back to article White House backs US web sales tax - eBay hits panic alarm

The White House has backed a bill that would give US states the ability to demand sales tax from online retailers, while the Senate clears the law for formal voting. The senators voted 74 to 20, with six abstaining, to limit debate on the Marketplace Fairness Act and get on with final vote on the legislation. The MFA, …


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  1. Real Ale is Best

    There's sales tax for second hand goods?

    Or are they just worried about the new goods they sell.

    But, aren't the sales just facilitated by eBay? Surely it's all the individuals and small businesses using eBay as a shop who ought to be collecting the tax?

    1. Number6

      Re: There's sales tax for second hand goods?

      I suspect that if eBay didn't charge commission and offer some (however vague) buyer protection then they'd have a stronger case to argue for tax-free status. After all, Craigslist is still tax-free for private transactions, but it's very much caveat emptor.

      The usual rule about second hand goods is that if sold by a business then taxes apply, if sold by a private individual (who is not taking the piss) then they don't. This is to stop the blatant abuse of the process whereby I could go into a garage and choose a car. The garage takes a couple of people on a test drive in that car so it's no longer a 'new' car and I save a fortune in tax by getting it 'second hand'. Obviously this could be applied to other goods too.

    2. Eddy Ito

      Re: There's sales tax for second hand goods?

      In California, yes there is sales tax on second hand goods. Before you ask, no the original buyer doesn't get a rebate based on the subsequent sales price. No it doesn't just apply to cars like in some states, you get to pay sales tax on nearly everything and if something changes hands enough times it is easily possible for the state to get greater revenue from one item than the original seller did. Oh, let us not forget the slice for the counties and cities as well, someone has to pay for the $200,000 annual compensation for the lifeguards.

    3. MachDiamond Silver badge

      Re: There's sales tax for second hand goods?

      All sales transactions are taxable in states that have a sales tax. In California, if not throughout the US, this includes barter transactions. Increasingly, a sales tax is being mandated for services that had previously free of sales tax. Food used to be free of sales tax but certain "snack food" items are now taxable in certain locales. The food sales tax is very complicated. Some tortilla chips are taxable and others are considered ethnocentric and not taxable. I don't remember how they figure which is which.

      Even items you sell at a swapmeet (boot sale), on eBay or at an estate sale (garage sale) are taxable transactions and you are supposed to collect and remit the sales tax. In practice, non-commercial sellers aren't tracked down and tortured for uncollected sales tax as the cost to the state to do so would grossly exceed the money recovered.

  2. Kevin 6

    God I hate politicians...

    What these idiots in D.C.(Dumbass Capitol) don't think of is these stores are able to hire people due to no interstate taxes, and they get to ream the additionally employed peoples paychecks instead.

    So now that this will more then likely do is kill most online places tax revenues will more then likely fall as people will also no longer afford to be able to buy as much as they were, and people who were employed will now become unemployed.

    Shipping companies profits will drop as why would people pay $10 shipping, and 10% tax , and they will more then likely terminate jobs.

    Amazon on the other hand offers free shipping due to their insane size, will make out like a bandit...

    Always told people putting a dumb fuck politician from Illinois (land of corruption, just look at how many politicians end up in jail, and they are mostly democrats...) in the white house was the worst decision imaginable.

    Obamas thing last time he ran for president should have been striving to put americans out of work.

    1. Charles 9

      Re: God I hate politicians...

      I believe that is THE EXACT IDEA. They want people to shop more on Main Street than e-Street: support LOCAL businesses instead.

      1. Kevin 6

        Re: God I hate politicians...

        Where I live it won't make a difference as to park by most local businesses(which the bill should help) you have to pay $4-5 for 30 minutes...

        Actually when the city put that parking fee in a few years back was when the local businesses got hurt, not before. But this is where I live. I also doubt it will help anywhere else.

        1. Anonymous Coward

          Re: God I hate politicians...

          America is a big country but just how far away are the local shops if you need to drive there?

      2. Gene Cash Silver badge

        Re: God I hate politicians...

        But I don't **want** to support local businesses! They never have anything in stock that I want, nor do they want to obtain it. The amount of hassle for a special order is insane.

        So I go in and manage to convince a clerk to order something for me. This is usually a 20 minute hassle in and of itself. Then I have to make sure they order the right goddamn thing.

        Then I wait 2 weeks and call, only to find out it either arrived a week ago and nobody called like promised, or no one knows what the hell I am talking about.

        Finally, someone admits to knowing what I'm talking about and that my item might be in. I drive back down to find out no, it isn't, they made a mistake and they have no clue when it's supposed to be in. It could also be that step #1 failed and they ordered the wrong thing. Do not pass go, do not collect $200.

        On the off chance it's actually there, they need a store manager to release the item to me, as they haven't been trained in the procedure and they don't want to take the responsibility. After another hour, I'm able to drive back home through the traffic.

        Or I could sit down at the computer, go clicketyclick, enter a number off a plastic card, and wait a week for it to be dropped at my doorstep.

        I do not want money from this procedure to go towards supporting the first set of retarded poo-flinging drooling morons.

