Illinois enacts Internet sales tax law

[Y2HH]

Gov. Pat Quinn signs bill into law, prompting Amazon.com and Overstock.com to say they will sever all ties with affiliates in state to avoid incurring such taxes.

 

Great idea, Quinn, you f***ing tax happy jackass...all the businesses that relied on Amazon.com and Overstock.com just got f***ed over by a bill you signed, and will produce almost nothing now.

[Balta1701]

Why should non-internet based businesses in Illinois subsidize Amazon.com?

[Y2HH]

Why should non-internet based businesses in Illinois subsidize Amazon.com?

 

Amazon.com doesn't have a physical presence in IL, that's why...it's taxing a virtual entity (which is controversial BTW)...and this is besides the point. The law did nothing but f*** over the people who sell things through Amazon.com, etc...since they all just got dumped by the company. In effect, he STILL collects nothing from Amazon, but now a bunch of small businesses got totally screwed over.

Edited March 11, 2011 by Y2HH

[Y2HH]

And this is why its controversial: The U.S. Supreme Court ruled in 1992 that companies without a physical presence in a state aren't required to collect state sales taxes.

[Balta1701]

So a business that doesn't have a physical presence in Illinois and therefore doesn't employ many people in Illinois should get a significant taxpayer subsidy from the state of Illinois?

[Y2HH]

So a business that doesn't have a physical presence in Illinois and therefore doesn't employ many people in Illinois should get a significant taxpayer subsidy from the state of Illinois?

 

You act like I made the rules...talk to the supreme court of the united states, mister. And they're not receiving any "subsidy", they're not here, therefore they don't pay state taxes, just like the supreme court ruled they shouldn't have to do. Now if they courts want to go back and revisit this law in light of the Internet and online commerce, by all means, do that...but right now, all this does is cut off small businesses from being affiliated with Amazon, Overstock, etc, as they're not forced to play by the rules Quinn sets.

 

As a consumer, I can still buy from Amazon.com and avoid all IL sales tax, but my business has no chance of going to an IL business now.

 

As for brick and mortars complaining that this merely levels the playing field...no it doesn't. I can physically go to a brick and mortar and get instant gratification of having said item immediately, which most people will pay a premium to do. For example, I can order an iPad2 online today, but I'd rather go to a Target/Walmart and pick one up, if I can, because then I don't have to wait to play with my new toy!

Edited March 11, 2011 by Y2HH

[southsider2k5]

I for one say yes. Governor Quinn you keep on passing and raising taxes!

 

Signed

Indiana Resident.

[Balta1701]

You act like I made the rules...talk to the supreme court of the united states, mister. And they're not receiving any "subsidy", they're not here, therefore they don't pay state taxes, just like the supreme court ruled they shouldn't have to do. Now if they courts want to go back and revisit this law in light of the Internet and online commerce, by all means, do that...

Except for the fact that in the state of NY, the courts rules that Amazon had to collect sales tax, and it did.

[Y2HH]

Except for the fact that in the state of NY, the courts rules that Amazon had to collect sales tax, and it did.

 

Um, you realize I'm talking about IL here, right?

 

Last I checked, we aren't under NY law, nor do we fall under the NY supreme courts rules.

[Balta1701]

Um, you realize I'm talking about IL here, right?

 

Last I checked, we aren't under NY law, nor do we fall under the NY supreme courts rules.

However, the decision that you're arguing is a federal decision.

Under a 1992 U.S. Supreme Court ruling, only sellers with a physical presence (“nexus” in taxspeak) in a state are required to collect that state’s sales taxes. Just shipping into a state by say, FedEx or UPS, isn’t enough to establish nexus. Consumers buying online still owe “use” (meaning sales) tax to their states, but few bother to pay. The Illinois Department of Revenue figures it loses between $153 million and $170 million in revenue a year from Internet sales on which taxes are due, but not collected.

 

The new Illinois law is modeled on one adopted by New York in 2008. While Amazon has been challenging (so far unsuccessfully) the constitutionality of that law in court, it has kept its New York affiliates and now collects New York sales tax on purchases shipped to the Empire State. (It also collects for shipments to its home state of Washington, as well as North Dakota, Kansas, and Kentucky.) After Rhode Island and North Carolina adopted copycat “Amazon” laws in 2009, Amazon ended its marketing deals with sites based in those states. It also jettisoned affiliates based in Colorado, which adopted a law requiring Internet sellers who don’t collect sales tax to report sales to the state. (A federal judge has issued a preliminary injunction blocking the Colorado law.) In addition to California, the states of Arizona, Connecticut, Hawaii, Minnesota, Mississippi, and Vermont are all now considering Amazon laws.

 

As Forbes suggested here, Amazon’s days of sales tax collection free selling may be numbered for another reason: Amazon’s growing network of warehouse and fulfillment centers. Last year, the Texas Comptroller sent Amazon a bill for $269 million for four years of back sales taxes, based on an Amazon warehouse there. Amazon insists the warehouse doesn’t give it nexus. But last Month, it told its Texas employees that it would close the warehouse, throwing 110 of them out of work.

