
| California |
|
|
|
Entity Isolation
Notification |
Existing legislation prohibits merchants from practicing entity isolation (i.e. claiming that web operations and store operations are unrelated).
Separate legislation has been considered to require merchants notify CA purchasers during checkout that they may owe Use tax. |
Entity isolation legislation in effect. The proposed new legislation on Notification passed the Senate 2/18/10 but failed to make it into final budget package. |
| Colorado |
HB1193 |
1/20/10 |
1/1/10 |
Notification
Reporting |
Requires online retailers to provide CO purchasers with a summary warning on web site and invoices and requires retailers to report this information to the state annually. Also requires retailers with over $1 mill annual sales to send a 1099-type notice to the customer. Retailers can avoid these requirements by collecting the sales tax. |
Signed into law 2/24/10. Affiliate Marketing rules were considered but not included in the final law. |
| Connecticut |
RB5481 |
3/8/10 |
|
Affiliate Marketing ($2,000 threshold) |
|
Died in Committee 5/5/10 |
| Florida |
SB2552 |
|
|
Other |
Proposes FL allocates money to build software requiring credit card companies to collect sales tax. |
Unlikely to pass. |
| Georgia |
SB512 |
3/17/10 |
|
Contingency Fees |
Authorized GA to pay contingency fees to lawyers to sue retailers to enforce collection obligations. |
Passed Senate 3/26/10 |
| Illinois |
SB3353 |
|
|
Affiliate Marketing ($10,000 threshold) |
|
Bill ‘held over’. |
| Indiana |
|
|
|
Entity isolation |
Existing legislation prohibits merchants from practicing entity isolation (i.e. claiming that web operations and store operations are unrelated). |
Entity isolation legislation in effect. |
| Iowa |
HF2510 |
3/1/10 |
|
Affiliate Marketing |
|
Died in Committee 3/2/10. |
| Maryland |
SB824 |
|
|
|
|
Died in Committee before the end of the 2010 legislative session. |
| Mississippi |
SB2927 |
1/20/10 |
|
Affiliate Marketing ($0 threshold) |
|
Died in Committee 2/2/10 |
| New Mexico |
HB50 |
1/15/10 |
|
Affiliate Marketing ($10,000 threshold) |
|
Died in Committee 5/3/10 |
| New York |
|
|
6/1/08 |
Affiliate Marketing ($10,000 threshold) |
NY reported that it generated $53 million in new use tax from the 30 companies affected by its Affiliate Marketing law. |
Signed into law April 2008 |
| North Carolina |
|
|
4/23/10 |
Affiliate Marketing |
|
Signed into law in 8/5/09. |
| Oklahoma |
HB2359 |
1/5/10 |
7/1/10 |
Notification |
Requires retailers to post a notice to OK residents on the checkout page that they may be liable for use tax, and to disclose this on the invoice. |
Signed into law 5/28/10. |
| Rhode Island |
|
|
7/1/2009 |
Affiliate Marketing ($5,000 threshold) |
|
Signed into law 6/30/09 |
| Tennessee |
SB1741, HB1947 |
3/19/09 |
|
Affiliate Marketing
Notification |
|
Died in Committee 4/20/10 |
| Vermont |
HB661 |
1/29/10 |
|
Affiliate Marketing ($10,000 threshold) |
|
Died in Committee. |
| Virginia |
SB660 |
1/21/10 |
|
Affiliate Marketing ($10,000 threshold) |
|
Died in House subcommittee 2/24/10 |
Please Note: The information provided on this web site is intended to stimulate discussion about sales tax issues affecting online merchants. While we make every effort to provide accurate information, readers should refer to their own tax counsel, state and local laws and other source documents for more detail.
All of this activity at the state level should provide ample indication to our Senators and Representatives in Washington D.C. that federal action is necessary to prevent a flood of varied state-by-state laws. Urge your Senators and Representatives to ask around on the hill, and find out what is holding up introduction (and passage) the the Main Street Fairness Act!
Here at Fed-Tax.net we are eager to help all Internet merchants easily and automatically calculate and remit correct local sales tax for every jurisdiction in the United States – at zero cost to merchants. We will do this regardless of which system ultimately prevails, state-by-state affiliate taxes, or a federally authorized Streamlined Sales and Use Tax Agreement.
Our TaxCloud service will launch later this year (watch here for our preview release announcement soon), and will demonstrate beyond any shadow of doubt that it is no longer overly burdensome (technically or financially) for remote sellers to comply with all local sales tax laws. We are building TaxCloud to activate the opinion of the Court as originally penned by Justice Stewart in 1967 (and re-affirmed in 1992) which invited congress to act once “the skill of contemporary man and his machines” has solved this problem.
UPDATE – COLORADO SB 1193 2/2/2010: Last night the Colorado House of Representatives voted (on “Shall the bill pass?”) 33 (Yes) to 32 (No). So, they PASSED SB 1193 – Here is the Current (Amended) Bill now on its way through the Colorado Senate.
