Do you think online sales should be taxed?
In California, Democratic Assemblywoman Nancy Skinner is pushing for an online sales tax on Californians when they purchase items from companies that are located in other states. The bill would require Amazon.com Inc. and many other Internet retailers to collect sales taxes on purchases made by California consumers. What do you think?
- 10 years agoFavorite Answer
It will fall pretty flat. Amazon has no CA nexus which leaves CA essentially powerless to enforce the CA law in another state. Success would depend upon a federal law that could be enforced across state lines. Such a law does exist for tobacco and alcoholic beverage sales but Congress isn't likely to be very friendly towards putting another huge reporting burden on businesses.
The other issue is forcing an out-of-state business to collect CA sales taxes. The so-called "mail order rule" bars that and the Supreme Court has held that that rule applies to Internet sales as well.
The tobacco and alcoholic beverage rules are permitted because they apply primarily to the excise taxes on those items, which themselves are regulated and taxed at the federal level. States can force out-of-state vendors to provide copies of customer lists and invoices of taxable goods shipped into their states in order to enforce the collection of the excise taxes. Collection of the relevant sales taxes is incidental to the collection of the usually much higher excise tax.
- falsi fiableLv 710 years ago
Opponents claiming that taxation drive jobs out of state have it backwards. Taxing only in state brick and mortar businesses drives jobs away from California. Why should out-of-state companies get an unfair advantage? A recent LA Times article covered this subject. Californians end up covering the cost of infrastructure and road damage delivering all those goods in heavy trucks within the state.
The Board of Equalization will argue before the Supreme Court that the Amazon Affiliates Program creates a business presence within the state.
- MisterZeroLv 510 years ago
Actually I believe MOST states within the U.S. already have a "Use Tax" in place. Use Tax is due on sales occurring outside the borders of the particular state that the individual or company is a 'resident' of. To date it has been "self-regulated". Here in Oklahoma there is a Use Tax pretty much equal to what the State Sales Tax amount is based on the physical location of the individuals residence or the home office of the company.
So if you, or ABC Inc., buys a widget from a company in Wisconsin (either by telephone or by mail or over the internet) then you, or ABC Inc., is responsible for computing the Use Tax and including it on your Oklahoma tax form. Do most people do it? Of course not! Usually companies that are making MAJOR purchases will comply with the Use Tax law because they don't want the OTC in their backpockets auditing their books. It's cheaper to pay the tax up front than to get 'gigged' for it later and have to pay penalties and interest and then be on the taxing agency's "radar".
Between you, me and the lightpost...I really believe the individual states may well get a federally mandated Use Tax enacted eventually. Since the explosive use of buying online they have been losing SERIOUS sales tax revenues. ALL states are hurting because of it.
The federal government has many venues to collect revenue from besides income taxes like excise tax (fuel, tobacco, alcohol, imports, etc.). Municipalities and School Districts generate revenue from property taxes. But states are fairly limited in how they can get revenue. They get 'a piece of the pie' from Uncle Sam based on their latest Census figures and other types of measurements (like funds from the U.S. Dept. of Education to the states based on test scores computations). They get a smaller piece of the pie on fuel taxes. Most states get their biggest revenues from Sales taxes.
It will be interesting to see how it all develops though.
Mike Womack, Sr. Partner
Zero Degrees Tax LLP
- Anonymous10 years ago
no because they get us on the shipping costs but where I live if the company has any stores in my state it is taxed. there are so many levels of taxation for products anyway. the government taxes the raw materials to build it, the manufacturer, the middle men the store then the consumer
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- JudyLv 710 years ago
The cost of implementing, tracking and filing in all states would be huge, and pretty burdensome to small online vendors. For that reason, I hope not.
- Enough TrollsLv 710 years ago
So you use an accomadation address just over the border - you just re-invented smuggling within the USA.
- 10 years ago
i think one could argue if it were taxed - the proceeds should be used to build free wifi in major cities and subburbs.
- 10 years ago