Internet Tax
Congress is expected to make their final decision on the Marketplace Fairness Act and the establishment of an online sales tax. We must make our voices loud and clear over this next week and demand lawmakers to vote “NO!” on this unfair, pro-tax act.
Expanding taxes to the largely tax-free internet is not in the interest of Americans or small businesses. Consumers don’t want to – and should not have to – surrender even more of their money to government just to get the goods they want from their favorite small businesses online. Business owners, likewise, should not be forced to collect sales taxes nationwide for as many as 9,600 state, municipal, and local tax jurisdictions! Not only that, online retailers should not be subject to facing multiple audits simultaneously – imagine an online shop-owner in Texas being chased by auditors from New York, California, and Illinois all at once! Lawmakers would never demand this sort of absurd red-tape limbo from brick-and-mortar shops. They shouldn’t force online retailers to either. Simple economics says that a free economy is never improved by raising… especially not in a recession.
State governments have long wanted to chase taxes from sea to shining sea, even though they are constitutionally limited to collecting taxes from businesses only within their respective borders. The Marketplace Fairness Act, a bill that is anything but fair, would allow states to bully online businesses into collecting taxes on their behalves, regardless of whether or not the business is actually within their borders. Take a minute and demand your Representative and Senators to oppose the Marketplace Freedom Act!
If the Internet Tax bill passes, it will cause us major problems. The World Wide Web has captivated Americans and changed they way they shop. According to Internet World Stats over 200 million people (70% of the population) in the United States use the Internet. And, what is more astounding is over 80% of the Internet users shop on-line.
On-line shopping last year generated over $200 billion in sales. As on-line sales have increased, brick and mortar business sales have decreased. This is having a negative impact on state’s sales tax collections since sales tax is not collected on all on-line sales. Therefore, many states are asking Congress to pass a new law allowing them to collect sales taxes on consumer Internet purchases from companies located in other states. Currently, businesses must collect sales tax only on Internet sales to customers in those states where the business has a “physical presence.” Generally speaking, a physical presence means such things as having a warehouse, store, or office in the state.
Democrat Sen. Richard Durbin (D-IL) has introduced a bill in Congress, supported by President Obama, that would require everyone to pay sales tax on all on-line purchases. The Marketplace Fairness Act (better known as the “Internet Tax”) is scheduled to be voted on next week - May 6th.
The most conservative U. S. Senators – Marco Rubio (FL), Rand Paul (KY) and Ted Cruz (TX) –
are strongly opposed to this legislation. Also, former conservative Republican U. S. Sen.
Jim DeMint who is now President of the conservative Heritage Foundation is opposed to the
bill. Here is what they have to say about the so-called “Internet Tax” bill:
U.S. Sen. Marco Rubio: ”Making business collect taxes for states they are not in is not
fairness, it is a money grab”.
U.S. Sen. Rand Paul: “The Republican Party is supposed to oppose tax increases and
burdensome, unnecessary government regulations. But sometimes, they lose their way”.
U.S. Sen. Ted Cruz: “At a time when so many people are hurting, this bill would impose
billions of dollars of new taxes on small businesses across America. That makes no sense”.
Former U.S. Sen. Jim DeMint: “Our nation was born from the idea of ‘no taxation without
representation’….. lawmakers in Washington want to overturn that bedrock principle in order
to extract more revenues from American consumers”.
If passed, retailers would be forced to track the place from which an online consumer is
making a purchase, calculate the applicable state and local sales taxes, collect them, and
then remit them to the appropriate agency — and, in the process, keep track of the nation’s
9,600 tax codes.
These retailers would be forced to have a small army of people dedicated to serving as
tax collectors trying to understand these thousands of tax laws. Each business would have
to verify the residence of the individual purchasing the merchandise, determine what the tax
rate is in that city/county/state, and finally send the taxes that they collect to each
state.
Funny_Internet_Tax_Cartoon, The new “Internet Tax” is good news for the Democrats in
Montgomery who are always looking for more of your money to spend on their pet projects.