[NorthSideSox72]

So a business that doesn't have a physical presence in Illinois and therefore doesn't employ many people in Illinois should get a significant taxpayer subsidy from the state of Illinois?

Well, I'll give you an example. Remember a few days ago, discussion of my small not-for-profit came up? The wilderness travel co-op thing? We used Associate links with Amazon, REI and Moosejaw to fund our website costs, since we have no actual revenue. That typically generated us enough money to pay for server space and domain name, and a little software. Now we don't get that money to offset the cost. We can now do one of these things:

 

--shut down the website

--Add a website cost amount to what everyone pays in for trips

--I can pay it out of pocket and just take the loss myself

 

Now, my organization is just a co-op with no employees, no significant assets, etc. So the only people this effects are me and/or people in the co-op. But many of the other affiliates are people who run small businesses, and this will directly impact their bottom line in a much bigger way. I'm actually pretty lucky here, comparatively.

 

[Y2HH]

However, the decision that you're arguing is a federal decision.

 

I'm not arguing the decision, YOU are.

 

The US Supreme Court made this rule -- and the you bring up NY for some reason.

 

I'm not against such a tax, but it has to be done in all 50 states to keep things even, what was done here by the Gov. was create a void and cause Amazon and Overstock to just abandon IL. If this was enacted in all 50 states, they wouldn't be able to just abandon the state, but it's not...and they did.

 

So he accomplished nothing as of now but to screw over a lot of small businesses, like I said from the start.

 

I don't even know what you are arguing here...you sound pretty anti-small business, however. You don't seem to understand that, in effect, he accomplished NOTHING here other than hurting small business affiliates, as he STILL collects 0$ in taxes from Amazon and Overstock, which account for about 99% of online sales in this state.

Edited March 11, 2011 by Y2HH

[NorthSideSox72]

I'm not against such a tax, but it has to be done in all 50 states to keep things even, what was done here by the Gov. was create a void and cause Amazon and Overstock to just abandon IL. If this was enacted in all 50 states, they wouldn't be able to just abandon the state, but it's not...and they did.

 

So he accomplished nothing as of now but to screw over a lot of small businesses, like I said from the start.

 

I don't even know what you are arguing here...you sound pretty anti-small business, however. You don't seem to understand that, in effect, he accomplished NOTHING here other than hurting small business affiliates.

I actually agree about 50 states. I can understand the argument that internet product sales have artificially eaten into sales tax base, and I'd be OK with this - but all the states have to do it (or most at least). As I understand it as of now, 4 or 5 do, with another handful considering it.

 

[Y2HH]

I actually agree about 50 states. I can understand the argument that internet product sales have artificially eaten into sales tax base, and I'd be OK with this - but all the states have to do it (or most at least). As I understand it as of now, 4 or 5 do, with another handful considering it.

 

Right, if it's going to be done, it has to be done properly, as to avoid total abandonment of a state, which is what occurred here.

 

And it's sad that small non-profits like yours get hurt by this. I guarantee it didn't affect Amazon or Overstock whatsoever.

[StrangeSox]

Isn't the problem that a lot of consumers are illegally avoiding taxes that they should really be paying?

 

I won't act like I don't do that myself--on big ticket items, sales tax vs. shipping definitely factors in. But it's a legit problem.

[Y2HH]

Isn't the problem that a lot of consumers are illegally avoiding taxes that they should really be paying?

 

I won't act like I don't do that myself--on big ticket items, sales tax vs. shipping definitely factors in. But it's a legit problem.

 

Easily rectified if they revisit the law and amend it in light of Internet e-commerce, so it's something all 50 states have to comply with. As it stands, since these companies are essentially "servers", they can just move them to whichever states do not tax them, and re-incorporate in that state.

[NorthSideSox72]

Right, if it's going to be done, it has to be done properly, as to avoid total abandonment of a state, which is what occurred here.

 

And it's sad that small non-profits like yours get hurt by this. I guarantee it didn't affect Amazon or Overstock whatsoever.

 

Amazon and the like had a simple choice... either drop their affiliates in Illinios, or begin charging sales tax to all IL residents on purchases. They chose the former, because it hurts them less. Its exactly what they should have done.

 

Isn't the problem that a lot of consumers are illegally avoiding taxes that they should really be paying?

 

I won't act like I don't do that myself--on big ticket items, sales tax vs. shipping definitely factors in. But it's a legit problem.

 

There is nothing illegal about it. As I understand it, if you order something online from a business in another state, its the same as when you buy something while travelling and they elect to ship it to you to avoid sales tax.

 

[StrangeSox]

The current no-sales-tax scheme also gives a strong competitive advantage to online retailers vs. in-state businesses.

[StrangeSox]

There is nothing illegal about it. As I understand it, if you order something online from a business in another state, its the same as when you buy something while travelling and they elect to ship it to you to avoid sales tax.

 

I'm pretty sure you're still supposed to report and pay that tax as the consumer, but no one does.