        1. JDB

          Re: God I hate politicians...

          But this has nothing to do with supporting local businesses - it's about reclaiming lost sales tax revenue for cities and states and making sure that both local and online businesses are competing on a level playing field. If you don't like your local business, fine, keep ordering online (I pay sales tax on Amazon, but I still look there first for many of the reasons you mentioned) and if the local business can't make shopping there more compelling than online, they lose just as they should. Taking an unfair advantage away from player B is not the same as giving support to player A.

        2. Kevin 6

          Re: God I hate politicians...

          Gene Cash there is that too 90% of what I do buy online is not available by me. I only know one store that can order it but they are over 40 mins away... And half the times screw up orders up getting the wrong part(then blaming the customer for poor penmanship), or tell you to come back in 3 days after they order it and they never got it, because you find out later there was no record of the order. I USED to shop there all the time(place was ALWAYS busy) even with the local tax's, and cost to go out there till it ended up under new management which fucked the place up completely.

          And the people that think this means more brick, and mortar stores will hire more people are disillusioned at best, they will just make what they have work harder for no additional pay.

          The politicians just want a pay raise which I bet will be the thing after this if it passes voted on.

      3. Eddy Ito

        Re: God I hate politicians...@Charles 9

        With companies like Wally World it won't matter. It's almost always cheaper to order online and have it delivered to the store for pick-up than it is to buy the exact same product off the shelf. It is to the point that the local Wally World has longer lines at the pick-up counter than the cash registers.

        I imagine the future will consist of little pick-up shops staffed by a very few people who simply hand out the things you ordered online. You get a text saying it's ready, stop in with your 'too clever by half' phone but the NFC won't be for payment, since that will be handled online, instead NFC will be used as an identity check when you arrive to get your stuff. It will likely have a catchy name like Queue to Bonk and we'll say things like; "Oh, I have to grab something at Cutie Bonk, do you?"

        1. JDB

          Re: God I hate politicians...@Charles 9

          That sounds pretty awesome to me, except Amazon delivers it right to my door. I suppose if I could get it even cheaper I wouldn't mind picking it up at a central location - I've always thought that UPS should have a cheaper delivery option where people can just ship stuff to the local UPS warehouse and we pick it up instead of it being delivered by truck. Would save them a ton of money on trucks/fuel/employees/etc. and they could advertise how "green" it was (even though it probably wouldn't be since now we're all driving to UPS).

        2. FutureShock999

          Re: God I hate politicians...@Charles 9

          It already exists in the UK, it's called Argos...and it is all over the UK. The "Showroom" has a few in-store specials and impulse purchase items, a few TVs on display, but nearly the entire store is a back-of-counter warehouse and a conveyer belt system. Up front is a set of kiosks, that you can order from on-site and pay to collect what you ordered on-line. I don't think they have the NFC yet, but that is obviously next. Highly efficient, sells OK stuff, and are reasonably good at taking stuff back.

          1. Charles 9

            Re: God I hate politicians...@Charles 9


            We've tried that system before in the US. We called ours Service Merchandise. They had showrooms and everything, but ALL orders went by their terminals which they affectionately called "Silent Sam". You then went to the pickup counters to get your products. It went under in the late 90's, a victim of the dot-com boom and the big-boxes.

        3. Anonymous Coward
          Anonymous Coward

          Re: God I hate politicians...@Charles 9

          My WallyWorld doesn't have a long line, but the service at Site-to-Store is miserably slow.

          As for the sales tax rules, it wasnalways a stupid exemption.

          The thing is, in many states it shouldn't matter because use tax means you'd end up paying the same tax (or a bit less overall if you can deduct it from your Federal), but the fact is that people are breaking the law by dodging use tax payments.

          If you're an honest person you should _want_ this because it saves you the trouble of calculating the tax due yourself.

      4. John Sanders
        Thumb Down

        Re: God I hate politicians...

        If they want to level the playing field for small business, why not stopping charging for the tax altogether?

        I know what I'm saying, even if it sounds preposterous. All taxes are evil, always get raised, and never fund what they say they will fund, it is all employed to buy voters.

    2. JC_

      @Kevin 6..

      Wow, that comment was simply insane.

      What D.C. (finally) does get is that the competition is unfair - purchases from a bricks & mortar store have to include sales tax while internet purchases don't. How on earth is it "dumbass" to level the field?

      Regarding your beliefs on employment: economics doesn't work the way you think it does! Read a 101 textbook, for god's sake, before commenting about it again.

      Always told people putting a dumb fuck politician from Illinois (land of corruption, just look at how many politicians end up in jail, and they are mostly democrats...) in the white house was the worst decision imaginable.

      Yeah, we need fewer disasters like Abe Lincoln and more Texas successes like George W. Bush, right?

      1. Tom 35

        Re: @Kevin 6..

        If we want to make everything a level field maybe they should also make all brick & mortar shops box everything, charge you shipping, and make you wait a few days before you can have your item.

        This has nothing to do with levelling the field it's about politicians that want more tax money to play with.

