Apr 18 2009
More Taxes?
I just saw a news story dated April 16, 2009, that the US Congress is once again considering a law making online merchants collect sales tax no matter where the purchaser lives. At present, only sales tax has to be collected from purchasers living in a state where the seller has a physical presence.
If Congress succeeds this time-they’ve been trying for at least 15 years to pass this law-a lot of Internet businesses will be closing. Because of the current serious recession, and all levels of government trying to figure out how to raise more taxes, this nefarious scheme has a better chance of passing.
Raising taxes during a recession is a really bad idea! This would have the same effect as raising prices while customers’ incomes are either diminishing or disappearing. During the recession of the late 1980’s, my state increased the number of things subject to sales tax. My sales were already down, and that actually put me out of business in my brick and mortar store. Wiser heads prevailed a couple of years later, and the tax reverted to what it had been previously, but it was already too late to help me.
The problem with out-of-state sales taxes is that it would be a nightmare trying to figure out how much tax to collect, prepare all the myriad of reports, and pay all the jurisdictions. A few states have no sales tax. Other states have a general sales tax applicable to the entire state. Many states not only have a state sales tax, but cities, counties and other local jurisdictions can tack on additional sales taxes. Whew! Can you imagine?
At the moment I have two online businesses. One is services, which is generally not subject to sales taxes and there are relatively few clients in any case. However, the other business is sales of merchandise. Due to the nature of my sales, and the cost of sophisticated shopping carts, I use a simple PayPal shopping cart (which costs nothing), but have much code on each merchandise page to make the sale and, if the purchaser is located in my state, collect sales tax. I have something over a thousand pages online. I would have to revise every one of those pages to collect taxes for other states; and, the page would have to have 50+ tax buttons to collect the right state’s tax! Similarly, even if that tax law is not enacted my state is considering raising its tax rate. I’d have to revise every one of those pages simply to comply with the new tax rate.
The crux of the matter is that if either tax change happens my business is closed! I simply have neither the time nor the money to make those changes. (It’s a big enough challenge changing the S&H every time the post office raises postage rates!)
