Internet Sales Tax - double taxation legal in 2014 + solutionsSubmitted by befree on Thu, 05/02/2013 - 05:03
Here is some more details of the Internet Sales Tax/ Marketplace fairness Act.
First off, it is an Internet/Mail/Phone order tax and here is why.
It was not legal for other states to require businesses that do not have a physical presence in a state to collect sales tax. So, congress is making a NEW LAW to make it legal. Also, this new national law is only directed at internet/phone/mailorder companies. IT IS NOT DIRECTED AT ALL COMPANIES THAT SELL MERCHANDISE THAT WILL BE USED IN OTHER STATES. If they were really just trying to enforce state use laws they would extend it to all sales to customers that live in another state.
Here is an paragraph from the above article:
Enactment of S. 1832 to override Quill, authorize state governments to require out-of-state remote sellers to collect sales taxes, and allow SSUTA full member states to have the power to change their sourcing rules from time to time, creates the potential for multiple taxation of the remote sellers in some circumstances, with the same sales transactions taxed by the state of the customer who used the Internet to place the order and the state in which the remote seller is located. Current law prohibits such multiple taxation, but that prohibition expires on November 1, 2014.
While the Internet Sales tax itself didn't make multiple taxation legal it does make it much more probable starting next year. So with some states local/state sales taxes being up to 10% multiply that by 2 and you get one helluva tax!!
And one more paragraph just for your consumption:
These organizations are remarkably transparent about their purpose: They seek enactment of S. 1832 so that states can prefer in-state businesses over out-of-state businesses in the kind of anti-competitive economic discrimination the U.S. Constitution was in part adopted to prevent. As the U.S. Supreme Court has stated, “[p]reservation of local industry by protecting it from the rigors of interstate competition is the hallmark of the economic protectionism that the Commerce Clause prohibits."
So, in the short term my solution for consumers is to move to Oregon, New Hampshire, Montana, or Delaware which are completely devoid of sales taxes. :-)
For businesses that are not too much over $1,000,000 and you have very small margins so that you would lose sales from the increase taxes I suggest splitting your company into smaller entities. Might work best with LLC.
In the long term, my personal opinion is that this is going to pave the way for a National Sales Tax. Oh heck, what's another percent or two?