Tom Keating from the VoIP & Gadgets Blog over at TMCnet just posted an interesting, albeit one-sided and slightly misguided piece in response to the New York Times article. Our commentary follows:
While I appreciate your impassioned response to the New York Times article which comes right out citing the US Constitution, I feel compelled to point out that your citations are in restrictions on the imposition of duties (fees or tariffs) on imports and exports between states. Sales taxes have nothing to do with import/export fees or tariffs. An import/export fee is what you see when articles come into, and go out of, the United States, not in between states – as so directed by your citations.
I would like to direct your readers to understand that even if an Internet merchant doesn’t charge you sales tax, you still likely owe the equivalent use tax in your state – which you are supposed to report to your state on your annual tax returns (and remit payment – although most people regularly do neither).
The only reason Internet merchants don’t do this for you (like your local stores do) is that in 1967 & 1992 the issue of “Remote Sellers” came before the US Supreme Court (then in the context of mail order catalog merchants). In both opinions, the court agreed that remote sellers should collect and remit local sales taxes, but they also conceded that requiring remote sellers to keep track of 4,000+ local tax jurisdictions would be too difficult, and that only an act of Congress could empower the States to require remote sellers to collect and remit sales taxes just as local businesses do.
With contemporary companies like Amazon.com and services like iTunes, no one can legitimately question their technical ability to keep track of many millions of transactions per quarter. Further, with the successes of the Internet over the last 25 years, it is time to revisit how difficult it is for remote sellers to manage a mere 10,000+ local jurisdictions.
Remember: Sales taxes are decided upon directly or indirectly by you, in the voting booth at every election. When you vote for local services (police, schools, hospitals, etc) or projects (parks, transportation, sports facilities), these voter mandates are funded almost entirely by local sales tax revenues. When you avoid paying these local sales taxes (intentionally or not), only your local community suffers.
It is time to tell Internet merchants to start collecting and remitting local sales tax, just like the corner store has to. Stop pretending that the transaction is “tax-free” because Use tax is still due.
Your local sales tax should be collected and remitted for you by all merchants! Businesses and individuals should not have to meticulously keep track of all out-of-state transactions, just because keeping track of these local tax jurisdictions seemed so difficult 25 years ago.
As always – we look forward to stimulating some intelligent discussion on these points.