Fair tax policy for online U.S. sellers

Bureaucrats are trying to impose internet sales taxes. If H. R. 2193 passes, tiny artisan vendors like us will be required to collect and remit sales tax to various state entities, and buyers will have to pay higher prices to cover the taxes on goods purchased. If they pass laws saying that taxes are due in the state where the purchaser lives, we’ll literally be responsible for an accounting in every state that we sell to. Each of those states can do the equivalent of an IRS tax audit on our sales. I have no idea whether online petitions are of any use, but you might consider signing this one regardless.
Support Fair Tax Policy for Online Buyers and Sellers


Thanks. I signed it!

I wasn’t sure if it would help either but ebay sent a notice of this to its sellers, I signed.

I signed it, too. It didn’t say how many had already. ?

This topic is not a simple one. Your point about the accounting burden on small businesses is an important one. But there is another side to the story.

I live in a state that gets a sizeable portion of the revenues for education and other state services from sales tax. When someone in another state sells to a resident in my state without charging sales tax, the state is deprived of revenue to help fund services which that resident needs.

And to the extent that a customer chooses your product instead of mine because they won’t have to pay tax, I am deprived of making a sale. I am a small artist business, but this also affects many other small local businesses that are struggling to survive against companies that attract their customers primarily on the basis of not paying local taxes.

As long as states and cities have different tax structures, there will be inequities. I don’t have a solution, but just want to point out that there are many problems to solve.

It is indeed a complicated issue. I live in a state with a high sales tax, CA, and to further complicate matters the rate varies all over the state. But every year when I visit my tax man I am asked what online purchases (out of state) I made throughout the year where no sales tax was charged.
So am I paying them anyway or has the government been collecting the data for exactly this or maybe I am paying a sales tax based on CA state tax? I am not asked specifically which state the purchase was made so that tells me it is not going back to that state. I’ll have to ask my tax man.
Five states don’t have sales tax so those states are ‘out of the loop’ as far as Cynthia’s comment goes.

I understand Cynthia’s point. It is like the brick and mortar business vs the mobile or online business and their advantage over the local small business, mom and pop shops etc. who have a higher overhead.
On a similar note there has been much controversy here in Los Angeles over the food trucks having an unfair advantage over brick and mortar restaurants and stealing their customers when they park on their block and offer lower prices than the restaurant can afford to.
We don’t want to see the small business’ all disappear but at the same time the bureaucrats will find any way possible to take more money from us if we let them.

It’s hard to imagine many buyers would base a decision about which painting to buy on the sales tax. To me the bigger nightmare would be collecting/reporting/remitting it to—and ever being audited by—several different state agencies. Filling out CA’s annual Board of Equalization reporting form is such a pain, and their audits (one of which I survived) are unanimously thought to be worse than an IRS audit. I can’t imagine the hellscape of having to fill out 10 or 20 DIFFERENT state sales tax forms EVERY YEAR.

Thanks for sharing this. I also posted it to my Facebook page and art gallery where I am president.

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I set up complicated tax rules for every zipcode in Florida last year, but now DPW has now done this for us. From DPW Help: “Before December 23rd 2017, you needed to create country, state, and postal code-level sales tax rules in DPW, just as you do in PayPal. This is no longer necessary. Instead, DPW now only requires that you enter the full address you ship your work from and then DPW will use a dedicated service to calculate the exact sales tax (or VAT) to charge your buyers based on your and their addresses. This service is provided without additional charge with your DPW artist membership.” Am I not understanding this? Doesn’t this cover the taxes problem? I hate taxes as much as you all do, but they are already required in all states per the buyer or seller or both. DPW has made this easy to do.

Yes, when I was on DPW I had the same rules setup and maybe David had them in place at that time too I can’t remember.
But Connie is referring more to, not just the charging of sales tax to customers, but the accounting nightmare of potentially having to keep track of, report, pay and fill out separate forms to each state every year.
Even if done at the federal level where all is paid to the IRS and they disburse to each state we would still be required to keep track of each separately, a form for each state.

And just to further muck it up, not just each state but each zip code. California like Florida and others have so many zip codes with different sales tax rates, and in CA they constantly change in the course of any given year.
I get notices from The Ca State Board of Equalization every year on various county and city and rate changes taking affect on given upcoming dates.
So that also means keeping track of when the sale was made within that year, whether it was made before or after that date.

Yes, if that is what they are talking about, I would stop selling online. I hope they think hard before passing a law that would devastate the online art industry.

Wow, I just read this article below and was really encouraged to see that groups on both sides of the political aisle support the effort to stop H.R. 2193. Visit this link to see and read more. https://www.ntu.org/governmentbytes/detail/open-letter-to-congress-oppose-hr-2193-the-remote-transactions-parity-act

Good article Vana. Let’s hope the politicians listen for a change.It’s always about money and they do their share of squandering our tax dollars.
If they don’t and it goes through, well, Let’s hope someone designs an algorithm that keeps track of it for us. That way it won’t devastate the online industry for the small business.

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As Vana pointed out, DPW uses a service that calculates sales tax due with the only input required from the artist being the address from which they ship their art. So, no matter how often the tax rates change and even if the tax rate is ever calculated based on the location of the buyer, DPW, using this service, will continue to calculate and charge the correct sales tax with no further work or action required of the artist.

When it comes time to report and submit the collected sales tax, DPW artists can view, print, and export a detailed sales report, by time frame, with all the information needed. If sales tax calculation does become based on buyer location, I will create another report to take this change into account.

BUT people need to know the sales tax rules for their own states. In California:
“ Sales tax generally does not apply to your transaction when you sell a product and ship it directly to the purchaser at an out-of-state location, for use outside California. Your sale is not taxable if you:

  • Ship the product directly to the purchaser, using your own delivery vehicle or another means of transport that you own; or
  • Ship the product by delivering it to a common carrier (including the U.S. Postal Service), contract carrier, customs broker, export packer, or forwarding agent.”