Internet Sales Tax Legislation Gains Steam

New legislation to impose state sales tax collection requirements on Internet retailers such as is in the works according to Republican Senator Lamar Alexander.

Legal confrontations between the giant Internet retailer and state lawmakers have been occurring for years as cash-strapped states continue to pressure Amazon to comply. However, the tide seems to be turning in favor of states as the so-called Internet sales tax initiative gains bi-partisan support in congress.

Other lawmakers introducing bills into the congress are Democrat Senator Dick Durbin and Democrat Representatives John Conyers and Peter Welch.

Cracks In The Dam?

Internet Sales Tax LegislationAmazon seems to be responding to pressure as it lends support to a simplified national solution that levels the playing field between Internet and traditional brick and mortar retailers. This is good news for B&M merchants but the impact to consumers may trigger a backlash if Internet prices suddenly jump as online retailers comply with new laws.

On a brighter note, some states may opt out of the requirement for Internet sellers to collect sales taxes. Opting out will position those states more competitively on a national level as being business friendly. This could cause online sellers to shift operations to revenue neutral sates to maintain their price advantage over their physical counterparts. Such a move may also spur sales for individual companies as consumers adapt to price changes between retailers.

This is a perfectly legitimate outcome to proposed legislation since it’s up to individual states to determine what statewide taxes to collect from its citizens and commercial entities operating within their borders.

Unintended Consequences

It’s conceivable that voters could persuade local legislatures to grant preferential tax treatment to remote retailers using the lure of lower prices to consumers. In addition, states choosing not to impose tax collection requirements on Internet retailers could be a jobs magnet as online sellers flock to their jurisdictions.

If such a scenario were to unfold, would federal government intervention in this issue help or hurt the states? History demonstrates that whenever the government intervenes in the marketplace, however well intentioned, unforeseen consequences emerge that distort the free market.

Whether or not the net effect of a national legislative response to state tax collection efforts is positive or negative remains to be seen. Nevertheless, consumers will ultimately determine economic winners and losers and not the government.

Meanwhile, Internet booksellers must continue to operate in an uncertain business climate until legislative action is finalized, one way or the other.

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Joe Waynick is author of “Internet Bookselling Made Easy! How to Earn a Living Selling Used Books Online” (ISBN 978-0983129608). You can reach him at: Internet Bookselling Mentor.

4 thoughts on “Internet Sales Tax Legislation Gains Steam”

  1. Sorry the real world is catching up with the freeloaders who will do, say or write anything for a buck.
    Paying taxes is the duty of every citizen because without people living up to their responsibilities countries become another Greece.
    We can all rationalize our own situation is special but sociopaths are made by convincing themselves with one small lie after another.

    Most internet sellers are like skulkers living on the fringe of society anyway – Amazon just does it on a larger scale.

    On the dark side – states who avoid doing the right thing – going after the people who are cheating and stealing from their neighbors who hold to a higher form of decency – are just doing what government legislators do – as little as possible in order to get re-elected.

    It would be great to have all the internet sellers concentrated in one area where eventually the decent citizens would realize how little they add to local society. Even Turks & Caicos was eventually brought down as a tax haven.

    Man up! Is there no shame anymore?

    • George, if only the world were that simplistic. I sell thousands of books through the internet every month. I also pay sales taxes on all copies sold to residents of my state. Simple enough, right? Wrong. In Arizona there is a two-tier tax system. You have what’s called “Programmed” and “Non-Programmed” cities for which taxes are collected differently.

      For Programmed cities, I pay a single tax that’s collected by the state and distributed to the cities listed in the program. Non-Programmed cities (of which there are 18) collect their own taxes. That means I have to manually file a separate tax form each month for 19 different taxing authorities, one state and 18 cities.

      My total tax bill for in-state sales rarely exceeds $30 per month. But I pay more than $150 per month in labor costs tacking and filing the paperwork required to pay my monthly tax bill. Compound this absurdity with all of the paperwork and labor required by these different entities to collect a miniscule amount of tax and the burden of excessive government regulation becomes mind boggling.

      Now, multiply the above absurdity by 50 states and these regulations become truly insane. Given that context, it’s easy to understand why the Supreme Court made the Quill vs. North Dakota decision to prohibit states from taxing interstate commerce. Piling that much regulation onto small remote sellers would effectively kill billions of dollars worth of electronic and mail order business – costing many tens of thousands of jobs.

      What needs to happen is congress must develop a uniform tax policy that applies to all interstate commerce that’s collected from businesses by the states and administered by local government from there. The federal government should not burden individual businesses with the all but impossible task of collecting and disbursing taxes to thousands of cities and municipalities nationwide.

      I agree that paying taxes is the duty of every citizen. But I also believe that the government has a responsibly and duty to be good stewards of our tax dollars. Anyone who believes that government is living up to that responsibility is living in lala land. And until the government develops a coherent, uniform tax policy for interstate commerce, no internet bookseller should feel obligated to pay one penny more in taxes than they are legally required.

  2. George-I don’t think you should paint every internet seller with the same brush. My very good friend sells books on ebay, charges taxes if bought in his state, and certainly pays taxes. But, he’s a little guy. Large corporations, who knows. But then again, large corporations that are NOT online don’t pay taxes either–so it’s a toss up as to which are the worse offender of tax evasion.
    Since politicians, state, townships give away their right to collect taxes from corporations in a desperate attempt to keep them within their locale, we will probably never see taxes paid on a fair basis from them.

    • It would be nice to hear from actual books sellers on this issue (all book issues for that matter), people who have the guts and all else it takes to open and build a brick and mortar store operation, and still pay all the taxes any decent member of a community should be expected to pay.

      If the Occupy Movement ever gets off the ground they may light a fire in people who have been ethically dead for far too long – apathetic people tolerating what should be intolerable. Corporate welfare should be the first thing to go – continent wide.

      Tax avoidance is an abomination – no matter who practises it and under any guise!

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