Speaker of the House John Boehner kills Internet sales tax bill

“Legislation in the U.S. Congress that would allow states to collect sales tax on Internet sales will not pass before the end of the year because of opposition from Speaker of the House John Boehner,” Grant Gross reports for PCWorld. “Boehner’s opposition to the Main Street Fairness Act means the bill, which would allow states and local governments to collect sales taxes on Internet sales by businesses located outside their borders, will not pass during this session of Congress.”

“Boehner has long opposed efforts to expand Internet sales taxes, said spokesman Kevin Smith. ‘The speaker has made clear in the past he has significant concerns about the bill, and it won’t move forward this year,’ Smith said by email Tuesday,” Gross reports. “Opponents of the bill say it would amount to a new tax on Internet shoppers, although many small businesses would be exempt from collecting taxes. A new tax collection system, covering potentially thousands of U.S. taxing jurisdictions, would also be costly for Internet sellers to set up, critics say. Supporters of the legislation say current tax collection rules prohibiting out-of-state Internet sales taxes are unfair to brick-and-mortar retailers that are required to charge sales tax. Instead of the sales tax bill, Boehner called on the House and Senate to work together to extend a moratorium on Internet access and transit taxes, which expires in mid-December.”

“Generation Opportunity, a libertarian group aimed at so-called millennial young U.S. residents, praised Boehner for killing the sales tax measure. The group has asked members to contact lawmakers in opposition of the Marketplace Fairness Act,” Gross reports. “The Internet sales tax is ‘Washington at its worst: a measure pushed by corporate lobbyists that would disproportionately harm millennials, who do much of their shopping online and use the web to create their own jobs,’ the group said in a statement.”

Read more in the full article here.

53 Comments

  1. Good. The idea of state and local (municipal) sales taxes resulting in effectively thousands of different tax zones is ludicrous even for in-person sales, and jaw-droppingly, head-smackingly stupid for online sales crossing many lines.

      1. I actually think that there should be a sales tax, as I would like local merchants to have a somewhat level playing field.

        However, the logistical problems that this creates for small internet retailers are somewhat insurmountable. All it would do is force small internet shippers into the arms giant web processors like Amazon marketplace and ebay who can handle the tax payment and compliance in every jurisdiction.

        1. Except that online purchases frequently include shipping costs. I think the trade off of shipping costs versus state tax already contributes to leveling the playing field.

        2. Ah the software available to calculate the tax is available for $199, thus not a burden. Anyone who started their own Web business in a state that requires sales tax, like California, already has the capability installed. It’s just a flip of a switch.

        3. The logistical problem is grotesquely overstated. There are several companies that provide APIs to automatically provide your Web shopping cart with the correct tax. It is a simple procedure, probably cheaper and easier to set up than your contract with your shipping provider. Streamlinedsalestax.org provides the back end for many of them.

      2. State tax
        County Tax
        City Tax

        All of which would be on the burden of the online retailer to constantly update the tax records, which would mean possibly filing a return in every state they deal with..

        Oh, and you have to file every quarter.

        Did you know that if you are a brick and mortar store that delivers a product TO a buyer, there is one state tax rate, but if they come TO you to pick it up.. there is another tax rate, oh and if you ship it IN STATE to them.. yet another tax rate… Now add in Tax from internet sales.

        Clusterf**k.

          1. it’s not as simple as “software”

            The different tax rates for how things are sold.. my mothers CPA didn’t even know that and his “software” didn’t mention it either. She got Audited this year by the state, thats how I know.

        1. Agreed. Small business owners already have a hundred obstacles to navigate to stay in compliance with rules, regs and taxes. This is one more way to deter small business and to create more penalties and fears. Why should the small business owner now be forced to serve as tax collector for every state, county and city in the country that has a sales tax? This is nothing but a guaranteed full time job program for more accountants.

          1. Exactly.
            Something I forgot to mention in the previous posts, small business.

            Lets say it does go through.
            Large companies like Amazon, etc. Won’t have that much of a problem with it.
            Small start ups.. will be hit hard.