UPDATE – VERMONT HB 661 Introduced 2/3/2010: Just saw that Vermont also introduced their own version of an affiliate tax late last week. Sorry we missed it.
UPDATE – Colorado SB 1193 Revised 2/8/2010 – the Colorado Senate has revised SB 1193 significantly.
UPDATE – Maryland SB 824 Introduced 2/10/2010
UPDATE – Illinois SB 3353 Introduced 2/10/2010
UPDATE – California Senate passes AB 8 2/18/2010
UPDATE – Colorado SB 1193 is now LAW – The Governor of the State of Colorado – see Emergency Regulation 39-21-112.3.5.
UPDATE OKLAHOMA HB2359 is now LAW. It requires retailers to post a notice to OK residents on the checkout page that they may be liable for use tax, and to disclose that information on any invoice sent to the customer.
1 Comment | Issues, News | Tagged: affiliate tax, amazon affiliates tax, California, Colorado, Fed-Tax.net, Main Street Fairness, Mississippi, New Mexico, SSTP, streamlined sales tax, TaxCloud, Virginia | Permalink
Posted by Fed-Tax.net
April 1, 2010
The Merced Sun-Star in Merced California ran an interesting article today about the need to collect sales tax on Internet transactions.
Unfortunately, the article was slightly confused about the Internet Tax Freedom Act, which we quickly pointed out (scroll down to the comments section).
Leave a Comment » | Issues, News | Tagged: California, Fed-Tax.net, Internet Sales Tax, Main Street Fairness, SST, streamlined sales tax, The Federal Tax Authority | Permalink
Posted by Fed-Tax.net
March 23, 2010
Just in case you missed it late last week, The Wall Street Journal ran a good article last week about all the recent state-by-state legislation efforts.
Politically speaking, we believe we are rapidly approaching an “event horizon” at which time the mandate for federal legislation to resolve interstate sales tax matters will be irreversibly required under the United States constitution. We feel the growing volume of state-by-state actions attempting to force out-of-state retailers to collect sales tax are increasingly interfering with interstate commerce as multi-state sellers are becoming entangled by these varied obligations and uncommon sets of rules. These state-by-state efforts share imperative origins in significant budget crises, that cannot be remedied by program cuts alone. However, each state is attacking this problem differently, which should quickly provoke action by merchants across the country and legislators across the aisle to finally resolve this issue once and for all. We look forward to this moment coming soon!
Leave a Comment » | Issues, News, Technologies | Tagged: amazon affiliates tax, Fed-Tax.net, Internet Sales Tax, Main Street Fairness, SSUTA, streamlined sales tax, TaxCloud, The Federal Tax Authority | Permalink
Posted by Fed-Tax.net
February 22, 2010
Virginia news organization newsleader.com published an editorial today entitled “Equalize Internet sales with tax.”
This article, and the editorial intent behind it are flawless – and the piece is well written and to the point. It illustrates cleanly and clearly why sales taxes should be collected on all Internet transaction with Virginia residents.
Unfortunately, it seems to be referring to Virginia Senate Bill 660, the Virginia legislature’s version of another Amazon Tax. The National Retail Federation estimates SB 660 could produce up to $18M in revenue for Virginia next year – but only if affected Internet retailers do not suspend affiliate marketing programs in Virgina. As was demonstrated in North Carolina and Rhode Island last year, such an assumption could prove disastrous. When those states passed similar legislation, the Internet retailers simply suspended all affiliate relationships in those states yielding zero revenue growth and adding lost jobs and business closures instead.
This is unfortunate on several levels, but perhaps most frustrating for Virginians is that SB 660 seems to be passing while less than 1 week earlier a better and more appropriate legislation, Virginia Senate Bill 340, was delayed for consideration until 2011.
Under Virginia SB 340, Virginia could be able to collect $156.6M in additional sales tax revenue in 2010 (almost 9 times more revenue than targeted by SB 660).
Naturally, we posted a response directly on the newsleader.com site.
Leave a Comment » | Issues, News | Tagged: affiliate tax, amazon affiliates tax, Internet Sales Tax, sales tax, streamlined sales tax, Virginia | Permalink
Posted by Fed-Tax.net
February 19, 2010
Even though it was vetoed last year by Gov. Schwarzenegger, the bill is back – only this time embedded within an emergency “Tax Enforcement” Bill.
In Assembly Bill No. 8 of the 8th extraordinary session, the California legislature has expanded the definition of a “Retailer engaged in business in this state” to include:
Any retailer entering into an agreement or agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refers potential purchasers of tangible personal property to the retailer, whether by a link or an Internet Web site or otherwise, provided that the total cumulative sales price from all of the retailer’s sales of tangible personal property to purchasers in this state that are referred pursuant to all of those agreements with a person or persons in this state, within the preceding 12 months, is in excess of ten thousand dollars ($10,000).
