Yes, the "internet sales tax bill" (marketplace fairness act) passed the Senate this week. It has White House support, so only needs to pass the House to become law.
The post implies that there is some additional "Internet only" tax above and beyond regular sales tax. This is the confusion, I believe. The Marketplace fairness act is not imposing extra taxes on top of normal sales tax. It is simply removing the exemption that mail order and internet sales currently enjoy. Jeff Seems to be OK with the idea of Canada's goods and services tax - I'm not sure why he thinks sales tax is so different.
My accountant would not be able to handle a XX-fold increase in the number of tax codes, forms and filings he has to handle per-client. We're going to have to train more accountants.
I have to make an appointment to see my accountant at least 1-2 months in advance if it's anywhere near tax time (late January-May). He's definitely no time to take on more forms per client, let alone advise me properly which states will tax which products at what rates.
I run the online store for my father's retail shop, with several hundred SKUs. We sell fancy health water bottles for example -- some states this is not taxed, some it is, some it is depending on bottle size and whether it meets their definition of water or some other kind of beverage. Someone will have to reconcile every SKU against every state's sales tax classification changes every 90 days. That's not something any accountant does for small businesses operating in a single state right now.
We'll obviously need one (where today this accountant meets all our needs, and has been a family friend for decades), but a small business accountant that can do what's going to be required doesn't exist yet. Only national chains have had to worry about such things.
Again, and respectfully, I don't think handling sales tax filings for a small business is a huge hurdle compared to some of the craziness that even small business accountants are routinely called on to do.
Your point upthread was "no small business person can handle filings to 50 states". I'll stipulate that! My response is just, people with real businesses usually don't (and shouldn't) DIY their taxes anyways.
They dont? And shouldnt? Why not? The point someone here is trying to make is that what was once simple is potentially going to become inordinately difficult. Not impossible but very difficult.
And by who's determination is my business "not real" if I do my own taxes??? At least I do my taxes more accurately than Geithner does or did AND HE got to sign our dollar bills! Was his business "not real"?
Once again, thanks to GovCo, life is getting worse, harder not easier, asinine not smart. There is absolutely NO THOUGHT WHATSOEVER put into anything coming from DC lately. None.
What exactly is your complaint here? Are you opposed to sales taxes on principle? If not, what's your complaint? Properly accounting for sales and business taxes, as well as following other laws, in a jurisdiction in which you do business is a basic cost of doing business. The U.S. just happens to be a country of 50 sovereign jurisdictions, each with autonomy in how they structure their sales and business taxes. Does this make accounting for taxes complicated? Sure. It makes lots of things complicated. But we did it on purpose. Why should Congress insulate you from that reality?
The internet certainly makes it easier to say take orders from people in many different jurisdictions at once, but why should you get to avoid the other business realities of operating in multiple jurisdictions just because you're an internet business? You might see everyone as just an IP address, but in the real world, groups of those IP addresses are parts of sovereign entities called state and national governments, and each of those groups are governed by different laws. Just being an internet business shouldn't insulate you from the reality that exists once you break through the IP address abstraction.
> I don't have time to read 50 states' tax codes, file 50 tax returns and potentially be audited 50 times a year. What small business does?
If, even with the streamlining and support required for states to opt-in to the provisions of the MFA, you can't do that, you can just choose not to sell into those states. Why should remote sellers be favored over local sellers by not being required to make that choice about where they are willing to do business?
This is a false equivalency. Opening a retail store in a state is not the same as opening a website people in that state can access. There's no conscious decision, or deployment of capital to that state. My website does not use any of the public resources of infrastructure of other states. There's no legal or practical justification for having me taxed by those states.
Laws should also consider practical aspects like whether they're going to dampen the economy, restrain commerce and favor corporations over small businesses. It may be equivalent in your academic mind, but it's not equivalent to the people who will have to do 50 times more work just to continue running their single-location family-owned business as they have for the past 10-20 years.
> Opening a retail store in a state is not the same as opening a website people in that state can access. There's no conscious decision, or deployment of capital to that state.
Yes, its much more expensive to open a retail store, and involves some contribution to the local economy to operate it, so the two are not equivalent.
On the other hand, they are similar in that each is a conscious decision to conduct business with people in the State, and there is no rational reason to favor remote business.
Neither should be favored. If a customer that lives in each of the 50 states walks into our retail store, we still only have to collect a single sales tax and remit it to a single entity. If a customer that lives in each of the 50 states logs into our online store, we have to collect 50 sales taxes and remit them to 50 entities. That's a law that favors retail store owners over online sellers. A law with the same practical effects could be written that favors neither by having a single federally-operated sales tax that's distributed to the states according to the relative sales volume to residents of those states.
It's not make $1mm, it's sell $1mm. At a 3-5% net profit, that's $30-50k/year before taxes, or so small you can't even hire a first employee yet. And that's the category the online store for my father's retail shop is in.
Its not either. Its have over $1 million in remote sales in the prior year.
> At a 3-5% net profit, that's $30-50k/year before taxes, or so small you can't even hire a first employee yet.
Well, since net profit is after operating expenses (including labor costs), that's only "so small you can't even hire a first employee yet" if you expect the net value produced by that employee to be negative 30-50k per annum, in which case you it would be economically irrational to hire the employee even if you could afford it while remaining profitable. (While the numbers change, the general observation is true for any non-negative net profit amount: if you expect a positive return from an employee, you can "afford" to hire them -- and expect to be profitable afterwards -- anytime you have either a non-negative net profit, or a negative net profit that is smaller than the expected net value provided by the employee.)
I'm not comfortable giving out too many details about his store without permission, but here's a list of 83 industries that average less than 5% net margin: http://biz.yahoo.com/p/sum_qpmu.html
A summary: http://www.dangrossman.info/2013/04/24/what-startups-need-to...