States Hungry. Restaurant: Online


Inquiring minds are taking in Alex Johnson’s article “States working harder to collect online sales taxes” over at MSNBC.com where he shows that state governments are working overtime to take in more tax dollars.

Who gets hurt? That’s easy:

It’s too early to know exactly how much the Nebraska chapter of the March of Dimes raised this week at its annual Signature Chefs Auction in Omaha, but odds are that more than 10 percent of the charity’s proceeds are going straight to the tax man.

That’s because the March of Dimes went online when it bought about 4,000 T-shirts from a Florida vendor to give to donors during its March for Babies Walk last April. The charity often buys supplies and other materials online, and it also raises money online by selling items at auction — racking up a big tax bill in each case.

“We didn’t know that,” said Rosemary Opbroek, director of the Nebraska chapter. “We wish the law was different. It is taking money away from helping … babies.”

As is often the case, laws are instituted during good times and “found” during the bad:

Sales taxes or similar levies have always been in place on most online purchases in most states. But they are almost never paid. And with their budgets in crisis, states are more determined than ever to get their share.

As the States see it, people are just confused about what to do:

The confusion boils down to who does the collecting and when. As with everything involving tax legislation, there are exceptions and other complications from state to state. For example, if you live in Delaware, Montana, New Hampshire or Oregon, which have no sales taxes, none of this applies.

Online retailers like Amazon.com typically don’t add the tax, except in the states where they’re based or where they have physical facilities like warehouses or distribution centers. Amazon, for example, collects sales taxes only in Washington (its home state), Kansas, Kentucky, North Dakota and New York.

The tax is still supposed to be paid, however. And if the seller’s not responsible, then you, the buyer, are. In general, you’re supposed to voluntarily file your own report and pay the standard tax on your out-of-state online purchases. (The appropriate forms are available on state tax agency websites, revenue officials are happy to remind you.)

South Carolina, like most states, relies on consumers to be honest. But if you happen to be audited and you haven’t paid up, you could be in for a world of hurt.

“The Department of Revenue realizes that there is concern and there are issues with collecting the use tax,” Fairwell said. “But we aggressively go after that.”

Numerous other states are considering legislation or studying proposals that would crack down on non-payment of online taxes:

•The Alabama Department of Revenue is sending letters to random taxpayers, telling them to review their last three years of online purchases and send in a check.
•In February, Colorado enacted the so-called Amazon law, declaring that online retailers were part of an “economic nexus” with state residents. Under the law — which has been challenged in federal court — Amazon and other online retailers are required to calculate the sales tax on every transaction and tell their customers how much they have to pay the state. They’re also required to disclose the identities of their customers and how much they spent, which has set off a fierce dispute over Coloradans’ privacy rights. Amazon says the law was enacted “over our strong objections.”

‘Amazon laws’

The following twelve states are ‘hard at work’ to steal more money from their citizens…

States that are currently considering requiring out-of-state retailers to collect sales taxes on online transactions:

California

Connecticut

Illinois

Iowa

Maryland

Minnesota

New Mexico

South Carolina

Tennessee

Vermont

Virginia

Wisconsin

If only these guys worked as hard to make a real profit for people.

Where is our Robin Hood?

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