Sales Tax on Internet Buying

[Gary Sisco]

From today's local rag:

Voluntary program begins Internet sales tax for Vermonters

Published: Sunday, November 5, 2006
By Dan McLean
Free Press Staff Writer

The days of tax-free Internet shopping are fading.

Starting Jan. 1, 2007, state residents will pay Vermont sales tax on Internet purchases if the transaction is made with one of the 1,047 companies that have signed on to the "streamlined sales tax project," said Michael Wasser, a policy analyst for the Vermont Department of Taxes.

The tax project adds local and state sales taxes to the cost of the Internet sale -- assuming the shopper lives in one of the 21 states participating in the program.

"Internet sales continue to grow year to year. ... It's creating a problem because our tax base is eroding over time," Wasser said.

The voluntary program is projected to have a 15 percent compliance rate from online retailers and send $3.1 million to Vermont's coffers in fiscal year 2007, said Sara Teachout, a fiscal analyst with the Legislative Joint Fiscal Office. Full compliance would generate a projected $22.5 million, she said.

Aside from raising revenue for the state, the tax project is designed to "level the playing field" for local stores that are competing with Internet retailers that "have an automatic 6 percent advantage" because they are not charging Vermont sales tax, Wasser said.

Vermonters who are making an online purchase with a participating company will be charged Vermont's 6 percent sales tax, said Wasser. Shoppers who live in Burlington, Manchester, Stratton and Williston will also have to pay the 1 percent local option tax.

Vermonters are already supposed to pay sales tax on items purchased online, through a line item on the state income tax form, but the compliance rate is "very low," Wasser said.

Companies that voluntarily sign on to the program by Dec. 31, 2007, are granted amnesty from any Vermont taxes they may owe from past tax liability, he said.

The states participating in the program are Arkansas, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, West Virginia and Wyoming.

*************

That'd be the day.

Actually, it's been the case for decades where I live that sales tax is due on *any* purchase, wherever it took place. You're supposed to include it yourself in your income and tax documentation. Right. I'd bet anything that that line is the most commonly blank line on any tax form.

[tippy]

New York started this two years ago - you can either itemize or pay a blanket tax based on your income.

[Gary Sisco]

I'd leave it blank like I have all along here.

We pay enough as it is. I'm not volunteering.

My brother lived on Nantucket a long time, building houses for the rich and famous. Everyone of the crew got paid in cash. The IRS finally busted the boss and held him up for a million in back taxes.

That night, while the crew was out drinking, my brother pipes up with, "You know, now that they have the boss, they also have us." So, he turned himself in to the IRS. IRS guy says, well, tell me how much you got paid. My brother says, No way. You decide what you think I owe you and we'll work out a payment plan.

So they did. He had to work on the island six years or so longer than he'd wanted to (higher wages out there than he could get anywhere else) to pay them off, which he eventually did.

One of those years, he made 50 large in cash. Mofos were tipping waitrons a hundred bucks at dinner.

[Gary Sisco]

One of my favorite American folk songs comes from the Depression era, and has a chorus:

One cent, two cents,
three cents in tax,
that's the way my money goes a'spendin',
but take off my hat
and hit me with a bat
if they put a sales tax on the women.

[Sandi22]

We don't have a sales tax in Oregon.

A 2nd cousin contacted me wanting me to say she and her husband were living with us when they bought their motor home so they wouldn't have to pay the taxes for it. So I said sure, but not really wanting to do it after having thought about it for about 3 minutes. All of my relatives, my other cousins and my mother and father just had a fit, contacting me and telling me if she called, to tell her no, and when I told them I had already told my sister to tell them OK, they began to tell me it was just too dumb of me for words. They had asked another cousin who lives here in Oregon as well and she of course had said no, so then they contacted me. I ended up telling them no, and my sister had a fit about it, thinking I was just being hard headed and hard hearted. But I didn't let them do it, and two weeks later the news papers and news stations were full of how the FBI had ongoing investigations of everyone who had done this very thing. We would have been in a mess, it would have cost us a bundle in lost wages, lost time, and perhaps even attorney fees. But other than this one close call and me being so dumb about it in the beginning I really do like the fact that there are no sales taxes to pay in Oregon, as not having to figure out just what something will end up costing once the tax is tacked on when purchasing anything at all is great.

We don't seem to have any less services, than say California, which does have a sales tax. At least it's livable here. We aren't really suffering due to not having one.

[Ron Thorne]

Alaska does not have a statewide sales tax. That's left up to each borough to decide on their own. It's odd, because we can drive 40 miles north or 120 miles south and be faced with a sales tax.

So, we can even make online purchases from The Vermont Country Store and not pay sales tax, Gary.

