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What's with the name?

Allow us to explain.

No. No no no no no no no. no.

Goodbye, Tax-Free Online Shopping


Gone are the sweet, sweet days of tax-free online shopping. At least, they might be soon, if an upcoming bill in Congress that would make sales tax standard online passes. Now might be a good time to check out those bookmarked shopping carts.

According to ABC News, the introduction of a bill requiring that sales tax be collected on online purchases stems from both a dire need to increase state revenue and the fact that tax-free online shopping often places brick-and-mortar establishments in a very bad economic position. After all, why buy directly from a physical store when you can get it on Amazon cheaper?

Online stores have been able to skirt charging sales tax due to a 1992 Supreme Court ruling that held that stores without a physical presence in the state where the customer lives do not have to include sales tax. Between the lower price points and the ease of internet-based transactions (deep down we all know that we’re only a few clicks away from blowing our entire paycheck on comics), small brick-and-mortar stores have suffered immensely, while online shopping has flourished. Technically, you are supposed to report online purchases when you file your state taxes and pay the sales tax there, but I’d venture that most people don’t know that, forget to do so, or you know, just choose not to.

A group of heavy-hitting websites that include eBay, Overstock, and Facebook have teamed up in protest of the proposed bill. Amazon, on the other hand, has offered support of the bill after battling it out with states like Texas, that demanded they levy sales tax because their distribution centers are located in the state. Traditional retailers with a web presence and brick-and-mortars, such as Barnes & Nobel, Wal-Mart, and Target also support the bill.

While it’s definitely the law to pay sales tax, and it sort of sucks that small businesses have been hurt so severely by the practice of tax-free online shopping, we’re still pretty sad we won’t be able to relish in that mischievous glee when we see something in a store we just know we can get cheaper online. So, here’s to you, late night tax-free shopping. I shall miss you dearly, though I’m sure my impulsive pocketbook won’t.

(via ABC News.)

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  • http://twitter.com/loerwyn Kathryn

    This seriously needs to happen, both in the US (where this’ll apply) and the UK.

    The amount of tax that Amazon, etc. are not paying is absolutely staggering.

  • http://www.facebook.com/1shewolf JoAnna Luffman

    What about small online stores? Do you know how damn expensive it is to start a physical business? Starting online allows us to start up on less than nothing, and build up the money to get a brick-and-mortar location.

    This means our prices will go up. We’ve already had our 2nd loss ever because of this shit economy, and now we will have to charge more? 

  • Kaarel Jakobson

     Um, sales tax isn’t paid by corporations, but by consumers. Unless I’ve misunderstood the concept completely?

  • Anonymous

    Noooooooooo!

    but really, its what 8 dollars per 100? that aint really so cheap specially when you can get a coupon to cover the diffrence usually.

  • http://www.facebook.com/1shewolf JoAnna Luffman

    Yes and no. When I sell in my state, I have to pay sales tax. I don’t raise prices for people here, so it’s coming out of my profit. When you go to a physical location, tax is added to the price, so you pay for it, but that also means you might not buy that extra item because you don’t want to spend more than say, $40 total. Which means a lost sale. 

  • http://www.facebook.com/1shewolf JoAnna Luffman

    So my post was eaten by the internet. Let me try again.

    1) If my distributor has to pay sales tax on what I buy to resell, then I will be charging not 8%, but 16% more to cover the new costs. 

    2) This means a lot more paperwork, since I will be charging varying sales tax rates. NC has a 7%, CA has a 7.25%, while NY has a base of 4%. Then, different counties can charge more. This link is just NY: 
    http://ny.rand.org/stats/govtfin/salestax.html 
    Now I have to figure out what the sales tax for every county and/or city in the US is, and pay that in, too? I’m either going to end up overcharging some people (7.25% more in price is higher than NC frex) and undercharging others (NYC being 8.875%). This will eat into already low profits.

  • Julianne McCartney

    JUST LET US HAVE THIS ONE THING

  • Anonymous

    I have to agree with Kathryn, this is a good move and long overdue. There’s no good reason why online retailers should be able to escape charging sales tax; it allows them to undermine traditional brick-and-mortar stores and drive them out of business. AND deprives the government of much-needed tax revenue.

