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Jewelers of America pushes Internet Sales Tax

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Todd Gray

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National Jeweler Magazine reports:

New York--In the hopes of leveling the playing field between Internet and brick-and-mortar retailers, Jewelers of America (JA) is urging Congress to reintroduce and pass the Sales Tax Fairness and Simplification Act.

The legislation would give states nationwide the power, which they currently do not have, to require that remote sellers, including Internet retailers, collect and remit sales and use taxes.

JA President and Chief Executive Officer Matthew Runci notified Congress of JA''s stance in a letter sent to Republican Sen. Michael Enzi of Wyoming and Rep. William Delahunt, a Massachusetts Democrat, each of whom sponsored sales tax fairness bills in the last session of Congress.

"The new law would close an Internet sales tax loophole that is affecting our members severely," Runci wrote. "Countless sales have been lost when consumers gain information at a brick-and-mortar store, but then purchase their items on the Internet--because they are not required to remit sales tax."

According to JA, Internet and other remote sellers have had an advantage over brick-and-mortar stores for more than 15 years, ever since the Supreme Court in 1992 barred states from requiring that remote sellers collect sales taxes. At the time, the nation''s highest court ruled that remote retailers conducting business nationwide would find collecting taxes for so many different jurisdictions too cumbersome.

But, JA contends that the situation is different today, thanks to the Streamlined Sales and Use Tax Agreement (SSUTA), which has been adopted by 22 states already. The agreement has simplified state sales-and-use tax rules, brought uniformity to the definitions of items in the sales tax base, reduced the paperwork burden on retailers and incorporated new technology to modernize administrative tax collection procedures. These changes enable remote retailers to use streamlined electronic systems to collect various taxes.

The hope for JA is that the act might have more momentum in 2009, as ailing state governments seek much-needed additional sales tax revenues. A University of Tennessee study has estimated that state and local governments lose more than $30 billion annually in uncollected sales taxes for remote sales.

JA has been working on the sales tax fairness issue for many years. The association is a member of a Sales Tax Fairness Coalition, which consists of businesses, shopping centers, associations and states, working to get the legislation enacted.

"Sales tax fairness legislation would eliminate an inequality in the tax code that for too many years has penalized consumers who wish to shop with Main Street retailers," wrote Runci in his letter to Enzi and Delahunt. "Particularly in the midst of a negative economic environment, being able to sell a product minus a sales tax provides a major advantage for the remote retailer. Jewelers and other business owners should no longer be burdened with this competitive disadvantage."
 

oldmancoyote

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Hum, really smart of them at a time when most others are looking for forms of fiscal stimulus...

Apart from that, given that most (all?) states that charge sales tax also have a "use tax" which imposes on buyers the obligation to pay tax as if they bought the item in their home state, I fail to see the point. They should rather demand that the IRS gets serious about the evasion of use taxes (fat chance!)
 

denverappraiser

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The point is compliance. ‘Use’ tax is supposed to be reported by consumers directly to the appropriate revenue department and if they fail to do so, which is the usual case, the revenuers either catch it on audit or lose the money. Sure, they get a little extra in the form of penalties and interest but this is terribly ineffective and labor intensive on the part of the taxman. The reality is that they can only audit a small number of taxpayers and they are writing off huge sums of uncollected funds. ‘Sales’ tax, on the other hand, is collected and remitted by merchants and compliance is nearly 100%. A few make errors and a few cheat but the auditor is basically looking for a small number of cheats within a large pool of honest merchants rather than the other way around. The merchants are doing the majority of the work and the taxman just gets the money.

Why they want to do it now is because of money. State budgets are hurting and sales taxes represent a LOT of money. Billions. With many this is one of their top revenue sources along with property tax and income tax and encouraging residents to shop out of state is not only bad for state tax collections, it’s bad for the states merchant base, which reduces income and other taxes paid by the merchants. I understand it's an unpopular position but agree with them, the current system of sales/use tax enforcement is patently unfair to local merchants and it’s about time they fixed it although I don’t have a lot of confidence that this is going to pass any time soon. It's too much of a sacred cow.

Note: Every state with a sales tax also has a ‘use’ tax that applies to the same sorts of goods and at the same rate for cases where a state resident buys something and the merchant isn’t required to collect tax, like internet purchases. They are different in every state but you can easily look up the rules in you own state on the revenuers web pages. Most have it well labeled and easy to find because there is so much confusion over this topic. Google your own state name and 'use tax' and it'll pop up within the first few results.