However, it is bad news for consumers.
The simplest solution, and the one most in keeping with our national principles,
is to allow states and cities to collect sales taxes from online retailers whose main place
of
business is in their jurisdiction
The Marketplace Fairness Act will be a regulation and tax nightmare for consumers and
businesses alike, but this act will also put a strain our recovering economy.
The last thing the United States need is more regulations and taxes.
The country is already facing an uphill battle to stabilize the economy, and economic
numbers have not indicated a speedy recovery. Instead of raising taxes, more states
should follow Alabama’s lead on budget issues and spend within their means, not expand
their means.
Please take 2 minutes to call and leave a short message at: Madison County Legislative Office 100 St. Clair Avenue, S.E., Suite A Huntsville, Alabama 35801 Phone (256) 539-5441, Fax (256) 539-5444 Simply say, please tell our local state senators to vote No to Alabama Internet Tax. Takes 60 seconds, and you are done.
If this bill passes, it will cost us dearly. Please take time, TODAY, and make the call. Forward this to your coworkers.
From the bill's summary:
8 To add a new Section 40-23-89, Code of 1975, 10 to require notification to certain purchasers of tangible 10 personal property that they have an obligation to remit 11 consumer use taxes to the State of Alabama and appropriate 12 local governments if the retailer does not collect and remit 13 on their behalf the applicable state and local sales tax on 14 the sale, and to assess a civil penalty and interest for a 15 violation of these provisions; to require those retailers to 16 send an annual summary of purchases to their Alabama 17 customers, with a reminder of the customer's potential 18 consumer use tax obligations; to exempt certain small 19 retailers from these requirements; to add a new Section 20 40-23-90, Code of Alabama 1975, to authorize the Department of 21 Revenue to facilitate the collection of the consumer use tax 22 on these sales by amending its individual income tax forms so 23 that Alabama residents and part-year residents may remit both 24 the state and local consumer use tax due, on an annual basis, 25 and to direct the distribution of the use tax revenue in 26 excess of the state general use tax rate to the local 27 governments.
Information from Alabama Eagle Forum:
Rep. Ison has introduced legislation (HB365) to increase enforcement of the 1939 sales and use tax law specifically targeting internet sales. The vast majority of Alabamians are unaware of the law which requires them to remit a "use" tax on items purchased through catalogs or over the internet. The law has never really been enforced, and Alabama retailers are trying to change that.
Local retailers argue they are put at a disadvantage because consumers must pay sales tax when buying at their stores, but do not have to pay sales tax when ordering online. While this is true, there are local retail stores that continue to flourish. The advantages of having the desired goods immediately and without paying shipping and handling often outweigh the benefit of not paying sales tax. Even if that were not the case, legislators cannot use public policy to subsidize business models that don’t work in the current marketplace. The internet is not a fad. Like it or not, business owners must begin to account for it when making their business plans.
Rep. Ison’s proposed legislation puts a huge burden on online retailers and an even bigger burden on individual consumers. As it stands, HB365 will:
- require an obnoxious pop-up window to appear on your computer screen prior to completing a purchase. The warning would inform shoppers that they owe a tax and inform them of penalties for non-compliance. Consumers will be required to indicate they have read and understand the notice before they can proceed with their purchase.
- require retailers to maintain a record of your purchases and send you a statement at the end of every year listing all the items you have bought within the year.
- require retailers to keep your purchase records as well as your acknowledgement of obligation to pay the tax for an indefinite period of time to be set by the Revenue Department.
The bill would very likely be declared unconstitutional. Similar laws in other states have failed on constitutional grounds. This bill discriminates against out of state retailers, actually compels certain retailers to collect a tax, and relieves certain taxpayers from the tax. Alabama is trying to skirt relevant court decisions, but this clearly places a burden on out of state businesses to assist in tax collection, if not collect it directly, in likely violation of the Commerce Clause.
The Bottom Line: This bill has constitutional problems, privacy problems, and tax problems.
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