      3. kaplanmike- You’ve obviously never run a business where you had to collect sales tax. To start with, collecting sales tax by definition means sending that collected sales tax to the appropriate taxing authority. Most of which, if not all, require a seller to be registered. Some with a cost of registration.
        Second is the issue pf paying those sales taxes. My home state has flip-flopped about have a dozen times in the last 12 years over whether I should file my sales tax returns quarterly or annually. And I’m definitely considered a “small time business”- my *gross* sales typically fall under $20,000 a year. Now imagine that an internet sales tax law is passed. How many thousands of online businesses will now need to register in 49 additional states to collect sales tax? Do you suppose that all the States are prepared to handle such an influx of registrations? And do you think that all those online sellers would have the resources to file dozens, if not hundreds, of sales tax returns each year? You would see costs rise not only to cover the collected sales tax, but to cover the additional burden that online sellers would face in filing so many sales tax returns. A “main street” store only has to collect sale taxes for it’s location. It does not have to determine where the buyer lives or what tax jurisdictions the buyer may be subject to. Nor does it need to file sales tax returns with potentially all of the states.
        Finally, there’s the issue of determining just what exactly the tax rate is. For example, my street address lists a town name, yet my home is not physically located within that town’s boundaries. If the local town were to enact a sales tax, should I be subject to it for an online purchase? And how would all the online sellers out there know what the exact tax districts my house is located in?

        1. If only our officials would put half as much effort into figuring out how to lower our tax burdens and simply our tax code, as we have in this one commentary area!!!

          Unfortunately, the complicated tax code exists due to politicians… One cut here for this group, a special incentive for these people, demonize other folks and make others pay for this over here, and a loophole over there, all in the name of gathering up votes to stay in power. Makes me ill.

          Oh wait, this be an Apple site – Go Apple!

          1. No, the complicated corporate tax code exists because of businesses. They are the ones that paid good money for the loopholes and carve-outs. If we simplified the tax system, but eliminated loopholes, about half of the companies would end up paying more tax. So they will fight like the ten thousand horned demons of hell to stop tax reform.

        2. All of these problems are covered with existing systems. Look up the Streamlined Sales Tax organization. Software linked to them automates the process of collecting and paying taxes. It is relatively painless and indemnifies the company from State indecisiveness.

      4. It’s not hard… if sales tax only went as far as state-level. But there’s literally over 2600 separate local use/sales tax zones in Texas alone, and I doubt they line up nicely with zip codes!

        Clearly my “thousands of different tax zones” was seriously lowballed…

        A POS terminal in a retail store only needs to be set for the state and local tax zone it’s in.

        An online purchasing system having to manage tens (hundreds?) of thousands of tax zones is doable, but then your system must keep track of all the far off places you have to ship to, and anytime their sales tax rate changes. I’m sure there’ll be an organization that’ll sell a pricey subscription to manage those updates for you.

        Other countries either have a single national sales tax (e.g. Australia), or have just national and state/province level (e.g. Canada). At least in these countries sales tax manageable even by small business.

      5. The hard part is paying sales tax in fifty different states. Many small business owners have a hard enough time with just their own states tax portal, imagine having to use every single state’s web portal each month. Most states require you to file even if you had no taxable sales in their state that month and they charge an annual fee for your vender’s license. With approximately 22 weekdays per month, it is very possible for a “successful” small business owner to have to spend hours each day having to pay taxes instead of running his/her business.

        This sounds like a recipe for disaster to me. How could anybody afford to create a startup?

    1. Businesses currently have to charge sales tax in states where they actually are located. Amazon has locations in every state.

      Some businesses charge state taxes in one state. Others 2 or 3. Really big businesses with locations everywhere charge in al 50 states.

  2. While I am personally pleased this bill won’t become law, I don’t understand the reasoning that this is “a measure pushed by corporate lobbyists that would disproportionately harm millennials, who do much of their shopping online and use the web to create their own jobs.”