        1. Kevin 6

          Re: @Tom 35

          Kinda what I was trying to get at this is just to create more money for the politicians to piss away while doing nothing for the average citizens while using trying to help local businesses as an excuse. Basically kinda like most laws of recent...

          1. InsaneGeek

            Re: @Tom 35

            Do you know why they have an exception in the first place? Over a decade ago, it came up and the reason given that they should be exempt from sales tax is that when it was enacted (Al Gore was still VP) the government ruled that because shopping on the Internet was very new, but they believed it had great potential and didn't want to hinder it's growth. So to give shopping on the Internet an explicit competitive edge to grow into actually something, they decided to not tax it until it got big enough to sustain itself. Is there any doubt anymore that shopping on the Internet is now able to stand on it's own two feet and no longer needs help from the government anymore? Why does shopping on the Internet need a government mandated cost advantage anymore? I think the Internet has grown up from the 90's and doesn't require getting a government advantage to compete with every other business anymore...

        2. Charles 9

          Re: @Kevin 6..

          "If we want to make everything a level field maybe they should also make all brick & mortar shops box everything, charge you shipping, and make you wait a few days before you can have your item."

          They already do. It's called a SPECIAL ORDER.

      2. Killraven

        Re: @Kevin 6..

        Except that, in many cases, the lack of sales tax doesn't give the internet store an advantage, because the cost of shipping/postage tends to make it a break even sort of situation.

      3. Armando 123

        Re: @Kevin 6..

        "What D.C. (finally) does get is that the competition is unfair "

        Competition is unfair. Water is wet. Anything else to add?

        And remember, Congress never LOWERS taxes due to unfairness. Per usual, this is about the government finding a way to take more of our money.

    3. JDB

      Re: God I hate politicians...

      "So now that this will more then likely do is kill most online places tax revenues will more then likely fall as people will also no longer afford to be able to buy as much as they were, and people who were employed will now become unemployed."

      Or - the local businesses will now be able to remain competitive and can hire local workers that they had to lay off because they were being beaten by their online competition who wasn't having to collect sales tax, and the local tax revenues will rise because more local people are now employed and all the sales taxes that weren't being collected because of online out of state sales are now being collected.

      Also, I'd love to hear your reasoning on why " revenues would more then likely fall as people will also no longer afford to be able to buy as much..." when the states weren't getting anything for those sales in the first place. If "Kevin" used to be able to buy a $100 pair of sneakers online without paying any sales tax, and now he can only afford an $90 pair, but pays a 5% sales tax, how does the tax revenue fall? Any% of $90 is a lot more than 0% of $100.

      1. Anonymous Coward
        Anonymous Coward

        Re: God I hate politicians...

        "Or - the local businesses will now be able to remain competitive and can hire local workers that they had to lay off because they were being beaten by their online competition who wasn't having to collect sales tax, and the local tax revenues will rise because more local people are now employed and all the sales taxes that weren't being collected because of online out of state sales are now being collected."

        @JDB: Not now, but at one point all you mentioned would be feasible, but can optimism buy money? Also, if you think about it, couldn't having tax free internet sales actually keep Wal-Mart at bay?

        Wal-Mart and their kindred are too deep and too discounted for any real local competition today. This bill will hand them the silver bullet. Don't forget that more money gets sent out of state back to HQ than is ever put back into the local economy. Wal-Mart has the downside of being a terraformer for cash, and sending almost all of it back to the mothership. Also, I think we both know how well paid and treated employees of Wal-Mart are, so that won't be good.

        The only things I know to come of this bill are a higher probability you will pay more for the same product, and a higher increase of foreign sales. I have seen many products I would of bought from Japan, China, even England if the shipping wasn't so high, but now with this mandated tax, I have to rethink the shipping charges.

        Of course, when the government has more money, they give bigger tax "incentives" to large corporations, start "relocating" the poor, and sell off public land to build yet more condos and shopping centers near me. This bill has just increased the probability of me seeing yet another Wal-Mart, Target, etc., and living through the traffic.

        1. JDB

          Re: God I hate politicians...

          Sure, tax free internet sales would be awesome - so would tax free income, and tax free property. The point is that states and cities require revenue to operate (build roads, fight fires and floods, protect citizens, and fun stuff like that) and the way they get that revenue (in most cases) is a mix of sales/property/income tax (and some fees for services). So, states that have decided to have low (or no) sales tax have to make up that difference in higher property/income tax, and vice versa. The problem comes now when the "internet changes everything" and states that plan their income based on expected sales taxes are coming up short because so many people are buying online from out of state and not paying those taxes. Personally I think the ideal solution is to eliminate sales tax and increase property and income tax to offset the loss, but until that happens I think this is the proper solution. I'm so sick of the idiots posting on here complaining about "the politicians" just trying to take more money away from "us" - these are taxes that we've already agreed to with our votes, but are refusing to pay on our own, so now the burden of collecting them is being moved to the online stores (just like it is already on the physical stores). If you don't like how much the taxes are or what they're being used for, fine, that's a totally different argument - go vote, run for office, or get them changed by whatever democratic process it takes in your state - this argument is only about how we collect those taxes. Remember - this won't make anything online cost more, it's just going to force people to pay the taxes they've already agreed to pay to keep their communities running.

