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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, proposed …

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Boffin

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?

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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.

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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.

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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.

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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.

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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.

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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?

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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 "...tax 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.

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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.

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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.

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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.

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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.

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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.

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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...

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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?"

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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.

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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.

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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).

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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.

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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.

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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...

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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.

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Coat

Re: God I hate politicians...

This is a local shop, for local people. We'll have no trouble here!

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Facepalm

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?

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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.

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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.

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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.

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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.

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

@FutureShock999

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.

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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.

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Anonymous Coward

NO INTERNET TAX!

If you are in the US, get busy!

https://www.popvox.com/bills/search?q=Marketplace+Fairness&congressnumber=

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Trollface

Re: NO INTERNET TAX!

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

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This post has been deleted by a moderator

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.

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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.

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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.

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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.

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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.

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Coat

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.

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@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.

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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.

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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).

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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.

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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." (http://www.theregister.co.uk/2013/04/22/marketplace_fairness_act_senate_vote/).

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.

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Re: US Gov sucks

JDB,

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.

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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)

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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.

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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?

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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,

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Meh

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)

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