Here, for example, is how my own state of Colorado handles it:
http://www.colorado.gov/cs/Satellite/Revenue/REVX/1176829212128

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver
 

Iiro

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From my point of view it looks extremely odd you Americans tolerate "Tax Free" internet sales. In EU we have quite well working tax collecting system, despite of several languages and multicomplex combination of cultures and legistation.
 

strmrdr

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It is only a matter of time before they try it but they may have a hard time getting it past the supreme court.
 

oldmancoyote

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Date: 3/16/2009 11:44:48 PM
Author: Iiro
From my point of view it looks extremely odd you Americans tolerate 'Tax Free' internet sales. In EU we have quite well working tax collecting system, despite of several languages and multicomplex combination of cultures and legistation.
...and that's because for many retail transactions they work exactly as the proposal, i.e. tax taken at source by the retailer, no matter where the consumer resides...
 

tradergirl

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I go to enormous lengths to avoid paying sales taxes, to the point that I barely buy anything locally anymore other than food and necessities. That would really anger me if they imposed taxes on internet sales.
 

iluvcarats

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Well I am sure that my great state of NY will be on board.
Let''s tax the tax on the tax!

 

atroop711

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Date: 3/17/2009 7:54:12 AM
Author: iluvcarats
Well I am sure that my great state of NY will be on board.

Let''s tax the tax on the tax!



ITTA..here in NY they gonna tax us soon for walking on the streets
 

iluvcarats

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Date: 3/17/2009 7:56:23 AM
Author: atroop711
Date: 3/17/2009 7:54:12 AM

Author: iluvcarats

Well I am sure that my great state of NY will be on board.


Let''s tax the tax on the tax!





ITTA..here in NY they gonna tax us soon for walking on the streets
Imagine what the tax would be for walking the streets with a soda on your way to a haircut!
 

grandeyota

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It was not sales tax that convinced me to purchase online, it was a better product at a better price. The local shops I went into were more interested in selling me garbage at a premium price than getting me what I was looking for. Even if an internet sales tax were to "even things up" my decision to buy what I was actually looking for online would not have changed.

I have a feeling my experience was not unique.
 

Todd Gray

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Date: 3/17/2009 12:11:20 PM
Author: grandeyota
It was not sales tax that convinced me to purchase online, it was a better product at a better price. The local shops I went into were more interested in selling me garbage at a premium price than getting me what I was looking for. Even if an internet sales tax were to ''even things up'' my decision to buy what I was actually looking for online would not have changed.

I have a feeling my experience was not unique.
Based on comments from clients, I do not believe your experience was unique either. In fact, when we were located in Fair Oaks, California (just North of Sacramento) we sold a diamond via the internet to a client located just a few hours away simply because his local "high end" jeweler had tried to sell him an inferior product, based upon his research. Instead of sourcing the diamond of the quality that he was asking for, they tried to sell him what they had sitting in the case... The client still had to pay California sales tax.

The challenge I see is that (based on the last rendition of this program) they expect us to keep track of a zillion tax rates each based on the city, county and state of the customer. Oh sure, there''s a lovely software program that we can purchase to assist with that, the price is real nifty too! Enough so that it is probably intended to kill the internet as a marketing platform more than level the playing field.

You know if our elected officials were truly concerned about generating revenues for their venues, they would make more of an effort to prevent U.S. jobs from being outsourced to foreign countries and think less of taxing us! It''s not like they actually do anything constructive with the tax revenue anyway. I find it amazing that people are kicking back and watching their jobs move overseas while the unemployment rate in the U.S. is off the charts! I think we should outsource our politicians, it''s not like some kid in a third world country could do a worse job
 

strmrdr

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I think the way it will end up and it might get past the supreme court is reporting rather than collecting.
I don''t see collecting being able to fly but a clearing house where the sale has to be reported to each state is where I see it going.
 

ATM

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internet has better selection hands down. the no TAX is a plus. ohhh and if i get free shipping too.. =0) i love the net.
 

icekid

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Date: 3/17/2009 7:54:12 AM
Author: iluvcarats
Well I am sure that my great state of NY will be on board.
Let''s tax the tax on the tax!

iluv- I was visiting my parents a month ago (I believe you''re a WNYer-ish too?) and my dad was telling me that the governor wanted to impose a fee to file your taxes by paper (which he has to do, because of complicated business taxes). What? You want him to pay so he can pay taxes???? What? NYS sucks!

The only good thing about Delaware.. no sales tax!
 

Maisie

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I always have to pay duty and tax anyway because I am in the UK. Nothing gets in here without the charges being paid!
 

Steel

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Date: 3/17/2009 3:35:33 PM
Author: Maisie
I always have to pay duty and tax anyway because I am in the UK. Nothing gets in here without the charges being paid!
Aint that the truth
.

And our Vat is a whopping 21.5% PLUS Duty.....


So I don't have much sympathy for this. Not only do we have to pay tax on everything, but our tax is crazy super tax
. What I wouldn't give for 6,7 or 8% sales tax...
 
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