          1. Anonymous Coward
            Anonymous Coward

            Re: God I hate politicians...

            If you really think government spending is adequate enough to justify more taxes, then apparently you've never worked for the government (or possibly have so much money and live on an island).

            If you can find a way, look at how much the government spends on expedite shipping alone, JUST expedited. Do those skids of blank forms really need to be sent over night? Do those employees really need new $1000 Herman Miller chairs? Do those employees really need Reasonable Accommodation because they refuse to ride the bus? You have no idea how much is wasted in just any 1 division of the government, let alone the entire thing. Soooo..., firehouses, schools, roads....rrrrrrrright, if only.

          2. Charles 9

            Re: God I hate politicians...

            The balance between sales and income taxes generally depends on the type of business that is predominant in a state.

            For examples, states with high levels of tourism or other "imported" customers (think Florida, Tenessee, and Nevada--both have no income tax but high sales tax) tend to favor sales taxes and the like over income taxes because they're better at capturing money from the out-of-state tourists who don't work there (and therefore don't make income they can tax).

            OTOH, states with a high concentration of business (like Delaware) will tend to favor income taxes over sales taxes. Low or no sales taxes (Delaware has no sales tax) lower the cost of living and attract people to work in their state, where they make the income they can then tax; it works for them because brick-and-mortar businesses and hubs are more difficult to relocate.

            New York is a very interesting case. It's one of the few places that has BOTH tourism and big business, so it has some of the highest sales AND income taxes in the country (not to mention some of the most coveted land in the country in Manhattan--high demand and low supply spikes prices). California (similar) comes in second.

      2. This post has been deleted by its author

  3. Anonymous Coward
    Anonymous Coward


    If you are in the US, get busy!

    1. Anonymous Coward


      WTF is that? Is this your website...or do the votes get passed onto the ~official~ YouTube channel?

  4. Stuart Grout

    Sounds fair

    On-line stores already have a significant advantage in not having to pay for retail sites or staff. The additional tax advantage makes it impossible for physical stores to compete.

    With regards to E-bay. I'm not sure how they are treated in tax law but it would be easy enough for then to note the % tax to be paid by a customer based on where the buyer is. They already show me what a bid costs in real money rather than the $ the seller might be getting so telling me the sales tax I'll be paying should be easy enough.

    Of course it will mean paying more for some purchases but that's just because we currently get a short term benefit in screwing over local retailers.

    1. Anonymous Coward
      Anonymous Coward

      Re: Sounds fair

      > but it would be easy enough for then to note the % tax to be paid by a customer based on where the buyer is.

      From a previous article on this, there are over 9,600 state, regional, city and town tax authorities. The rules can differ according to which city or town the buyer is in and even what day of the week it is.

      For an internet business this will produce a significant burden to keep all of this information up to date or even result in them having to pay a third party for the information for every sale. A bricks and mortar establishment only has to keep track of the tax in their location.

      Perhaps a better alternative solution would be to treat the internet as a 51st State, when it comes to sales, and to levy a single sales tax rate. The revenue raised could then be split between the 50 real States.

      1. Simon 49

        Re: Sounds fair

        That's precisely why when congress last discuss this back in the 90's, they delayed it pending the setup of the 'SST' streamlined sales tax arrangement, where a bunch of states agreed to pay for 3rd parties to collate and calculate and file taxes for small business. These days using a SaaS service to calculate the tax is easy and free (the states pay rather than the business).

        Don't forget people are supposed to have been paying their out of state sales taxes all along, just by adding them to their tax returns at the end of the year, just nobody did.

        1. MD Rackham

          @Simon 49:

          Can you please point me to a free SaaS which calculates sales tax for me that is both free and easy?

          Oh, and make sure that it takes type of goods into account, since different items are often taxed differently.

          The ones I know of are quite costly.

    2. Yet Another Anonymous coward Silver badge

      Re: Sounds fair

      High street stores can just level the playing field.

      Go into Best Buy and choose the item, go to the till and click to buy it online from their Caymen Island's web server and then pick it up from their instore delivery option immediately = nobody pays any tax.

      Exactly what Boeing does when you buy an aircraft from them, or Rolls Royce does when you buy their engines.

      1. Anonymous Coward
        Anonymous Coward

        Re: Sounds fair

        "Go into Best Buy and choose the item, go to the till and click to buy it online from their Caymen Island's web server and then pick it up from their instore delivery option immediately = nobody pays any tax."

        Best Buy online would still be taxed in NY as they have a B&M presence.

        Since the Caymans are outside the US, the money also stays outside the US. Then BB would be in the same situation as Apple, Microsoft, Cisco ... having huge amounts of cash outside the US that they can't repatriate without having to pay 35% in taxes.

    3. Lars Silver badge

      Re: Sounds fair

      Yes, why should on-line stores not pay tax?. I suppose they don't because it's was a rather new and small business. Not so today.

