Internet Sales Tax

[Scooter]

The State of Washington just passed a voluntary internet sales tax that would start in 2008. What do you guys think? Talk amongst yourselves, I won't be back at the computer until this evening.


Gregoire signs Internet sales tax bill into law
By Jennifer Byrd

The Associated Press

Related

OLYMPIA — Saying it will level the playing field between in-state and out-of-state businesses, Gov. Chris Gregoire has signed a measure that encourages Internet and catalog companies to collect and send the state sales taxes on purchases made by Washington residents.

"This is absolutely about tax fairness to the businesses of the state of Washington," Gregoire said as she signed the bill into law Thursday.

Washington will join 21 other states that have passed legislation to become members of the Streamlined Sales Tax Project.

More than 1,000 companies that sell products in multiple states have voluntarily agreed to begin collecting and distributing sales taxes to any state that agrees to become a member of the project.

The state Department of Revenue predicts that by joining the program, Washington will initially see an additional $35 million to $40 million in sales taxes from out-of-state companies that sell products to Washington residents.

A 1992 U.S. Supreme Court ruling prohibits states from forcing businesses to collect the states' sales taxes unless the company has a physical presence in the affected state. The court noted the dizzying array of tax jurisdictions and widely varying definitions of taxable goods.

The law will streamline those definitions.

Washington has been working on joining the project ever since it was started in 2000 by national tax and government associations, Revenue Department spokesman Mike Gowrylow said.

People who purchase items from out-of-state Internet or catalog companies are currently supposed to pay the sales tax, but rarely do.

The measure, which was requested by Gregoire, easily passed the House and Senate this year. It passed the Senate last year, but got held up in the House.

"There isn't anybody in the Legislature that doesn't know how hard this has been on both sides of the aisle," Gregoire said. "It's been a long haul, a lot of hard work."

The main sticking point revolved around a change the law makes on where sales tax goes when it is collected. Under current law, the jurisdiction where a product originates receives the sales tax. That doesn't help the state, if the product originates with an out-of-state Internet company.

Under the measure, the jurisdiction where the product is delivered would get the tax.

The change benefits some cities and towns, but hurts others. To solve this problem, the measure calls for mitigation, in which jurisdictions that lose money would receive payments from the state.

The measure does not go into effect until July 2008, so businesses and local governments will have a chance to implement the change, Revenue Department director Cindi Holmstrom said.

"We're going to have a really intensive education effort," Holmstrom said. "We're going to hit the ground running now."

The measure is Senate Bill 5089.

[Porsche-O-Phile]

Oh sure. I love helping government. Those poor public servants that act so selflessly in the public interest deserve even more of my money. They don't get nearly enough as it is and are so under-compensated for their hard work, toil, sacrifice and trevail. . .

Why don't we all start a campaign to start sending 'em IOUs (collectable starting in the year 3057 in installments over 1,000 years) with a picture of a big giant ass as a watermark so they can kiss it.

[LeeH]

Have you ever filled out a sales tax form? What a pain. In Arizona you have to have a license in each city where you work. There are some cities that allow the state to collect their sales tax and some collect their own - each with a unique form. It's a royal PITA.

[cashflyer]

SC has had a sales tax law for several years that requires people who buy via mail order or via internet to fill out a tax form and send in your sales tax.

I don't know of any individuals that do it, and most people don't even know about it. It's difficult for the state to track, but not impossible. I've never heard of anyone getting busted. Maybe the effort to enforce costs more than the return. (??)

[Hugh R]

Companies in other states can't sell tobacco product to Californians with calling during the dinner hour and speaking to an adult (yeah, right how would you know, and what minors have a credit card). You also have to use a credit card and they have to ship to the card address. All in the name of protection of children who want to buy tobacco. So the state of California has decided how I buy a legal product, what financial vehicle I use and where I can have it shipped. The newest step is the state is posting signs saying if you buy tobacco over the internet your supposed to pay sales tax in California which is $1 per cigar and, I think 89 cents for cigarettes. All that money is supposed to go to childhood healtcare. This was dreamed up by the washed out actor Rob Rheiner (meathead from All in the Family. CA will definitely sign on for such a program.

[Noah930]

Taxachusetts does this, already. When you file your state income tax, at the end, it asks you to document what you're purchased and haven't paid sales tax on. Internet sales, catalog sales, and stuff from any state that has sales tax less than the 5% MA charges. So if you bought something from New Hampshire (no sales tax), you still have to pay sales tax on it come April 15. Massachusetts calls it a "use tax." You used the item in Massachusetts, so Massachusetts gets to tax you on it. Even though the transaction took place out of Massachusetts jurisdiction.

Even more bogus is a new twist to that law this year, whereby if you claim less than whatever limit the gov't is happy with (which varies, depending on your income level), they instead make you pay some flat tax (I think I was hit for $45 this year) to make up for whatever you're "forgetting." I'm stupidly honest, so I actually went back and looked at all my credit card purchases and canceled checks. Being anal and honest, I listed everything...which, taxed/extorted at 5%, came out to be less than $45. So I got slapped with that $45 minimum. Last year (before this little minimum tax caveat), I was similarly stupidly honest, and listed everything. I think I paid about $35. However, I neglected to remember that some stuff was clothing, which doesn't get taxed in Massachusetts. So I actually paid tax on stuff I didn't really have to pay tax for. Just a few bucks difference, but Grrr.

[stomachmonkey]

Originally posted by Noah930
Taxachusetts does this, already. When you file your state income tax, at the end, it asks you to document what you're purchased and haven't paid sales tax on. Internet sales, catalog sales, and stuff from any state that has sales tax less than the 5% MA charges. So if you bought something from New Hampshire (no sales tax), you still have to pay sales tax on it come April 15. Massachusetts calls it a "use tax." You used the item in Massachusetts, so Massachusetts gets to tax you on it. Even though the transaction took place out of Massachusetts jurisdiction.

Even more bogus is a new twist to that law this year, whereby if you claim less than whatever limit the gov't is happy with (which varies, depending on your income level), they instead make you pay some flat tax (I think I was hit for $45 this year) to make up for whatever you're "forgetting." I'm stupidly honest, so I actually went back and looked at all my credit card purchases and canceled checks. Being anal and honest, I listed everything...which, taxed/extorted at 5%, came out to be less than $45. So I got slapped with that $45 minimum. Last year (before this little minimum tax caveat), I was similarly stupidly honest, and listed everything. I think I paid about $35. However, I neglected to remember that some stuff was clothing, which doesn't get taxed in Massachusetts. So I actually paid tax on stuff I didn't really have to pay tax for. Just a few bucks difference, but Grrr.

Well that's a crock o crap. What if I'm a wealthy hermit that does not own a computer and do all my shopping at the corner store? I get banged on my return anyway?

Damn.

[on2wheels52]

It's just too many dollars changing hands to get a percentage, I expect all internet sales to get tagged and some sort of 'equitable' distribution to the states applied.
Jim

[Steve Carlton]

Personally, I'm for it. I don't think it's fair to the local brick & mortars to lose sales to big warehouses who's main advantage is they don't have to charge sales tax.