Marketplace Fairness Act - Got My Attention

Because of copyright laws I can't copy/paste the article but it's sure worth reading.
Check out the December 12, 2014, edition of the CDN MONTHLY SUPPLEMENT newsletter.
There's an article about the pending Marketplace Fairness Act in Congress.
That should among other things bring most Internet sales to a screeching halt.
And furthermore close down most online dealers.
Or at least put a BIG crimp in their sales.

 

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So I don't get the CDN but a little research seems to me that you'll be paying sales tax now on online purchases for states that have committed to this new program. I don't think sales tax will hurt online retail generally or online sales coins specifically and I'm interested in hearing why it might. (I am in favor of no online sales tax)

 

My biggest concern is that it would impose an unsupportable accounting burden. It's hard enough to keep track of state, county, and local tax rates within my own state, not to mention tax holidays (although our new legislature has helpfully eliminated those).

The proponents of this measure claim that states will need to agree to simplified taxation systems, and that software to compute taxes will be cheap and reliable. I won't believe either one until I see it. I see a very poor track record of simplifying tax regulations at any level of government. I'm in the software business, and the idea that you could build a cheap software package that will keep up with frequent legislative changes, accurately assign every saleable item to each state's proper category, and pass the required regulatory testing is just laughable.

I agree that there's an unbalanced playing field right now, and I don't believe "let the local retailers start doing online business if they want to compete" is a reasonable remedy. I don't know what the solution is. I like my own state's "calculated use tax", which is based on a flat percentage of your taxable income, but I'll admit that I like that because I probably come out well ahead under it. It does almost nothing to level the playing field; it just protects the state's revenue stream. (If I decide to pay the flat rate instead of tracking every online purchase, additional online purchases don't change my tax liability, so there's still the incentive to "avoid taxes" by buying online.)

 

How ever would someone pay sales tax to a state which they do not live in? What documentation would have to be provided? Would internet sellers have to have a business license to sell in the states which collect sales taxes?

A lot of work and administrative tasks associated with such a thing.

 

Here's a link to a Web site thar explains the bill:

http://marketplacefairness.org

What this says to me is simply making it easier for states to collect sales tax due them anyway. Keep in mind the retailer does not "pay" sales tax. They merely collect from the consumer and remit it to the state. It is the consumer who actually pays the tax. This bill looks like it is designed to force the retailer to simply supply the states money they are due them.

I can only speak about Pennsylvania. In PA you are required to pay sales tax on every taxable item, no matter where it's purchased. Internet retailers who have any kind of presence in PA are required to collect sales tax, and most do. For those entities that do not collect sales tax, PA requires you (the purchaser) to pay the required sales tax in the form of a Use Tax. You pay this on your state income tax forms at the end of the year. Does everybody do this? I would venture to guess most do not. What it looks like this bill does is facilitate states getting money already due them. This does not effect a tax increase. It does place an additional burden on the retailer to collect and submit this money. Chalk that up to the cost of doing business.

I did read on that site that some small business may be exempt from this legislation. The link is there, so you can see who the exemptions apply to.

 

My understanding of the most recent bill is that online businesses with under $1M in annual revenue would be exempt. That would cover most coin and currency sellers on Ebay.

 

My wife mentioned the VAT as used elsewhere.
I'm not familiar with it but it appears to be "one tax fits all".

 

That's what I gathered too - this bill is to help the state collect the sales tax from online retailers in their state.

 

They have the VAT in the UK. I think it's 10% here.

 

19Lyds,

That's not how it works. If I buy online from a retailer in Florida, I am not required to pay Florida sales tax. I am required to pay the 6% Pennsylvania sales tax (to Pa) on that purchase, because that is my home state. Under the bill the Florida retailer would be required to charge me the PA sales tax and remit that to the PA Department of Revenue. I would not pay any sales tax to Florida.

Like I said in my previous post, under PA tax code, for the above example I am required to declare that purchase on my tax return, and pay the 6% "use tax" in lieu of the sales tax I didn't pay at the time of purchase.

 

This not the way I read this. Rather, it forces out of state retailers to collect sales taxes from the purchaser and submit that to the purchaser's home state

 

Those legislators are getting lots of pressure from local brick and mortar businesses that are losing sales to out of state internet only businesses with little overhead. The fact is that my LCS can't compete with online dealers when I buy a $2000 coin. Not only is he getting beaten down by the low overhead internet sales, but add the sales tax and he doesn't have a prayer. That $140 sales tax my LCS "must" charge me deters me significantly from buying local on larger purchases.

