States are looking for ways to collect sales tax for purchases made by their citizens. With 14,000 different tax jurisdictions in the US, compliance by small on line business could prove impossible, leading to their demise. Federal laws must be written to protect the mom & pop internet business from extinction.

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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.

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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.

Options:

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.

Another option is to provide a means for sales to other states to simply be reported by retailers with no obligation to collect and pay taxes themselves. This places the burden where it rightfully belongs, on the purchaser and their own state government. This could be accomplished by a quarterly report to a central database that the state taxing agencies can monitor. This could be a federal database paid for by the states who choose to collect the taxes. This would relieve the federal government of the cost and place those costs where they belong. In the hands of those states who opt in to collect taxes from citizens of their own states.

"Amazon Tax"

The New York Law found a loophole to exploit retailers who had affiliates in the state of New York. Most small operators don't have affiliates, however one of the consequences of this angle is that some of the retailers avoided collecting taxes for New York by terminating all of their NY affiliates. Not only do they then avoid the tax issue, citizens of that state lost any revenue from their affiliate sales and, presumably, paid less income tax to the state as well. Amazon, being the wealthy company they are choose to sue but to also retain their affiliates. If a "nexus" must be defined by affiliates, this type of tax collection risks the loss of income for small individuals who earn extra income by collecting a small commission from individual sales. NY punished it's own citizens as a result.

Centralization:

Any attempt to require small businesses to collect and remit taxes and file forms to collect taxes for another jurisdiction MUST be a centralized system at the federal level with the states paying for it. It is simply not possible to expect a small one or two person home based operation to tackle the task of maintaining records and sending money to 14,000+ separate taxing jurisdictions. There could be only one tax rate paid to a central pool accepted by any state that choose to abide by the "system", otherwise be banned from collecting sales tax from other jurisdictions.

Conclusion:

While I sympathize with the state's need for income, this could become a burden on individual retailers to solve a problem that is not theirs and which could result in the loss of more jobs rather than an increase in state tax revenue. Why should the needs of California and Texas or Nevada place a financial burden on a working citizen of Florida to collect their taxes for them at our own expense? This is shifting a government responsibility out of their taxing jurisdiction to individual citizens of other states.

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Authors Website: http://www.joethevoter.org

Authors Bio:
Political Activism is a passion but I have earned a living since 1995 through my web page design and hosting business. I also do graphics design and offer business cards, fliers, brochures etc. My most recent venture which can be seen at http://www.xtarusa.com is to solicit wholesale accounts for quality line of flash lights.

http://www.joethevoter.org

My collection of articles has since been compiled and is now for sale on Amazon.com Title "Mind of a Liberal" http://amzn.to/1cNWH4B