    I thought most corporations were against this. I don’t know of many millennials, who use the web to create their own jobs, unless they’re selling stuff on eBay. And that’s not a huge number. So while I like the outcome, the reason Boehner offered sounds like the same old Washington double speak to me.

    1. Actually, probably more pressure from state and local governments then businesses on this matter.

      State’s are the ones losing billions but many (I think 27) have joined Nation Streamline Sales and Use Tax consortium to be able to collect tax based on where the product is delivered or where the service is performed.

      So, states are already changing their laws to collect tax on internet sales. If the fed’s were to pass a tax then those states would need to change their laws and is some cases lose money because it would be a lower tax. Many cities would lose billions because the city’s would also receive less or get left out completely.

      Just saying, it’s a complicated issue and I don’t see how the fed’s getting involved will help.

      1. Several states have added an extra tax on income to cover “lost sales taxes” on internet purchases. The first one I found via Duck-Duck-Go was NC: they have a “Use Tax” levied on income. And the state double dips as Amazon has to collect sales tax on items sold to NC residents.

        1. See, it’s a complicated mess and if the Fed’s were to add any tax then it would be addition to what each state has already imposed.

          For those who don’t understand and just want to say, “charged an internet tax” really don’t get that each state controls their own tax system and they are all very different.

          So I’m guessing whoever was pushing for it at the federal level was by no means pushing it to favor business but to add another tax for the federal coffers. The public and State and Local Governments were going to get screwed.

          But I’m sure they were using some kind of marketing bullshit like, “it’s only fair, tax big corp or tax the rich” in their punch line so the masses would vote in favor of it.

          1. My understanding is that the Federal bill would replace the patchwork of the State’s bills and not just be added on top of it. They would likely utilize the Streamlined system and just make it national.

        1. yep.
          I like 20 miles from a state that has Gas prices right now $.32 a gallon less than here. Guess where everyone goes for gas?
          And food.. (no food tax) and big ticket items.. (2.8% lower tax rate)

    1. Just move across the river to Washington State and you’ll learn all about sale’s tax. Along with every other freak’n tax they can come up with. Highest gas tax, Liquor tax, sin tax………..

      You know what they say about Washington State don’t you? “They’ve never found a tax they didn’t like”. Stay in Oregon!

      1. Last I heard, WA didn’t have a personal income tax. So every other transaction is taxed, right? It all works out about the same. Seems like a better system to me to pay for what you buy rather than being raped for working too many hours.

  3. Why is it that tax discussions are always slanted toward increasing taxes or not. What about creating a more level playing field by reducing the sales tax burden on the brick and mortar guys at the local level. Just sayin’.

  4. When the internet commerce was new there was an argument to hold of on internet sales taxes. Today the internet is far more powerful than bricks & mortar stores and the sales taxes paid for physical stores is one of the main reasons for that inequity.

    After spending almost 20 years in the retail industry and then 20 years servicing that industry I am a supporter of the physical stores, especially those owned by individuals or families. Maybe that is why they call it the Main Street Fairness Bill.

    As for Boehner, maybe his decision was based on who made the greater political contributions. We are living in an era when politics is for sale more than ever and it shows with this bill.

    1. Suuuuure Howie. Everyone who is poor is just choosing to live like that. E.g. all the homeless, mentally fucked up vets who risked their lives to defend your world. They’re just losers. And all the people working two jobs at low wages to try and provide enough for their families. Losers just choosing not to get a better job. And people with mental problems. Yeh, that’s right. Losers choosing to be autistic, schizophrenic, etc. And all the people who CHOSE to have industrial accidents that crippled them. And on. And on.

      1. Don’t start with that BS! I’m a compassionate person, and I’m all for helping people who are actually poor, but I’m not for supporting generations of losers who refuse to see in themselves anything more than a dependent who has no choice but to live off tax payer dollars. The TRUTH is that a lot of these people are poor because of their own laziness. And because of the Democrat Party! Your dumb ass example of people who have mental disorders shows that you didn’t understand my point at all, and I won’t bother to try explaining to you because you’re clearly a dumb ass.

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