 

from yahoo:

http://smallbusiness.yahoo.com/r-article-a...it_who_doesnt-i

Consumers' Responsibility to Pay Sales or Use Taxes

 

Consumers who live in a state that collects sales tax are technically required to pay the tax to the state even when an Internet retailer doesn't collect it. When consumers are required to pay tax directly to the state, it is referred to as "use" tax rather than sales tax.

 

The only difference between sales and use tax is which person -- the seller or the buyer -- pays the state. Theoretically, use taxes are just a backup plan to make sure that the state collects revenue on every taxable item that is purchased within its borders. But because collecting use tax on smaller purchases is so much trouble, states have traditionally attempted to collect a use tax only on big-ticket items that require licenses, such as cars and boats.

 

Some states, including Connecticut, Maine, Nebraska, New Jersey, and North Carolina, have changed their attitudes and are stepping up efforts to collect use taxes. But bureaucracy, complex tax rules, and limited state resources have thus far prevented most states from pursuing use taxes. Since state governments are losing substantial revenue, the collection of use taxes may become a priority if the federal government continues its ban on Internet e-commerce taxes.

 

[Y2HH]

The current no-sales-tax scheme also gives a strong competitive advantage to online retailers vs. in-state businesses.

 

This advantage is crowed about, but is a total non-advantage. Online retailers have to ship and buy shipping insurance, something the local retailers do not have to do, but they neglect to talk about it...because it upends their gripe. Also, keep in mind that when you buy something online, you have to wait for it, whereas at a regular store, you not only get to see what you are buying before you buy it, and play with it, but you get instant gratification of leaving the store with the item, without having to wait to use it. This also makes returns and exchanges much easier, another advantage they forget they have when they discuss online vs brick and mortar. This cannot be dismissed as a non-advantage...there are plenty of things I buy online, but I wouldn't bother if I knew I could drive to the local retailer and get it immediately...unless of course we are talking a cost savings of hundreds here, which we aren't.

 

There are advantages to both and disadvantages to both, let's not pretend otherwise.

Edited March 11, 2011 by Y2HH

[StrangeSox]

I'm not pretending otherwise. But people also take advantage by shopping around at birck-and-mortars and then go order it cheaper online.

 

And obviously, for cheaper stuff, the advantage is minimal.

[Y2HH]

I'm not pretending otherwise. But people also take advantage by shopping around at birck-and-mortars and then go order it cheaper online.

 

And obviously, for cheaper stuff, the advantage is minimal.

 

This does happen, but only when online purchases save them hundreds of dollars, say on a television set. In those cases, it's not taxes holding the brick and mortar back, it's the fact that they're charging 2000$ for a TV that can be purchased online for 1500$. Taxes be damned in a situation like this.

[StrangeSox]

This does happen, but only when online purchases save them hundreds of dollars, say on a television set. In those cases, it's not taxes holding the brick and mortar back, it's the fact that they're charging 2000$ for a TV that can be purchased online for 1500$. Taxes be damned in a situation like this.

 

Well, there's a reason why they have to charge more--there's a lot more overhead involved in running an actual store with displays set up and running a server and warehouse.

 

Anyway I'm not lamenting the loss of brick-and-mortar stores here. Just pointing out that the "OMG! it'll kill Illinois business" might not be the whole picture, because it removes an advantage online retailers have over local businesses, even if it is a minor one.

[Iwritecode]

I'm pretty sure you're still supposed to report and pay that tax as the consumer, but no one does.

 

from yahoo:

http://smallbusiness.yahoo.com/r-article-a...it_who_doesnt-i

Consumers' Responsibility to Pay Sales or Use Taxes

 

Consumers who live in a state that collects sales tax are technically required to pay the tax to the state even when an Internet retailer doesn't collect it. When consumers are required to pay tax directly to the state, it is referred to as "use" tax rather than sales tax.

 

The only difference between sales and use tax is which person -- the seller or the buyer -- pays the state. Theoretically, use taxes are just a backup plan to make sure that the state collects revenue on every taxable item that is purchased within its borders. But because collecting use tax on smaller purchases is so much trouble, states have traditionally attempted to collect a use tax only on big-ticket items that require licenses, such as cars and boats.

 

Some states, including Connecticut, Maine, Nebraska, New Jersey, and North Carolina, have changed their attitudes and are stepping up efforts to collect use taxes. But bureaucracy, complex tax rules, and limited state resources have thus far prevented most states from pursuing use taxes. Since state governments are losing substantial revenue, the collection of use taxes may become a priority if the federal government continues its ban on Internet e-commerce taxes.

 

You are supposed to report anything you bought out of state and brought back to Illinois. In fact, I remember this exact question coming up on TurboTax when I did my taxes a few weeks ago.

 

Of course I'm sure everyone kept all their receipts of out-of-state purchases and filled in the proper amount on their 1040 this year...

 

 

 

[StrangeSox]

Exactly, states are getting legitimately screwed out of big chunks of sales/use tax revenue. I agree that it should be done nationwide, though.