Possible New Law on Sales Tax Collection

[celebra1]

The government is trying to get a bill passed to make online retailers collect sales on all purchases.

Wall Street Journal

If ecommerce isn't hard enough now, it is about to get worse. They're looking at us to collect taxes for every state. Another service to buy / plug-in? Will it ever end? Don't they realize that the majority of online shops are small businesses with low profit margins?

[tclifesafety]

The government is trying to get a bill passed to make online retailers collect sales on all purchases.

Wall Street Journal

If ecommerce isn't hard enough now, it is about to get worse. They're looking at us to collect taxes for every state. Another service to buy / plug-in? Will it ever end? Don't they realize that the majority of online shops are small businesses with low profit margins?

I saw that as well - unfortunately, our biggest ally against state sales tax, Amazon, seems to have capitulated to the states and now have plans to offer same day delivery in some locales.

[celebra1]

Sales Tax Collection

USA Today

Yes, Amazon has "sold out" to benefit their bottom line.The last few lines of the article are below

"The administrative burden would be particularly difficult for small businesses that sell their products online, says Jerry Cerasale, senior vice president for the Direct Marketing Association."

These merchants could be forced to raise prices to cover the added compliance costs, Cerasale says.

"That's going to harm e-commerce, which is one of the few promising growth spots in this somewhat stagnant economy."

[Dave_C.]

Some brick and mortar stores have been pushing for this for years because they can't compete on pricing with their overhead and expenses. I also think some of these states are looking for new cash because they've screwed up what they already have.

[celebra1]

Competitveness

Most people, lawmakers included, do not understand that there are a lot of expenses involved in being online. The added expenses and paperwork involved to do this will likely cause many stores to close down. I personally know 5 stores closing next month because of Google's newest tactics; one that closed a month ago; one that closed last week. This sales tax collection possibility is a BIG deal! A store owner cannot do this alone. There are 50 states, counties within states and local taxes within counties. The tax rates keep changing too. We have no choice but to buy a service to manage it for us.

A friend of mine, not involved in ecommerce, told me about the possible up coming change with online taxing. He has listened to me talk about my business and said that it seems like there is a lobby to eliminate all but the Big Box retailers or force affiliations with Big Box etailers. He very well may be on to something. Unless the small etailers raise a LOUD collective voice soon, this taxation collection change will likely happen within the year.

[g1gallery]

The government is trying to get a bill passed to make online retailers collect sales on all purchases.

Wall Street Journal

If ecommerce isn't hard enough now, it is about to get worse. They're looking at us to collect taxes for every state. Another service to buy / plug-in? Will it ever end? Don't they realize that the majority of online shops are small businesses with low profit margins?

"C",

I think the legislation under serious consideration contains an exemption for sales under $500,000 per year. Who knows what that might be when it DOES pass next year. Some analysts predict an exemption for $1,000,000 in sales per year.

States are broke, laws already on the books for tax. Legislation is to address ruling by the Supreme Court.

You're right - more plug-ins.

All the best,
Jon

[wcsjohn]

I look at this as a good thing. Some competitors will not be able comply and they will go out of business. It also let's us compete better in our own state. And there's an easy solution. Avalara.

[celebra1]

Jon,
I hope there is an exemption. I'll be watching for updates on the legislation proposal.

wcsjohn,
I realize Avalara exists. I feel a bit overwhelmed some days with all the additional fees for plug-ins and all the major changes Google throws out.

[wcsjohn]

Even without any tax law changes, many states actually require (by law) to pay collect and pay sales tax for all municipalities. Using your address to default a sales tax rate is in effect, cheating, and if you were audited, would cause a giant mess. So Avalara is a great thing to have regardless.

[g1gallery]

Jon,
I hope there is an exemption. I'll be watching for updates on the legislation proposal.

wcsjohn,
I realize Avalara exists. I feel a bit overwhelmed some days with all the additional fees for plug-ins and all the major changes Google throws out.

"C",

Will let you know if we hear anything but I imagine it will be big news when it happens.

We're busy putting together a new store at a new location. It will take a little while though. We still have shows to do through fall. We're at our best when we can actually shake someone's hand so I'm back at it again too ....

I imagine there still is no Bingy Thingy available here yet.

I still owe you an email!

All our best,
Jon

[Pack Secure]

If they absolutely must pass a law, then what it should be is a Federal Tax set percent such as 5%, the money then goes to one Federal location from online sellers. At this point then the Federal government would issue checks to states based on perhaps population percentages. Problem here is to trust the Federal government to get the money to the states. :)

It would be a nightmare to have to file to each state individually and then have to determine how many times a year and at what percent each state would want their filing done.

THIS WOULD BE INSANE.

Mary

[Mark]

Actually, there are laws already on the books, called the Use Tax, that consumers are required to pay sales tax on their out of state purchases. Since this cannot be enforced and I have NEVER, EVER, heard of a person actually reporting and paying a use tax, the governments of the states must have a NEW law, and require the merchants to record and submit sales tax as this is more easily enforced against merchants. This is a level playing field for large and small merchants alike, however, the complexity of the sales and use tax tables for 50 states, including county and city taxes, can be complex indeed and the smaller merchants will have more difficulty (funds) to comply. Yuck. I am choosing a new hobby....

[Pack Secure]

I am fully aware of the USE tax, but as you said almost nobody pays it.

[wcsjohn]

We report and pay use tax. So Mark, now you know someone. :-) We do this because our CPA said they are seeing MUCH higher audit rates for people that report 0 use tax, especially on out of state purchases.

But you're right. They will create new laws because most people don't pay it.

And getting the Federal Government involved would be a nightmare. Can you imagine how screwed up the process would be? Leave it to the states, please!

Mary, totally not insane. Avalara can already do what you're stating. And it's zero effort on the merchants part, outside of getting it set up.

[Pack Secure]

So how much does this program cost? So I have to send out 52 checks? I would not send the money to an outside company to pay these taxes.

So yeah, INSANE.

Mary