  5. Number6

    Sales Tax

    Of course, one could take the position that the way to level the playing field would be to abolish all sales tax, not impose it on those who had previously escaped it.

    Perhaps another way would be to require tax to be payable at the rate in the home state of the business and then forward that revenue to other states based on recorded sales, which would (1) give all mail-order companies an incentive to relocate to the cheapest state and (2) give states an incentive to keep sales tax down. Surprisingly, this is what the EU was attempting to achieve with its corporation tax (apart from the forwarding bit) to give nation states an incentive to keep corporation tax rates low, and is why all the multinationals don't pay much tax in the UK.

    1. Charles 9

      Re: Sales Tax

      But that gives an edge to states like Oregon, Montana, Delaware, and New Hampshire (maybe not Alaska--too far away). These states have NO sales tax (they get their revenues other ways).

  6. tempemeaty
    Thumb Down

    US Gov sucks

    All those little one person online stores selling self made goods on the internet earning a small living will not be able to handle this. They all may likely have to shut down their web stores. This is likely to INCREASE the number of jobless for that reason.

    1. JDB

      Re: US Gov sucks

      From a previous Reg article on the Marketplace Fairness Act: "There's a $1m exemption built into this," a spokesman for MFA's sponsor Mike Enzi (R, Wy) told The Register. "If you have a business you can have $10m business, $1m of which can be in remote sales over the internet, and you're exempt." (

      This bill isn't going to affect any little one person online stores, or the vast majority of people selling stuff on eBay. If you're doing over $1 million in sales online, I think you can handle the demands of collecting sales tax.

      1. MachDiamond Silver badge

        Re: US Gov sucks


        Whether a business doing $1m of online business can handle the demands of collecting sales tax for 9.600 jurisdictions is up for debate. It would depend much on what their profit margin is and the cost to calculate and remit the taxes due.

        One doesn't just send in a note that states what the tax is along with a check. Nuuuuuu, the math has to be shown too. This means showing total gross income, $ amount of items shipped or delivered outside of the state one is calculating the tax for, deductions for sales to government entities, refunds for returned items and sales to other companies for purposes of resale (wholesale trade). All of this has to be done for the 40 something states with sales tax, broken down by tax district. Every filing is going to be on a different form and will have different payment requirements. Some entities will only accept bank transfers and not checks. Other places will have different requirements based on the amount of money to be remitted. Some tax boards will require monthly filings and others may be fine with quarterly. Also, it doesn't matter if one has no sales or tax due to the state during the reporting period, one still has to file the paperwork. Let's not forget that sellers would have to register for a seller's permit and receive a tax ID number in each tax collecting state.

        The federales are not going to be able to just mandate an internet sales tax with a 90 day notice and have it work out. We'll wind up with a new criminal class of small business people without government paperwork skills. Do we incarcerate them with the drug dealers and muggers or do we build some new prisons just for them? Maybe we just keep the crimes in civil code and fine small businesses out of existence. Unless a system can be devised that standardizes forms and payment method and interest rates, the confusion and non-complicance will be out of control. An exemption for businesses with less than a certain amount of gross sales will just lead small businesses to form another small business to keep under the limit.

  7. Anonymous Coward
    Anonymous Coward

    Have I understood it correctly?

    The new bill would enable states to levy tax, if they wish. Not force, demand, insist or compel the state to do such a thing.

    So should it pass, there will then be a second round of frothy-mouthed rants about "internet tax" when it comes to the state taking up the offer?

    Of course with modern computing power, it would be the work of moments for ebay to calculate the tax payable on top of any successful ebay bid (no matter how complex the tax scheme - it nows where the seller and bidder reside, the time at which the auction ends, and possibly even which side you dress)

    1. JDB

      Re: Have I understood it correctly?

      No, I don't think so. The way I understand it is that this bill will shift the burden of paying sales tax to business that do more than $1 million in sales online. Currently, we're all supposed to pay sales tax on things we buy online (in most states, I think, if not all). The problem is that nobody does it, and it would be really hard to enforce. Right now a physical store needs to collect that sales tax at the time of purchase from the buyer, and then pass it on to the state. Online stores don't have to if the buyer is in a different state. This bill (if I understand it correctly) says that they will have to start doing that just like their physical counterparts. This isn't a "new" tax, and it's not an "internet" tax - this is just the closing of a loophole that's benefited online stores since people started buying stuff over the internet.

      1. Yet Another Anonymous coward Silver badge

        Re: Have I understood it correctly?

        They could collect sales tax from buyers if, for example, the states had access to all your browsing history and email without a warrant - didn't I hear about a bill like that recently?

  8. Anonymous Coward
    Anonymous Coward

    Ebay's systems

    While ebay probably could adapt quickly to any new requirement to recover/levy sales tax on online sales, and possibly even anticipate attempts to evade it if required, I'm surprised they can't spot obvious attempts to circumvent the rules at the moment.

    I'm thinking of buy-it-now items at £0.01 with postal charges of £5.50 for an code delivered by email, or the even more obvious instances of putting a space in the middle of the name of a medicine eg the vetinary antibiotic " chlor amphenicol ".

