[RonakG]

Senate passes nationwide online sales tax bill | The Verge

Would this help B&Ms to compete with big box online sellers? Prices from online stores will be little more competitive plus their expense per transaction will increase due to costs associated with this (calculate sales tax for every state, collect and remit it will cost money).

What do you think?

Full text from article -

The US Senate has approved a bill that could one day spell the end of sales tax-free online purchases. The Marketplace Fairness Act of 2013, which the Senate symbolically supported earlier this year and has now passed by a margin of 69 to 27, will give states the authority to collect sales tax from online storefronts, regardless of whether the sellers have a physical presence in the state. Technically, citizens are supposed to estimate and pay internet sales tax on their annual returns, but this is rarely done, leading states to eye Amazon or other sellers as a prime source of uncollected tax revenue.

This bill is a centralized effort to address something states have been working on for years, coming at a time when the online market is changing. Amazon, which could once shut down warehouses to evade state sales tax, has embraced a more fast-paced sales model that requires local facilities; it supports the tax bill. eBay and others, by contrast, have argued that the bill would impose serious costs and inconvenience for small sellers, making them manage taxes for every state that chooses to collect. The bill doesn't apply to businesses that sell less than $1 million a year online, but both Etsy and eBay have said that threshold is too low and worked to push it higher.

"Obama's White House 'strongly supports' the bill"

In order to allay these concerns, the bill's authors adopted the standards set by the Streamlined Sales and Use Tax Agreement (SSUTA), a federal program designed to simplify online or mail-order commerce tax collection. To start collecting online taxes through the bill, states will either need to either have SSUTA membership — at this moment, there are 22 full members and two associate members — or pass legislation that creates a central authority for tax collection, provides free tax software to online sellers, and limits the liability businesses would face if they make mistakes based on bad information from a software provider or state official.

While the bill passed by a wide margin, a small coalition of Republicans and Democrats combined forces to oppose it. This included Senator Ron Wyden (D-OR), a longtime supporter of internet privacy and network neutrality whose state has no sales tax. While Senator Lamar Alexander (R-TN) called the Marketplace Fairness Act a "states' rights bill," other conservatives worried that the bill was effectively a new tax that would "hamper the entrepreneurial spirit" of internet sellers, in the words of Senator Ted Cruz (R-TX).

From here, the Marketplace Fairness Act will head to the House; if it passes there, President Obama is very likely to sign it into law. The White House previously said in a statement (PDF) that it "strongly supports" the bill, which it hopes will "eliminate the unfair advantage currently enjoyed by big out-of-state online companies over local neighborhood-based small businesses."

[Tom S.]

What I think is if this turns into a political debate, it will get closed. Tread lightly folks.

[boriscleto]

evilBay and Etsy will just have to make it easier for there sellers to collect the taxes...

The Bill as written puts the onus on the States to provide the software, it's up to the e-commerce provider to keep their customers (the sellers). evilBay and Etsy stand to lose a lot of customers to Amazon if they don't do this right.

[Rupert]

For small businesses, this could be a real hassle? The paperwork involved can be a nightmare and drive up the cost considerably. Of course, most everyone knew this was coming sooner or later.

[boriscleto]

For small businesses, this could be a real hassle? The paperwork involved can be a nightmare and drive up the cost considerably. Of course, most everyone knew this was coming sooner or later.

In order to allay these concerns, the bill's authors adopted the standards set by the Streamlined Sales and Use Tax Agreement (SSUTA), a federal program designed to simplify online or mail-order commerce tax collection. To start collecting online taxes through the bill, states will either need to either have SSUTA membership — at this moment, there are 22 full members and two associate members — or pass legislation that creates a central authority for tax collection, provides free tax software to online sellers, and limits the liability businesses would face if they make mistakes based on bad information from a software provider or state official.

How many small businesses have online sales of more than $1 million? It's up to the States to provide the free software...