They also included a clarification:
An agreement under which a retailer purchases advertisements from a person or persons in this state, to be delivered on television, radio, in print, on the Internet, or by any other medium, is not an agreement described [above], unless the advertisement revenue paid to the person or persons in this state consists of commissions or other consideration that is based upon sales of tangible personal property.
Repeating: The California Senate yesterday (February 18, 2010) passed Assembly Bill No. 8. Stand by for official notice of termination by Amazon, Overstock, and others of all affiliate relationships in the state of California.
Leave a Comment » | Issues, News | Tagged: affiliate tax, amazon affiliates tax, California | Permalink
Posted by Fed-Tax.net
February 15, 2010
Cara Griffith was the legal editor for TaxAnalysts.com’s “State Tax Notes” weekly journal before becoming a manager with PricewaterhouseCoopers LLP. TaxAnalysts.com rcently published her thoughtful comparison of the Streamlined Sales and Use Tax Agreement (or “SSUTA”) versus the new fleet of “Vendor Presumption” or “Amazon tax” laws.
As we have said before, we firmly believe the SSUTA approach is the best option for states, vendors, and taxpayers, however Ms. Griffith points out how ultimately damaging these vendor presumption laws are to the SSUTA efforts.
The greatest cause for concern, she writes, is that this developing state-by-state patchwork of varied interpretations of affiliate nexus may mislead Federal legislators into believing that such efforts present a more viable option than SSUTA for states to recover lost revenue due to the explosive growth of e-commerce over the last decade.
The article is certainly worth a few minutes of your time to read, particularly given the pace of introduction of these Amazon Tax laws in so many states.
Leave a Comment » | Issues | Tagged: affiliate tax, amazon affiliates tax, Fed-Tax.net, Main Street Fairness, streamlined sales tax, TaxAnalysts.com, Vendor Presumption | Permalink
Posted by Fed-Tax.net
January 4, 2010
Today we responded to a Eric Engleman’s piece on the Amazon affiliate tax in the Puget Sound Business Journal. Focusing on Amazon is not only discriminatory, it’s also bad tax policy. Transactions with small merchants generate more than half of the uncollected tax revenue. With services like TaxCloud, tax calculation, collection and remittance are free to merchants. We need to make it easy for all of us, including sellers, purchasers and government, to do the right thing for our communities.
Leave a Comment » | Issues, News | Tagged: amazon affiliates tax, sales tax, SSUTA, TaxCloud | Permalink
Posted by corneliuswillis
December 14, 2009
Forbes just published an article entitled “A Flat Sales Tax?”. We feel it would be valuable and instructive to clarify some of the points of the article which provides a brief and not entirely accurate portrayal of the Streamlined Sales and Use Tax Agreement.
While it is true that the Streamlined effort puts in place a framework to standardize rates and definitions, it in no way constructs a “flat sales tax” as the title of the article might suggest.
The article also points out that to join the Streamlined effort several current “holdout” states (New York, California, Texas, Florida, Ohio and Illinois) would have to “change some of [their] most cherished and protected means of gouging consumers.” One side effect of the Streamlined effort is its tendency to bring such practices to light, and as they are a means of “gouging consumers”, perhaps changing these practices is duly warranted.
Specifically referring to the cited examples of these holdout states surrendering exemptions for particular items (the author references “cheap clothing” and “diesel fuel for agricultural use” among a few others), the Streamlined Governing Board (which is composed of representatives from each Member State) regularly revises what is referred to as a “Taxability Matrix” to allow Member States to guide the common definitions for exemptions to be used across all participating states. This matrix and other data is ingested by services like our TaxCloud service (available free of charge in Q2 2010) so that sellers and consumers never have to think twice about whether they live in Kansas or Washington, or are buying cocoa puffs or coats.
In its current form, the Taxability Matrix absolutely allows for thresholds to be defined such that particular classifications of items below a particular price could be tax exempt, and allows for local sales taxes to be levied (or exempted) on 900 numbers, parking, and yes, even a specific definition for fur coats (Streamlined does not mandate a single category for clothing as suggested in the article).
The article continues by describing how the State of New York has gotten restless in awaiting legislation necessary for the Streamlined effort to become adopted as federal law (The Main Street Fairness Act, soon to be introduced before congress). Last year New York enacted a law which redefines the concept of substantial nexus (i.e. “place of business”) to single-out Internet-based affiliate network businesses. Forbes readers should have significant concerns about this state legislation, because it could be interpreted to include any direct response mechanism (or for that matter, any contractual relationship) as it blurs the historical “bright-line” test of physical presence to determine substantial nexus, which is why we call it Complex Nexus. We have written about this in much more detail on our Blog.
In conclusion, we feel the Forbes article is both well written, and well-considered, but we believe some clarity on a few of its points would be helpful for readers.
Leave a Comment » | Issues, News, Rants | Tagged: affiliate tax, Complex Nexus, Fed-Tax.net, Internet Sales Tax, Main Street Fairness, streamlined sales tax, TaxCloud, The Federal Tax Authority | Permalink
Posted by Fed-Tax.net