    Not really related I suppose,

  9. Anonymous Coward

    Eh, it's just the "Washington Enables Local Money Grab Act of 2013"

    Just another method of squeezing more money out of the taxpayer without actually saying "we're raising taxes". (sigh)

  10. This post has been deleted by its author

  11. Malcolm Weir Silver badge

    The real issue is that, as previously noted, there are nearly 10,000 separate tax rates and authorities, and a business doing $1,000,001 in internet business is going to have to buy and maintain systems to handle that, which is reasonable if you're Amazon or selling high-value stuff, but a total crock if you're a small-to-medium size business.

    Still, it does open the door to "reseller companies" located in Delaware, Montana, Oregon, and New Hampshire (ignoring Alaska because the increased freight eliminates it). Those four states have no sales tax. So I establish Acme Resales, Inc. which is a (say) Montana corporation that will arrange to buy whatever I want and then sell it on to me for, say, a 2% fee. True, there would be double shipping involved, but that could be offset by a "shipping consolidation" service whereby everything I buy is shipped on to me in package.

    But wait, you say: surely Acme Resales will have to pay the tax when it hits $1M? Ah... says I.... that's where it gets cunning: Acme Resales is not a single company, but a group of them. Say, 50 of them, with imaginative names like "Acme Resales Week 01" and "Acme Resales Thanksgiving"...

    Hmmmm.... on balance, I prefer the 50-something state plan instead (previous mentioned as the 51st state, but DC is a tax jurisdiction, as is Puerto Rico, Guam (I think) and the US Military...

    1. Charles 9

      I would think your multiple-company would be construed as subsidiaries and they would go after the company behind them all. OR, if one folds and another rises, they could say the new company assumes the tax liabilities of the old (a common condition of acquiring a going concern), so they accumulate regardless.

  12. Irk

    I live in Oregon. We have no sales tax. That money is made up for by state income tax/property tax. Often if you drive up to Washington state, you can flash your ID and the stores don't charge you sales tax up there either. Lack of sales tax is a big thing for tourists, and also Washington citizens living near the Oregon border - Washington has no state income tax, so Washingtonians come down to Oregon to buy things where they pay no sales tax. So we get a lot of tourists/Washingtonian freeloaders who all want to buy things here because no tax.

    So what stops all these internet stores from buying "office space" in Oregon?

    1. JDB

      Double Fail? The tax being collected is for the buyer, not the seller. So, as an Oregon resident, you won't be paying any sales taxes for online purchases from Washington (or anywhere else), but online stores located in Oregon will now have to collect sales taxes for anything shipped to those Washingtonian freeloaders (and send that tax money back to WA).

      1. Rukario

        And will those Oregon online stores then have to register for sales tax in any district where they might sell something to? This is the main stumbling block, for what I can see, with the current system. Washington State sales tax rates. So, quick, what's the rate in Birch Bay? It's in the same ZIP code area as Blaine, so it's 8.5%, right? Actually it's 8.5% but because it's in the Whatcom Unincorporated PTBA. And this is just Washington state.

        Simple, isn't it?

        1. Yet Another Anonymous coward Silver badge

          Wouldn't the solution be for the states to collect together into some sort of federation and have a central federal government to regulate this sort of thing?

          1. Charles 9

            Except the federal government isn't interested in a unified sales or consumption tax. They talked about a century ago and determined it's too prone to corruption and subversion. Some of the problems with sales taxes involve preventing black markets appearing that don't keep records. Value-Added Taxing tends to prevent this because the taxing occurs at wholesale levels rather than at retail but it has its own foibles.

      2. T. F. M. Reader

        Triple fail

        The buyer pays the tax, but the buyer pays the tax according to the jurisdiction where the store is located. If I buy something in Oregon I do not pay sales tax even if I am from Washington or from UK.

        So no, I don't think it is reasonable - or practical - to require every web store to be able to handle every possible tax jurisdiction (and follow legislative changes everywhere, and transfer payments, handling all the logistics and the costs, etc.), especially since internet commerce is international. What's more, a customer would have to list his/her billing address, shipping address, AND tax address, plus electronically sign a declaration that he/she is not acting for someone else (who may or may not reside in a different tax jurisdiction). And how will such a declaration be verified, practically?

        The only practical options is to tax based on the store locality of record, just like for brick-and-mortar shops. This would level the field, right? Now, what is, indeed, the sales tax jurisdiction of Amazon? I suppose it is relatively easy to distinguish between and (I buy from both on occasion), but where in the States is Let's assume it is, for the purpose, in a no-sales-tax jurisdiction (or moves to one to retain competitiveness) - will no one pay any sales tax then? And will be registered in Channel Islands (no, I am not sure about the VAT regime there - just musing)?

        It all looks to me as yet another case of lawmakers not being fully aware of practicalities of our interconnected world.

        1. Anonymous Coward
          Anonymous Coward

          Re: Triple fail

          Well, there could always be one of those database thingies with one of those web service thingies that allows the merchant to use the Internet thingy to find out what the sales tax should be.