Many online stores find other ways to lose Alaskan's business . . . charging stupid shipping rates while failing to comprehend that we're on the same continent with 48 other states. I've actually had to explain to Customer Service reps that Alaska is part of the North American continent. I'm not kidding.

[Sandi22]

Shipping rates since 9/11 have risen quite a bit haven't they? I know it seems we're paying more and more to mail any kind of package. When we had our shop we tacked onto each item, $1.50 to cover our phone calls and shipping, and then others started tacking on even more like $2.95 for each small item sold, things like blouses, swim suits etc. Things would come in with several items to a box, at commercial rates I believe, and for one box of lightweight things it would run, in the beginning, about $8.40 per box, and the boxes were about a yard long and about 4 inches thick so there weren't a lot of things in them as a rule. So that charge wasn't over charging at all.
I know that some business have a super high mark up, and part of that is because of location. We carried a lot of True Grit, a fleece and other expensive fabric clothing line and a woman in the town we were located in went to a ski resort in Colorado and bought several clothing items, came home & finally decided to see what it was we were selling, ( she lived a half block away), she walked over, came in and saw our prices on the True Grit and began to cry. She had spent about 2 or three thousand dollars in Colorado, the price being three times what we were asking. There's no way shipping was the cause for that, but perhaps the rent on the shop was the culprit. Most malls charge a huge percentage of your sales, some as high as 30% we've been told, so along with electricity, water, trash pickup, insurance and cleaning, the overhead is horrendous. Then there's the lot upkeep, sweeping, paving, tree trimming, and on and on it goes. It's almost impossible for the small business to make it in this day and age. We finally just got out of it. Too much of "feast or famine."

[Gary Sisco]

Things cost what they cost, is the way I look at it. If you don't pay this tax, you pay the other. A friend was here from Portland last spring and while I was grousing about nearly three dollar gasoline, he was thinking it cheap because he'd been paying three bucks.

Taxing the internet is a thorny question, though. Where does the sale take place?

Doubtless they will one day. They'll tax us on oxygen use eventually. Put a microchip in our lungs or something. Parking meters in the driveway. Who knows.

[patricia]

Originally Posted by Gary Sisco

Things cost what they cost, is the way I look at it. If you don't pay this tax, you pay the other. A friend was here from Portland last spring and while I was grousing about nearly three dollar gasoline, he was thinking it cheap because he'd been paying three bucks.

Taxing the internet is a thorny question, though. Where does the sale take place?

Doubtless they will one day. They'll tax us on oxygen use eventually. Put a microchip in our lungs or something. Parking meters in the driveway. Who knows.

A flat tax on sex is just over the horizon, if the politicians can figure out a way to make it fair.
Imagine all the people who would claim to be celibate if it was a user-based tax??
So, a flat tax would assume everyone is doing something, from time to time.
Nobody would be exempt.
I remember my late father grousing about taxes deacades ago.
He said that when he first came to Canada from Norway, as a nineteen-year-old, he paid $5 in taxes and, as he put it, "they managed to run the country, and wasted my $5, just like they do now with much more."

[claude]

Originally Posted by Gary Sisco

Taxing the internet is a thorny question, though. Where does the sale take place?

Here in Canada (where we're pretty good at taxing the shit out of everything) sales taxes are based on the "place of supply" which means the place to which the product is delivered. So here in NB, I pay 14% sales tax on everything I have delivered (they catch it at customs when it comes into the country). So thank god for the music distributors who mark CDs as gifts!!
For stuff that comes from other provinces, the retailers are required to add the tax on when they invoice.

[Gary Sisco]

What've I been saying all along about those hordes to the north? Here, you see? You see? Next thing you know they'll force us to install pay toilets in our own homes.

[patricia]

Originally Posted by Gary Sisco

What've I been saying all along about those hordes to the north? Here, you see? You see? Next thing you know they'll force us to install pay toilets in our own homes.

Not yet, Gary.
But there still is a brisk smuggling operation from here, to our southern hemisphere friends, of high-flow toilets.
Flushing twice.........or so, is annoying, even if it does conserve water.

[Jazzzoline]

Originally Posted by Gary Sisco

Things cost what they cost, is the way I look at it. If you don't pay this tax, you pay the other. A friend was here from Portland last spring and while I was grousing about nearly three dollar gasoline, he was thinking it cheap because he'd been paying three bucks.

Taxing the internet is a thorny question, though. Where does the sale take place?

Doubtless they will one day. They'll tax us on oxygen use eventually. Put a microchip in our lungs or something. Parking meters in the driveway. Who knows.

Here, they have every restaurant install a new cash register that sends data, using internet solutions, everytime a meal is sold.
"Taximètres" already is in their plan. Something they install in every taxi that sends data via communication for every transport.