Tuesday, May 7, 2013

Fairness Of Tax On Internet Sales

Bloomberg had on the screen last night for all the world to read a statement about how smaller companies selling on the internet with under one billion dollars in sales would be exempt from collecting sales tax, of course it is "one million" in sales not one billion. It is little wonder Americans don't understand the real value of money when financial shows specializing in such things make such incredibly stupid mistakes. The important issue is that congress is finally about to level the playing field and take away one of the biggest advantages enjoyed by companies selling over the internet, that is not charging sales tax.

For years Amazon and companies like it have savaged brick and mortar stores in are communities, and a lot of the reason is because of this advantage.Internet and mail order buyers have always owed taxes on their purchases. Such buyers have generally been unaware of or have ignored their obligation to pay taxes on their purchases from out-of-state sellers. The Marketplace Fairness Act would put buyers from mail order and electronic sellers in the same position as persons who purchase from in-state brick-and-mortar stores. Some shoppers have in the past visited local stores, viewed an item, talked with a clerk getting their questions answered, then bought online to save a few dollars, including the sales tax.

The Act would only permit states to impose sales tax collection responsibility on internet and mail order firms with at least one million dollars in out-of-state sales. Truly small businesses would, still enjoy immunity from tax collection responsibilities on their out-of-state sales as long as they have no physical presence in the taxing state.The bill would permit states to collect sales tax due from its residents on Internet and mail catalog sales of goods. It is not an increase in taxes, just a way of collecting sales tax already owed by residents who order from catalogs by mail or Internet. Some states will use the revenues they collect under the Act to balance their budgets, others may use those revenues to lower their respective sales tax rates.

The Marketplace Fairness Act is long overdue. It is neither fair nor efficient to require brick-and-mortar sellers to collect sales taxes while their on-line and mail order competitors effectively sell "sales tax-free". NFR President and CEO Matthew Shay today called the Senate's action “a significant step for sales tax fairness” and lauded the bill's sponsors for carrying the day “despite a highly-funded misinformation campaign by the legislation's opposition.”  NRF Chairman Stephen Sadove, CEO of Saks Inc., added that “retailers compete for customers on many different levels … but they cannot compete on sales tax. Congress needs to address this sales tax disparity and allow retailers to compete freely and fairly.” As the owner of a small business I salute this bill.

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