          Oh, and then there always the option of charging the rate for the state, which I'm would make states much happier than they are now.

  13. The Nazz

    Will it really be a level playing field?

    Are "Brick and Mortar" stores with a turnover of less than $1m currently exempt from collecting sales taxes?

    1. JDB

      Re: Will it really be a level playing field?

      No, but to say "this makes it a lot better, but not 100% perfect, so let's junk the whole thing and stick with the crap we have" is ridiculous.

  14. Anonymous Coward
    Anonymous Coward

    This is just raping consumers

    The states want to get in on taxing consumers when legally they can't. I do a lot of online purchases and not to avoid sales tax but to get the products that I want when I want them without the hassles of local merchants many of whom are morons.

    1. JDB

      Re: This is just raping consumers

      Coward and an idiot. The states are already taxing the consumers - the problem is that the consumers aren't paying. This just allows them to move the burden of collection to the online stores. Check your state tax code - there's a very good chance that you should be paying the sales tax on all those online orders yourself - you just haven't been doing it.

  15. Anonymous Coward
    Anonymous Coward

    You've gotta love the dumbness of politicians.

    They must be the only people dumb enough to come out with the likes of this line.

    "We should not be subsidising some taxpayers at the expense of others."

    You're not subsidising any fucking one, you're running a protection racket where you charge some people for the privilege of making a living.

    1. FutureShock999

      Re: You've gotta love the dumbness of POSTERS.

      You have to love the DUMBNESS of someone who obviously hasn't taken ECON 101 classes. Any differential in taxation is a subsidy to the one getting lower rates. Because they are enjoying all of the benefits that the government provides (which includes a business courts systems that allows businesses to form contracts between them, enforce them, mitigate disputes, etc., protected borders so that businesses do not have to hire their own defence forces (don't laugh, in years past they DID), water, sewers, an educated workforce, etc.) WITHOUT paying an equal share of the bill. That is a subsidy, plain and simple.

      And yes, we ARE charging businesses...not for the "privilege of making a living", but for all of the benefits that they get from the government - starting with stable borders, enforceable laws, courts to address disputes, a police force that prevents looters from rampaging their supply warehouses, the educated workforce they use to make a profit, an interstate transportation network for delivering goods, a stable energy supply, etc., etc., etc. They literally cannot do business (in any modern fashion) without the above, and it's all provided by the government. Try doing business in Russia to see what it is like when there are no fair courts to enforce a contract - you are likely to end up dead if you try to enforce payment that is owed you by the wrong people in a deal, happens all the time in places like that. As a result, their entire economy cannot produce jack shit except sell off their natural resources, because nobody trusts anybody unless they know them very well - so their are no entrepreneurs to speak of. America has a dynamic business environment because we have business courts to settle business and contract disputes, and a relatively uncorrupt police force to enforce the judgements. And somebody has to pay for that...

      Get your head out of your Faux News ass and learn something. We pay taxes for a reason.

  16. Neoc


    I'm not a citizen of the USA, so my understanding may be a bit wobbly, but...

    Doesn't sales tax vary wildly from location to location in the US? So how is the proper amount of sales tax determined? Let's take a simple example: Company in Massachusetts has its servers located in California and sells a gadget to someone in Florida. Which State's tax applies?

    And for a more complex arrangement, let's add selling to an overseas buyer.

    What if the sale is on eBay, from an overseas seller?

    1. Irony Deficient

      ex una plus

      Neoc, the answer to your simple question depends upon whether the Massachusetts company has “presence” (e.g. brick-and-mortar shops) in Florida. If it does have a Floridian presence, then Florida’s sales tax applies, and the gadget buyer pays Florida sales tax to the company in Massachusetts, which will eventually remit it to Florida’s taxation department. If the Massachusetts company has no presence in Florida, then Florida’s use tax applies; it becomes the gadget buyer’s responsibility to send the use tax (typically identical to what the sales tax would have been, had the seller had a Florida presence) directly to the government of Florida. Use taxes are generally declared on state income tax forms, and added to the state income tax bill; but since some states don’t have income taxes (in this example, Florida has no individual income tax, but does have a corporate income tax), I’m not sure what the preferred method of remittal would be in such cases.

      If the overseas buyer of gadgets is someone with a US domicile, then he would still be responsible for remitting use tax as if his new gadget were shipped directly to the US domicile. The Massachusetts company would not be responsible for checking if Joe Bloggs in Foreignistan has a home in Florida, but if the the credit card used to pay for the gadget has a billing address in Florida, the company could use that fact to charge (and subsequently remit) Florida sales tax. If the overseas buyer has no US domicile, then neither sales tax nor use tax would be charged; Foreignistani laws on local value-added taxes, import duties, &c. would apply, which would be entirely independent of the Massachusetts company.

      If the eBay seller is from Foreignistan, and the gadget buyer is in Florida, then it depends upon whether the seller is a “casual seller”, i.e. someone (or some business) who doesn’t sell gadgets as his typical means of earning a living (or generating income). If the Foreignistani is a casual seller, then neither sales tax nor use tax is due from the gadget buyer; if the Foreignistani is not a casual seller, then the gadget buyer will owe Florida use tax.

