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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ...  (More)

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Expanding the taxation of online sales

Uploaded: Apr 16, 2018
Tomorrow the Supreme Court will take up a case to overturn a 1990s decision (the Quill case) that prohibited states from collecting sales tax from online sales where the seller does not have a physical presence in the state.

I support allowing states to collect equal sales taxes on all online purchases..

Currently Amazon and some others collect sales tax on all their direct sales but do not collect taxes on sales from other vendors that use the Amazon site.

I support an equal playing field for all online sellers and store retailers.

I think online sales are on a growth path and store outlets will slowly decline but equal taxation is a fairness issue though it will slightly slow but not reverse the trend toward online spending.

25 years ago there may have been an "infant industry" argument for not taxing online sales at all but now this is mature and rapidly growing market segment and does not any longer deserve special treatment versus store retail.

It will be interesting to see what the Supreme Court does.
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Posted by resident, a resident of Downtown North,
on Apr 16, 2018 at 6:21 pm

Years ago, small mail order businesses could make a valid argument that calculating different sales tax rates for different addresses was too difficult or expensive. That argument doesn't fly in the internet era where there are lots of apps and websites that can quickly and easily figure it out for you. This is especially true for businesses that use Amazon and EBay as their storefronts, since those platforms have sales tax calculations built-in.

Posted by musical, a resident of Palo Verde,
on Apr 16, 2018 at 10:02 pm

I can't even keep up with the exact sales tax rate here in Palo Alto. Don't know how I'd keep up with 10,000 different tax jurisdictions across the country if I were a small online retailer. Who all taxes shoes or candy bars or cough drops? Does the Quill case really prohibit California from collecting any online item tax? Apparently not. At this moment I am beating my Form 540 into submission. Line 91 seems to cover the collection of these taxes from the purchaser. Is there a problem with that?

Posted by SteveU, a resident of Barron Park,
on Apr 17, 2018 at 2:08 pm

Jurisdictional sales tax collection and reporting is a nightmare. CA now has over a hundred districts.
I used to run a small (mom and pop), mail order, business with Tax numbers in 3 states (CA,WA,AZ). Reporting alone is a pain. Add in the fact that even the Customer has no idea what TAX DISTRICT they live in (CA had good CITY level charts for the merchant. Others, varied.) So lack of precise Zip based charts is an serious issue.
Next is Reporting-payment. We need a central report/remit location IF your business does not have a presence. Similar to the IFTA (apportioned fuel tax truckers deal with). Third, The rate, when no presence is the State rate (just 50 districts to track, minus your local states) .
Got to be simple for small business

Posted by tom, a resident of Stierlin Estates,
on Apr 20, 2018 at 2:07 pm

If you have to pay for shipping when buying from online stores, are you going to have to pay shipping when you buy from a brick and mortar store? Level playing field.

Posted by Alex M, a resident of Willowgate,
on Apr 20, 2018 at 4:17 pm

With online ordering, I pay tax AND shipping. With brick and mortar, I just pay tax -- the shipping is almost negligible because the goods are shipped in bulk to one location.

The reason ordering online sometimes costs less has nothing to do with tax, really, but more to do with reduced payroll and property expenses.

The key is that ordering online SOMETIMES costs less. Sometimes it's better to buy from an actual shop near me. I buy stuff from Costco and Home Depot and Trader Joe's because I find it more economical or convenient than ordering the same things online. Amazon isn't always the low-price leader.

The real problem, I think, is the fact that local jurisdictions are allowed to levy sales taxes. Most countries I know of have a national sales tax, not taxes that vary by locality.

Posted by musical, a resident of Palo Verde,
on Apr 20, 2018 at 9:55 pm

So how's our newly-proposed "sugar" tax work into all this?

Posted by brick and mortah, a resident of Embarcadero Oaks/Leland,
on Apr 21, 2018 at 11:53 am

When I shop brick and mortar, I *do* pay shipping - with my gas, auto wear and tear, and most of all - time.

And I gotta tell ya, loading and unloading all that brick and mortar is hard work!

Jes' sayin'...

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