Internet Sales Taxes.
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| Author | Content |
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| jdixon Apr 14, 2006 5:48 PM EDT |
> For out of state sales, it is up to the citizen to pay such tax on their state and federal income tax returns. For Unites States, citizens, no, it's not. The federal government has no general purpose sales tax, and thus no federal taxes are due. The states are specificly barred by the US Constitution from taxing interstate commerce. Thus no state tax is due. Numerous states have tried to claim otherwise. The US Supreme Court has ruled on serveral such claims. The states have always lost. There is no state sales tax due on interstate commerce. Barring a constitutional amendment, only the federal government can institute such a tax. |
| Tracer Apr 14, 2006 7:11 PM EDT |
I have made a grand mistake. Perhaps too much asthma medicine last night? There were two sets of articles that I was noticing and I mixed the two by accident. A few people have been kind to correct me. (Thank you for helping me see the error in my ways.) Anyway, one set of articles was referring to the IRS going after eBay and PayPal to check for funneling of income into offshore accounts. Another set was referring to states going to PayPal, Amazon, and other well-known sites to get records regarding unreported use taxes (not sales taxes) on a state tax return and threatening some nasty notes to taxpayers if they failed to comply. Still, the concept of the Internet having no geography is important to note. Most of my comment is philosophically accurate in its intent. I also need to draw a line between sales tax and use tax, at least for most of the United States. (Not all states use a sales tax, or may not use a use tax either.) Sales taxes are what a USA company collects when its consumer's shipping address is located in the same state. Use taxes are what a consumer must, on their own, know to pay for purchases made with USA companies outside of his/her state. Some websites are nice enough to reflect what the approximate use tax might be, using published and quarterly-updated use tax tables, although some do not and merely give you notice that you are responsible for your own use taxes. Also note that some USA websites do not charge sales taxes at all and are in risky territory if the USA Federal Trade Commission decides to clamp down. As well, note that some states argue that if the website is located in the same site as the consumer, a sales tax must be charged, or may argue about what qualifies as the "nexus" (headquarters) of a business, or may argue that if the consumer's address is also where the USA company's distribution warehouse is located, a sales tax must be collected. However, these latter 3 arguments are perhaps legally untenable. Some states are even bold enough to get Internet Service Providers to throw on a service charge as a kind of capital punishment, to try and collect missing use taxes by a per capita "guesstimate". In sum, global governments should just give up on taxation of any sort on the Internet. Not only is it a good way to get voted out of office, but it also limits innovation, has incredible legal challenges, and is self-defeating because citizens will go elsewhere to get around it. Instead, governments around the world should just wake up and realize that when they help a business become more successful and can help brick-n-mortars become click-n-mortars, it has the opportunity to pay more taxes by being a booming business. And if that's not good enough, then thinktanks and the UN should be involved to come up with better solutions that do not kill the goose that lays the golden eggs and that encourage more Internet usage and more ecommerce. |
| jdixon Apr 14, 2006 9:22 PM EDT |
> Still, the concept of the Internet having no geography is important to note. Most of my comment is philosophically accurate in its intent. Yes, it is, and you are correct. > I also need to draw a line between sales tax and use tax, at least for most of the United States. You need to note that the two are considered different by the states which impose them. In point of fact, there is no difference, and both are covered by the interstate commerce clause denying the states the right to tax interstate commerce. As I noted, everytime the states have tried this, the US Supreme Court has overruled them. The fact that a state claims it is not a tax on interstate commerce does not make it so. It is, and as such the tax is unconstituitional. Anyone who has the money to take the case to the Supreme Court will win. Only the US federal government has the authority to tax interstate commerce. |
| jdixon Apr 15, 2006 4:36 PM EDT |
Oh, I should add, for the record: IANAL. However, this is Constitiutional Law 101 level stuff. Simply read the Constitution for yourself, anything in the original is written in comparatively simple english. It's only in the last century or so that laws have become so complicated that they're impossible to understand without a law degree. |
| grouch Apr 16, 2006 1:28 AM EDT |
jdixon: Kentucky has a "Use Tax". It charges the state sales tax rate against all purchases made out of state for goods transported to Kentucky, stored or consumed in Kentucky. In your (NAL) opinion, is that also contradicting the Interstate commerce clause? (IANAL either). Reference: http://caselaw.lp.findlaw.com/data/constitution/article01/33... "Also, the Court upheld a State's application of a use tax to aviation fuel stored temporarily in the State prior to loading on aircraft for consumption in interstate flights." |
| jdixon Apr 16, 2006 5:05 AM EDT |
> In your (NAL) opinion, is that also contradicting the Interstate commerce clause? So does WV. If the tax is on goods purchased by someone inside the state, from a company located outside the state, and shipped into the state; then it's a tax on interstate commerce and is unconsitutional. Ditto for the inverse case where someone outside the state purchases from a company inside the state. The legislatures actually realize this, though they won't admit so publicly, which is why they're agitating for a federal solution to the problem. If it would result in a federal use tax which replaced the local sales taxes and all income taxes, I'd probably support it. |
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