[magkelly]

Amazon is already collecting more and more by way of taxes. Every place they had a warehouse they started collecting. The others will have to follow suit that's all. Eh, it was nice while it lasted like everything else we took for granted with the internet it's changing as I type. The internet used to be a virtual Wild West but it is rapidly becoming sanitized and Disney-fied just like Time Square in NYC. I'm going to miss the sleazy free for all mentality a bit when it's all gone. Like Times Square it was more fun when it was tawdry. :P But I didn't expect it to last forever. Probably won't be giving Amazon as much business once they do start charging taxes across the board though. If I am going to have to pay as much as I do offline with taxes and all I might as well shop here at home.

[Just1MoreDave]

How many small businesses have online sales of more than $1 million? It's up to the States to provide the free software...

For camera gear, it wouldn't be that hard. When I put a little effort into eBay to sell stuff before moving, I qualified as a Powerseller right away. I realize that's well short of a million, but I was just selling $50-100 at a time.

[Parallax]

For small businesses, this could be a real hassle? The paperwork involved can be a nightmare and drive up the cost considerably. Of course, most everyone knew this was coming sooner or later.

There is less labor and expense per dollar of internet sales than per dollar of B&M stores, so if B&M stores can survive the hassle collecting taxes, it shouldn't be a problem for internet retailers.

[Just1MoreDave]

There is less labor and expense per dollar of internet sales than per dollar of B&M stores, so if B&M stores can survive the hassle collecting taxes, it shouldn't be a problem for internet retailers.

The talk is all about collecting the correct tax, which seems like a solvable problem with computers. OK, 9500 different tax districts is a lot, but possible. But then the retailer has to distribute the collected tax to the correct places. Governments get very grumpy when businesses don't return the taxes they collect. One transaction often means two taxes, a state tax and a local one. I expected the first bill would just apply state sales taxes and skip local ones.

[Tom S.]

There is less labor and expense per dollar of internet sales than per dollar of B&M stores, so if B&M stores can survive the hassle collecting taxes, it shouldn't be a problem for internet retailers.

The difference though is B&M stores only have to deal with their own state taxes, where as internet sales would have to deal with 45 states (There are five states that don't have sales taxes). When I had a business, dealing with my own states' sales tax was a real pita. I can't imagine dealing with 45, unless the law makes it simplified. For example, I had to file quarterly for my state. Imagine having to do that 45 times each quarter.

[Rupert]

How many small businesses have online sales of more than $1 million? It's up to the States to provide the free software...

That won't last long. Used to be that you didn't have to report wages paid under $600 using a 1099. So you could pay your yard man without the hassle of keeping records and sending in all those forms. Seen the new rules! Even a five dollar bill requires a 1099. So....you know it's coming, sooner or later.

Regards!

[RonakG]

The difference though is B&M stores only have to deal with their own state taxes, where as internet sales would have to deal with 45 states (There are five states that don't have sales taxes). When I had a business, dealing with my own states' sales tax was a real pita. I can't imagine dealing with 45, unless the law makes it simplified. For example, I had to file quarterly for my state. Imagine having to do that 45 times each quarter.

But then the internet stores have access to 49 different markets as well, don't they? If you want to cater to such a large customer base then you have to deal with added operation overhead as well.

[reeftool]

I live in New York state and have been paying sales tax on just about everything I buy online anyhow so this won't affect me much at all. I live in a rural area so I'm really forced to buy a lot from mail order and online simply because I can't buy that stuff anywhere around here. I actually prefer to shop brick and mortar stores but don't have that option much of the time.

[Tom S.]

But then the internet stores have access to 49 different markets as well, don't they? If you want to cater to such a large customer base then you have to deal with added operation overhead as well.

Isn't that the point? Before this law, they didn't have to deal with this added operational overhead, which BTW, the B&M stores don't have to deal with. Additionally, before the internet, there was mail order and phone order which were also tax free, yet no one said much about them.

Sales tax doesn't mean a lot to me. If I'm looking for a $100 item, it's not worth saving $6 (my state sales tax is .06%), to order online as opposed to buying local. What drives my online purchases are two things: overall cost and availability. When I say over all cost, I'm talking about being able to buy that $100 item for $60 plus $10 shipping as opposed to buying local and paying $106, plus running around looking for it.

[Parallax]

Sales tax doesn't mean a lot to me.

Really? I'll bet you like having paved streets, and firemen and police on the other end of a 911 call though, right?