      P.S. Contrary to what a couple of posters had stated above, some of us do actually pay our use taxes.

    2. Anonymous Coward
      Anonymous Coward

      Re: Nightmare.

      It seems that there are a bunch of complex rules around sales tax and location.

      I think the first thing would be to get all these rules written down.

      Then we could express them in some sort of simplified notation

      Now all we need is a machine that could rapidly calculate the combination of any given two locations and apply it to a monetary value.

      Oh, if only such a machine existed.

      Ah, but rules might change. Then we would need to update the machine.

      We would want some way of transmitting the information quickly to the machine (or machines)

      Perhaps it could be done through electricity over wires, or even through the aether.

      In all seriousnous, I don't see the calculations as insurmountable. And from the sound of it some businesses should be doing this anyway for non-internet sales. Awkward yes, and the complexity even if it was only a state level must be... well quite complex - I've forgotten how to do combinations and factorials. But should be possible to code a cheapish app for the job, the trick would be getting the underlying tax rates and locations without paying for access to other people's databases.

      Or the US could adopt VAT.......

      1. Charles 9

        Re: Nightmare.

        "In all seriousnous, I don't see the calculations as insurmountable. And from the sound of it some businesses should be doing this anyway for non-internet sales. Awkward yes, and the complexity even if it was only a state level must be... well quite complex - I've forgotten how to do combinations and factorials. But should be possible to code a cheapish app for the job, the trick would be getting the underlying tax rates and locations without paying for access to other people's databases."

        The problem is that there are further complications. Consider tax exemptions. For example, Virginia does not tax medicines, but the definition of medicine isn't entirely clear. A bottle of aspirin is generally a yes while an energy shot (also in the medicine aisle) is generally a no, but what about a non-pharmaceutical pain reliever? Then you have tax holidays, which can shift from year to year and may not apply from one year to the next, and they usually have item qualifications of their own.

        So how can one make a concrete set of rules for taxation when it's not even clear what is subject to taxation? And as for the feds, there's a strong push against a federal sales/consumption tax of any sort (they considered it a century ago and rejected it--too much subversion potential)--a VAT would be considered a consumption tax, which most people are against.

    3. MachDiamond Silver badge

      Re: Nightmare.

      The company in Massachusetts is currently required to collect Florida sales tax (amount dependent on the tax district) and remit it as specified by the Florida tax authority IF the company has a 'presence" in Florida. Having a "presence" varies from state to state but in general, if the company has an office, store or sales representative in the state, they have a "presence" there. The servers in California don't figure in the calculation. And, I would appreciate you not giving California any ideas. I have family there and the politicians love to propose stupid taxes.

      As the law currently stands, the buyer in Florida is liable for reporting and remitting the sales tax if the company doesn't not collect it. Yeah, fat chance.

      I am sure that the US is looking for a way to levy sales tax on overseas buyers of goods shipped from the US. I think that the US is concentrating on the FATCA stuff for present. Screwing the domestic populace is much more fun for the government.

      If one buys something from an overseas seller on eBay, the buyer is supposed to calculate the sales tax for their district and remit it. This is on top of any customs fees. For low priced items, the armed services will usually not be sent out to recover the taxes.

      The real hurdle for actually paying sales tax one may owe is that it is usually necessary to have a "seller's permit" or "resale license" obtained from the State. These generally require the filing and publication of business statements and are subject to approval from the tax board. It isn't something you just pay a fee for downtown and they hand you certificate you MUST hang on the wall (under penalty of the law). Like most government practices, it's too complicated for most people to comply with, so they don't. If everybody did, the State would have to raise taxes to hire enough people to shift all of the paper coming in.

      1. TakeTheSkyRoad

        "Or the US could adopt VAT......."

        A flat 20% "Value Added Tax" for luxury goods that ends up being applied to pretty much everything including fuel ? In addition to income tax ?

        Can't see that going down well !

        I console myself that we're not the most taxed country and some are worse. Not many though.

        1. Sam Liddicott

          Re: "Or the US could adopt VAT......."

          Aye... but perhaps better than property tax which is weird in a country that is not short of land.

  17. Anonymous Coward
    Anonymous Coward

    Light - Strong - Cheap

    Is this a bit similar to the old bicycle maker's adage?


    Easy to Implement - Fair to the People - Doesn't Impinge State Rights

    Pick any two.

  18. A J Stiles

    I think this is a good thing

    I am cautiously optimistic about this.

    Too often, people visit a high street store to look for something, decide what they want, and then go and buy it cheaper online from someone who simply doesn't have the same overheads. This ultimately damages high street stores and the people who depend on them. There are many reasons -- financial, ideological, or a court injunction, just for starters -- why a person might not be able to get on the Internet.

  19. Armando 123

    Stop press shocker!

    Chicago Machine Politician Supports More Taxes?!?!?! Why, you could knock me over with a sledgehammer!

    Mine's the one with the copy of The Declaration of Independence in the pocket

    1. This post has been deleted by its author

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