CNN article about internet sales tax

CNN: Billions of Tax Dollars States Don't Collect

CNN: Billions of Tax Dollars States Don't Collect

With all the governors in Washington, DC, this weekend for the National Governors Association winter meeting, state budgets are front and center. Not surprisingly, many states would appreciate some legislative support from DC to enact the Main Street Fairness Act and thereby authorize states to require internet retailers to collect sales tax at the time of a transaction, just as local retailers are required to do.

CNN’s Cole Deines filed an excellent and thorough article about this earlier today (2/26/2011): “The tax you should be paying.” Also, don’t miss the related audio article (“Billions of Tax Dollars States Don’t Collect”) by CNN’s Bob Costantini, which is linked to on that page.

One Response to CNN article about internet sales tax

  1. 1. The U.S. Constitution bars states from taxing non-citizens. You are a citizen of your own state and a US citizen. A state taxing or requiring another citizen of another state to tax someone is unconstitutional and violates federal law.

    2. Logistically, this is near impossible. Sure, big companies like Amazon could afford to upkeep a database of over 10,000 taxes. However, imagine the nightmare of mailing a check to each of those tax regions. For example, in CA, they now are making you collect sales tax for the state, county, and city. The problem that arrises here, is that the retailer then has to collect potentially 3 taxes for every order they mail, then they have to send three tax checks. That starts in April here in CA (though I suspect there will be a lawsuit and the courts will invalidate the law as the supreme court has ruled (Quill Corp. v. North Dakota) that a state cannot require someone in another state to collect taxes as they have no right or juridiction over them.

    3. Think about it this way, if you live in Missouri, and drive over the border to Kansas, should that retailer have to collect tax from you for Missouri? Or should they collect for Kansas?

    4. As I said before – this could be done by large corporations, (though the mailing of the thousands of tax checks would be a nightmare), but small business neither has the ability, money, or time effectively crushing small internet companies for good.

    4. Collecting taxes benefits the large corporations – not the small business. Those who think this has anything to do with income tax, should educate themselves. It does not.

    5. Even if small businesses could find a way to get past the logistical nightmare, the benefit of not having to collect and charge taxes, is balanced by charging shipping. So, if they charge taxes, then their product becomes more expense and they will likely lose customers and not be able to compete with big businesses.

    Also, this CNN author is just plain uninformed as well as any idiot who pays use tax. I don’t care what the tax spokeswomen from IN says, it’s not the law.

    You are to pay use tax in two areas:

    1. If you are a business and you buy product in-state and do not pay tax and end up consuming the product as a business (rather than selling it), you have to pay a use tax which is usually around 2-8% depending on the state.

    2. If you buy product in-state for the business that is a sol proprietor, and you use the product instead of selling it, then you have to pay use tax.

    3. If you buy a product as an individual or business from an out of state source, there is no tax. Plain and simple.

    I don’t know where he is getting that you have to pay use tax as an individual or business for out of state purchases.

    I have been a small business consultant for 15 years and I continually run into this misconception. It’s just plain wrong.

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