Please contact your representatives in Washington. This is my letter to both of my senators and rep. Feel free to use it. Send letters to editors.
What steps are being taken to avoid an Internet crisis that could spell doom for mom and pop on line business?
42 states are predicting multi-billion dollar budget deficits for 2009?
30+ states are now considering taxes on all Internet purchases - regardless of nexus?
The federal government is also considering such legislation?
There are more than 14,000 taxing jurisdictions in North America, with constantly changing rates and boundaries?
As a web developer and one who also sells promotional novelties across state lines, I can assure you that the typical web based business will not be in any position to comply with 14,000 different taxing codes and rates for each purchase. Present generation shopping cart software can at best, handle only a few tax rates and none I am aware of can track and report to 14,000 different tax codes let alone, keep up to date on changes.
The paper work alone would cripple and destroy home based businesses leaving only a few major on line retailers with the financial resources to cope.
In a time when many Americans are relying on extra sources of income just to make ends meet, facing the prospect of being put out of business by their own government's need for cash is not just or right. If they close they will be paying no taxes at all. Some may even lose homes and file for bankruptcy if they lose this extra income. Others rely on the Internet for their entire income as I do. Having to try to cope with knowing and complying with these 14,000 taxing jurisdictions would spell disaster. I simply cannot do it and would either have to ignore the law or close my business. I am 63 and disabled and have no alternatives to working from home.
We need, AND FAST, legislation to protect the small on line business owners from this threat. My first concern is the actual legality of one state imposing taxing liability on the citizens of another state. Paying sales tax is the legal responsibility of the purchaser. If they fail to report the purchase that is a legal matter between that state and their own citizens. It is not something an on line retailer has any control over, nor is enforcing tax law in another state the retailer's responsibility. We [retailers] are not enforcement agencies.
Any notion of requiring every on line retailer to obtain any form of license to sell in another state is out of the question just as it is out of the question to expect me to purchase a license plate for each state I may choose to drive through. Business licenses need to be left entirely out of the debate because many jurisdictions do not even require a license for someone working from their own homes as many of my customers do.
There are many retailers located in other countries. How will the Feds or states force someone in China or England to collect and remit sales taxes for a US State? Would that lead to more complications at customs, causing delays and expense trying to track retail orders and their values and tax authorities to be shifted onto Customs agents for orders arriving from over seas retailers? Would exempting them lead to an "equal protection" debate at home?
Any costs involved that had to be borne by the retailer would result in higher prices for their goods, making them less competitive with major retailers, thus forcing even some of those who try to comply out of business. This leads to less competition, fewer choices for buyers and, once again, larger corporations thrive while smaller business fails.
In the event the states find a way around this, we need a "floor" in terms of the amount of sales needed to trigger any liability to states in which we do not have a physical presence. Small retailers who sell, on line, less than $100,000 net in any given year should be exempt from collecting and paying sales taxes to any but their own state or to states in which they have a physical presence. Companies with revenues above this amount probably have the resources to hire a professional company to manage 14,000 tax codes for them on a fee basis. We need a federal law for this based on interstate commerce.
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