 

This is a baloney, at least in the world of coin collecting. It literally takes almost nothing more than if you travel the show circuit or have a brick and mortar store to throw a few listings on ebay and have an internet presence. An IPhone can even do it now.

The world is evolving everyday, you either try and keep up, or you try and restrict the growth so you maintain the upper hand. The logical conclusion is to grow with the technology and world around you, as you can more easily control your own destiny rather than every one elses around you.

The businesses complaining about not having a fair advantage need to put their minds to work and come up with a revolutionary idea or item that keeps them relevant instead of trying to box in how we do business so they dont have to change with they way the world is going.

 

I'd be willing to bet the pressure isn't coming from brick and mortar vendors so much as it's coming from the various state legislatures, as the states stand to gain the most from passage of this bill, to the tune of billions of dollars in uncollected sales taxes. The only added costs to the retailers is the cost of collection and submission. B&M retailers already incur this cost, so it's going to be the on-line sellers who get bit a little with this bill.

 

My response to this is, why arent MORE Brick and Mortar ONLY stores adding at least SOME inventory online?

It actually even effects your 'ebay' bottom line if you really think about it.

You can sell items in store with a typical (5%) sales tax (i think most range from 4%-7%), or you can put it on the internet to a wider audience with less overhead and only pay about ~10% (to ebay).

So really its only like 5% or 6% to do business on ebay if you consider that any out of state sales are not being taxed.

Like i said, if I owned a B&M store I would most certainly have SOME items on ebay.

 

I run a business and I often on expensive items have customers wish me to deliver it out of state to them or more often meet them in New Hampshire (no sales tax) to complete the transaction the reality is I have to charge the tax in ct and ma too as I have resale certificates in both states. New Hampshire and deleware really got it right. No sales or income tax. And their not broke unlike a lot of other states!

 

I agree with most of what you say. In this day and age, any retailer should have some kind of on-line presence. But keep in mind, under current regulations (and I can only speak for Pennsylvania), any on-line retailer with any type of physical presence in PA already is required to collect and submit the 6% PA sales tax to the PA Dept. of Revenue. Buy from a WalMart warehouse in Arkansas, you will still pay the 6% sales tax to PA. You won't, however, pay the Arkansas sales tax. Amazon will also collect the 6%. Keep in mind the buyer, not the seller, is responsible for paying any sales tax. So the bill in question only requires the seller to collect the tax, not pay it (instead, they forward the collected tax to the appropriate Dept. of Revenue).

The vast majority of people on this forum who buy and sell on eBay will not be affected by this bill. For one, there is an exemption for business who do under a million dollars in sales per year. For another, most of the eBay sellers who have a large presence on that service already collect sales taxes for their home state. This bill would just be an additional tool for other states to collect taxes already due them, that PA already tries to do with the Use Tax I mentioned earlier. I equate most smaller eBay sellers to flea market vendors. The only real difference being the eBay fees to set up and sell verses paying for tables and space at the flea market. These types of sellers do not collect and pay sales taxes. Some should, but undocumented inventory and cash sales makes it easy to hide total revenue, and in PA's case there probably isn't enough money from flea market sales to justify going after this revenue.

I disagree with the pressure to pass this bill coming from B&M stores to level the playing field in retail sales. They really have little to gain with passage of this bill. I firmly believe pressure to pass this legislation is coming directly from the state governments, as they are the ones with most to gain by its passage. I honestly do not think passage of this bill will greatly affect the buyers, other than having to pay addition sales tax where they not have previously, but a brick and mortar store has always had to collect sales tax in the state in which they do business, whether the buyer is from in-state or not. Ever go on vacation out of your state? Have you ever walked into a store and received a tax exemption because you are from another state? No, you probably paid that state's sales tax. For instance, in PA, the sales tax is 6%. In Allegheny County, there is an additional sales tax of 1% for RAD (Regional Asset District, this pays for all the art and culture). I do not live in Allegheny County, so all of what I buy is taxed at 6%. If I shop in the City of Pittsburgh, it doesn't matter that I live in another county. I still pay 7% on any taxable items I buy. All this bill aims to do is enforce sales tax regulations already in place, it adds no additional fees to the mix for the retailer, and forces the buyer to pay what he's already required to pay.

 

For some danged reason I thought you hailed from Alaska, Omahaorange. Don't ask me why.......

 

Nope. I don't like winters in Western PA. My wife even less. Not from Nebraska either. Screen name is actually a paint color.