  • Anonymous

    I hadnt considered resellers. I was just looking at it breifly as a consumer. Excellent points!

  • Marie Roe

    What does this mean for residents of Oregon, where there is no sales tax?

  • http://www.facebook.com/1shewolf JoAnna Luffman

    Competition can’t be allowed. Especially when you don’t have a brick-and-mortar store near you, since you’re a niche business. Or the product you are interested in doesn’t exist in your area. 

  • http://twitter.com/AmyDamy AmyDamy

    If you apply for a resellers certificate you don’t have to pay the sales tax from your supplier. 

  • http://www.facebook.com/1shewolf JoAnna Luffman

    Rereading this made me realize something else- how do you think ebay will get the money for sales tax? Fees to people that use ebay. 

    Hope none of you that think this is brilliant ever use ebay, or plan to. Or Etsy, or any other place where handmade items get sold online. Because those people that sew, or knit, or whatever aren’t megacorps killing mom-and-pops. They ARE the goddamn mom-and-pop stores you people think you’re championing.

  • http://pulse.yahoo.com/_BJ65LLJI6OOKT7NR4SLMWO2XZA Dazee

    I’m fine with it. I’m already required to calculate online orders I didn’t pay taxes on and pay for them when I do my taxes… this was a headache for me. This way, I’ll know I paid them and don’t have to go through my order history and emails to figure it out.

  • http://pulse.yahoo.com/_BJ65LLJI6OOKT7NR4SLMWO2XZA Dazee

    I’m fine with it. I’m already required to calculate online orders I didn’t pay taxes on and pay for them when I do my taxes… this was a headache for me. This way, I’ll know I paid them and don’t have to go through my order history and emails to figure it out.

  • http://twitter.com/EmberDione Kim Pittman

     Nothing in that case.

  • SickOfTheStupid

    Nothing boosts the economy like a tax……………….

  • http://twitter.com/briecs Brianna Sheldon

    For those of us in PA, we’ve been supposed to be reporting it on our taxes for ages now. 

  • Anonymous

    It means I just seriously considered moving to Oregon. :)

  • Anonymous

    “Technically, you are supposed to report online purchases when you file your state taxes and pay the sales tax there, but I’d venture that most people don’t know that, forget to do so, or you know, just choose not to.”

    That’s news to me. Does that apply to all states or has my tax-preparer been leaving out a critical piece of information? I live in Virginia and I’ve never been asked to provide online shopping receipts. 
    That being said, I definitely pay an online tax for some online purchases like clothing (I wish I could think of an exact site that taxes.) So, does that not apply to your state of residence but just where your purchase is originating from?
    I guess when it comes down to it, I don’t mind. I think the majority of my online purchases are books and very rarely, clothes. It’ll most likely remain cheaper, even with a tax and S&H. I also don’t mind providing taxes because it goes to things I want my state to provide…like paved roads and new textbooks. Just my little opinion.

  • John Wao

    I live in Washington so I already pay sales tax for most of my online purchase so no big change for me.

  • Anonymous

    The consumer is always responsible for the tax. If Congress passes this law then it’s up to the mom-and-pop stores, Etsy, Ebay, Amazon, etc to adjust their rates accordingly to cover the required tax- if you choose to not tax people in-state, that’s all on you and it’s not the government’s fault you’re cutting in to your own profit and giving your in-state neighbors a deal. If, like you mentioned above, the person has a set dollar amount to send and a tax sends it over the edge and then they go off and find the product elsewhere, then it would be up to the seller to provide more competitive pricing. I’m not saying that’s a good thing, I’m saying that’s how the world works in the majority of other businesses. I work for a hotel. When my rates are too high (and our occupancy tax rate is 14% in my town- much higher then the town right next door) then we adjust to fit our competition. I’ve been at this job for 3 years and I don’t think anyone has ever said no to a room because of the tax.

    We’re also not asking the right questions here. What is the “online” tax? Because normal sales tax in VA (for other than a hotel) is 5%. That’s barely anything. Does anyone even consider the sales tax when they go to the register? Tax is such a normal thing I doubt this will impact online store purchasing.

