An AP Reporter is saying An appellate court ruling against Borders Group Inc. sets a precedent that could enable California to force some major Internet retailers to start paying state sales tax for books, music and other goods sold online to state residents.
Whether California tax collectors use the precedent to go after not only Borders but Barnes & Noble Inc., Amazon.com and other online retailers remains to be seen. But independent booksellers and other “bricks-and-mortar” retailers have been cheering, saying the ruling should remove their Internet competition’s unfair advantage.
Follow-up to an earlier story found here .
Nexus my eye
OK, if the Court finds that accepting returns at an associated store then it will simply cause online retailers to stop accepting returns other than by post.
This will of course make things less convenient for people who return things. I don’t return things unless they are defective, so mailing things back is not really a hardship for me.
This is why you never see any Quill office supply stores, the Quill case is the one that clarified the sales tax laws many years ago. Quill only collects tax in states in which it has a physical presence. (see Quill v. North Dakota)
I think it is simply a matter of time before all states require that purchasers pay sales tax on mail order purchases themselves. In fact Florida, where I live requires that I remit taxes to the department of revenue on mail order purchases where the seller does not collect sales tax. (I have indeed done this as I had to file a sales tax return anyway as I owned a computer business). I know a number of states other than Florida do impose this tax, often called a use tax.
So in due course this nexus that the court found will be moot as mail order retailers will collect and remit the tax for us, a much easier solution than requiring the purchaser to remit the tax to the state themselves.
I agree with CA
If a bircks and mortar store is accepting returns, that de-facto makes it local.
I dunno what to do about the whole shipping & handling vs. taxes issue. Right now S&H is usually offset by the tax-free nature of online purchases.
I’d hate to try and make online retailers apply every state, county and city sales tax to every locality.
Maybe what’s needed is a median national tax estimate, applied once a year, which every state can get part of….
This would penalize states that have high tax rates, and work to the advantage of areas with low tax rates… And be filterable all the way down to the individual city (right now only the states are getting the revenue, and local libraries, etc, are getting hurt by the lack of local businesses getting driven out of business by online retailers)
— Ender, Duke_of_URL
Re:Nexus my eye
Ndoneil, you are many things…but are you an attorney?
I didn’t think you were.
Attorneys in the state of California (and soon after, those around the US) will undoubtedly help their state government find that Borders (and B&N) have been ‘having their way’ with the US tax system way too long, and that it’s time to pay the piper. Why do you want these big corporations to cheat the government?
Re:Nexus my eye
Make that Mdoneil (sorry).
And full disclosure…I’m married to a tax attorney (and we discussed the issue).
Pay tax where the server is
I’m not familiar with the particular ruling, but I think the idea was that if you are in location A and the Store is in location B, you should pay taxes at the rate of location A, as if the store magically was in your backyard.
Almost all the problems with sales tax collection would be solved by reversing that order – you pay taxes at location B, as if you drove there. This mirrors what happens in the real world, where Delaware is a giant outlet mall for Philadelphia, and Portland has big signs enticing Washington residents to drive over the river to buy items tax-free. And in both cases the states can’t regulate you doing this – you don’t have to stop at a customs station on the bridge back to Vancouver because the constitution explicitly forbids this.
In my opinion, states and localities depend so much on sales taxes for revenue that the judge factored that in the decision. With my plan, all vendors would immediately re-incorporate in a state with no sales tax, and states would probably have to modernize their laws. But at least it would make sense.
Re:Pay tax where the server is
Ah, but the problem is that the servers are not necessarily located where the company is incorporated.
Re:Nexus my eye
Ndoneil, you are many things…but are you an attorney?
Well, my LLB is from Trinity. I didn’t goof off all the time I lived in Ireland.
I am all for paying taxes, they support what we so often take for granted: roads, transport, schools, social services, ad nauseum.
I just think this will make it harder for people to return stuff. I think they should have paid tax on it in the first place no matter if they want to return it or not. The 60 or 70 cents per book isin’t going to break the bank. Then again I think everyone should shop locally at independent booksellers, then this would be a moot point.
N.B. If one stays in college until dead one’s student loans are forgiven!
Re:Pay tax where the server is
Actually the higher rate of tax is generally collected.
If I in Florida (my tax is 7%) buy something from NYC (where I think the tax is about 43% ) then I pay the higher rate to the merchant.
If however the merchant only collects 2% I have to remit the remaining 5% to the Florida department of revenue.
That way seems fair to me.