The internet sales tax mandate would be a major change in the way businesses operate especially around tax season. At the end of each yearbusinesses are responsible for paying sales tax. They can choose to tax their customers at the point of sale or pay out what they owe in sales tax at the end of the year. Businesses therefore act as a tax collection arm for the state in which they do business.
The internet sales tax mandate would force businesses to become sales tax collectors for all states. For example, if a customer in New York State makes a purchase from a company based in Virginia, the Virginia business would have to collect New York sales tax from the customer and then send the collected tax back to New York.
At the end of the year if there are any disputes over sales tax collection the Virginia business would be subject to the New York Department of Revenue and New York Courts. While this is scary in itself, there are a number of other problems that should cause our elected officials to think twice before they implement this new tax scheme:
- Slippery Slope – Opens the door for further government intervention in the internet and for states to reach across their borders for other taxes.
- Too Confusing – Small businesses would be forced to accommodate over 9,000 highly variable state and local tax codes and be required to settle disputes with out of state revenue boards in out of state courts.
- Discourages Tax Competition -Rather than competing to lower taxes and attract businesses, states will compete to raise taxes on residents of other states
- Expands State Tax Authority - State Governments will be able to tax across their borders despite clear legal and judicial precedentarguing otherwise
Write your congressman and senators urge them to oppose efforts to impose an internet sales tax mandate!