    Also, Ebay is not going to start charging people to use Ebay. If you CHOOSE to purchase a product on ebay, the tax will be added to your total and you will pay the full amount to the seller…who will then be responsible for sending the sales tax portion to the state. I think a lot of people are overreacting.

  • http://twitter.com/OldSKoolFool Old SKool Fool

    Does the government really need to steal more than the usual 30% of our income?

  • http://twitter.com/OldSKoolFool Old SKool Fool

    Umm no, it doesn’t work like that. If you don’t report your sales, then you lose the re-seller license.

  • http://twitter.com/MrMinion Mr. Minion

    Correct me if I’m wrong, but the cost of living in rural areas is usually lower. The higher gas consumption notwithstanding the price for food and other basic is so much lower that it’s a net positive. I don’t think a move to close a tax loophole can thus be considered a “tax on rural living”.

  • http://twitter.com/MrMinion Mr. Minion

    I don’t know how small your business is, but there’s usually an exemption for very small shops, be it online or brick and mortar. Have you considered going to a accountant?

  • http://www.facebook.com/1shewolf JoAnna Luffman

    Yet I am still having to pay $3.30 a gallon to go anywhere. Just to get to a grocery store it’s going to be at least a 30 mile round trip for me, if I actually want to get something other than staples or god forbid, non-grocery, it’s nearly double that. 

    Being able to order online saves me both the tax and gas price, not to mention wear and tear on my 1994 camry. So yea, it is.

  • http://www.facebook.com/1shewolf JoAnna Luffman

    We use one for Income tax, but for everything else it’s beyond us. It’s just the people in my picture – myself and my husband. Hell, I’ve taken a farm job just so we can try to keep afloat – something I haven’t had to do since we started in ’02. 

    In a bad economy, everyone should blasted tighten up, even the government. Taxing people more isn’t going to grow anything.

  • Anonymous

    My tax guy never asks me for info on my online purchases, but I total it up and provide it anyway. You don’t need to hand over receipts or other details, just a dollar amount.

    As for being taxed for some online purchases, it depends on the vendor. Barnes & Noble charged the state tax (back when I used to order from them online) and one or two others, but the vast majority of my online shopping has been tax-free.

  • Anonymous

    The law is supported by the big chain stores, Target, Walmart, et al. They want to force a tax as a penelty on small business and online stores because it cuts into there profit margins. Its not about boistering the economy it is about large corps acting like children saying its not fair even though they themselves squash small and local business, small and local that are the real job creators and employers. Tax the rich first.

  • http://twitter.com/loerwyn Kathryn

    Basically what JoAnna said.

    The way it works in the UK, at least, is the tax is added onto the price of the product (usually) before you buy it. So if I buy an item that’s £1, 20% of that is VAT – basically a sales tax – that’s included in the price. It then falls to the store, I believe, to pay that tax on my behalf. Not all goods are VAT-payable, though. I don’t think you have to pay VAT on books in the UK, but you have to pay it on ebooks.

    The reason Amazon and other online retailers can be so cheap is because they site themselves in places that are exempt from certain forms of tax so their prices can easily be lower.

  • http://twitter.com/MrMinion Mr. Minion

    My sympathies. I understand your sentiment. However, I DO believe that the government is justified to close tax loopholes, even if others should be closed off first. After all, tax revenue doesn’t just vanish, it pays for a lot of services everybody in society needs. Still, I hope you and your business make it through. :-)

  • http://profile.yahoo.com/WTMRZI53N2QLNWUAKPZMUJJPPA Gami

    Yeah, there’s no sales tax on quite a few things in Minnesota, too, so I’m wondering about this… 

  • William Roberts

    Americans are paying way too much in taxes, this compounds the cost of living and it hurts all of us.  This is being carried forward under the banner of “Fairness”.  There’s sales tax for the store, so lets tax the internet.
    How about:
    Lets make it fair by eliminating sales tax for the store?  Actually cut the shameful government overspending and waste.  Throw out the sales tax.  Oregon does not have one.
    This is a freedom issue folks.