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Tag Archive for Internet tax

TaxConnections Announces 500,000 Taxpayers Meet Tax Experts During Internet Summit

During July 2015, TaxConnections will bring together 500,000 Taxpayers and Tax Experts in the first internet tax summit of this kind.

With the number of taxpayers calls taken by the IRS dropping to an estimated 38.5% this year, taxpayers need more answers than they are currently receiving. TaxConnections mission is bringing visibility to our tax professional members and connecting them to taxpayers who need their help!

Based upon polling, we are currently talking to speakers and sponsors on the following topics: Small Business, Internet Tax, FATCA, Tax Audits, Marijuana Tax, Healthcare Tax, Cadillac Tax and more…

If you would like to participate in this very exciting 500,000 Taxpayers and Tax Experts Internet event, please contact Kat@taxconnections.com today! Or, call 858-999-0053.

I Want To Join TaxConnections

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Judiciary Committee Releases Internet Sales Tax Principles

TaxConnections Blogger Jerry Donnini posts internet sales tax principlesReportedly relying on trade groups, taxpayers, industry, and state governments the House Judiciary Committee announced seven basic principles on remote sales tax collection. Chairman Goodlatte made the announcement to allegedly begin the discussion on the looming problem of Internet sales tax.

The seven basic principles, announced, are:

1. Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.

2. Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.

3. No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement. Read more

The “Internet Tax” — Two Common (But Wrong) Beliefs About Marketplace Fairness and Sales Tax Nexus

When the Senate overwhelmingly passed the Marketplace Fairness Act (“MFA”) (S. 743) on May 6, 2013 tax professionals and other CPAs naturally took notice. Many journalists and bloggers have taken notice, too, writing prolifically about the so-called “Internet sales tax.” This is the closest such legislation has come to being enacted, and so naturally it is newsworthy. However, many in their excitement have begun talking about the passage of this Act as if it is a foregone conclusion. So far the MFA has passed the Senate. But some say it has a tough road ahead in the House and that it may even be dead-on-arrival in the Republican-controlled House.

Will it pass? We don’t know and can’t predict. The only thing we can be sure of is that whether the MFA passes or not, sales tax nexus is and will continue to be a very relevant, complex issue demanding attention by businesses large and small and their CPAs.

False Belief Number One: If The Marketplace Fairness Act Passes, Everyone Will Have Nexus Everywhere. Nexus Will Be Obsolete.

We are actually hearing this statement in one form or another from many CPAs and other professionals. While we could agree that the physical presence aspect of nexus has been under pressure since the Quill case and that the pressure appears to be increasing every year, we can not agree that nexus would be obsolete. The MFA still has many questions that need to be answered. For example, if the MFA does pass in the House, what modifications will be made and what will the final version look like? Will all the states participate? What will be the minimum threshold? Read more

The Tax Burden In America Is Not High Enough?

By a vote of 69-27, the United States Senate has passed yet another tax hike. Instead of curbing spending, they have decided that raising taxes on the Internet is the best way to pay the debt.

The bill aims to enforce a sales and use tax on businesses that rely on the Internet to reach their customers. While the specifics of the bill are about as long as Obamacare, here are the top three problems with the Internet sales tax:

•  Online businesses would be responsible for collecting and filing their sales tax from customers that don’t reside in their state.

•  Businesses would be forced to use software that will generate a database to keep track of their tax paying customers. This also puts their customers at risk should the database be hacked, spilling millions of sensitive personal information records into the wrong hands.

•  States might no longer seek to lower their taxes for business friendly environments. They’d be encouraged to raise their taxes in order to collect tax money from other states, thus hurting potential business development. Read more

Penny Taxwise Talks Internet Taxation

Internet Taxation

Howdy, my fellow finance nerds! It’s Penny again, and I’ve just embarked on yet another quest to understand this wacky U.S. tax code of ours. This week, I’ll be talking Internet taxation – and we’ll dive into the “Amazon Tax” in particular.

Ever heard of it? If you’re like me, the answer is probably no. And, like me, you’ve likely enjoyed using Amazon for years now, marveling at the low pricing but utterly failing to realize that you’ve escaped paying sales taxes during each and every one of your online checkouts.

The federal government doesn’t collect sales tax, so Amazon’s largely escaped the sales tax situation for years now. However, now that the economy’s in the toilet, many state lawmakers have begun rabidly digging for revenue-generating solutions. Amazon is one company on the chopping block, and eight states have enacted legislation compelling the ecommerce giant to start coughing up its fair share of government dues. More states are likely to join the movement, and the change will usher in a new (and way more expensive) era for online retailers and their customers.

Understanding the Amazon Tax

Apparently, I wasn’t the only one who didn’t quite “get” the Amazon Tax. Here’s a recent question from Tax Connections posted by a member who was equally confused:

 

Never fear – Tax Pro Debbie Tolbert to the rescue! Debbie works double duty as both owner and manager at Friends Doin’ Taxes, LLC in Lake Ozark, Missouri. Lordy, she must have her hands full! Here’s what Debbie had to say about the Amazon Tax:

I checked out her listed resource – along with a few of my own, of course – and found out quite a bit about Amazon’s tax debacle. I also discovered that Internet taxation in general is gaining a ridiculous amount of attention these days, and we’re likely to hear about it much more in the years ahead.

Amazon and Accountability for Internet Commerce

Eight states have officially enacted taxes for residents on their Amazon purchases. So far, only Kansas, Kentucky, New York, North Dakota, Texas, Washington, California, and Pennsylvania have taken the plunge. However, New Jersey, Virginia, Indiana, Nevada, Tennessee, and South Carolina aren’t far behind – these states have already introduced legislation to do the same, and their taxes are expected to roll out over the next two to three years. There’s a predetermined date set for each state.

Those in favor of the Amazon Tax maintain that it’s grossly unfair to force brick-and-mortar stores in a state to collect sales tax while simultaneously allowing Amazon to sell to those same state residents tax-free. That’s why Amazon’s feet are roasting in the proverbial fire right now – the company has flat refused to charge sales tax in states without laws compelling it to do so. Here’s what makes matters worse: in many of the tax-free states, Amazon even maintains warehouses and other business offices – meaning it’s not just operating online in these areas… the company also has a physical presence.

The only thing Amazon’s said about the matter is that it would support some kind of federal fix-it that would be both simple and fair, but the government didn’t give a hoot about what Amazon would support. Back in May of 2011, Congress enacted sweeping legislation that granted states the authority to tax their residents on out-of-state sales.

The Motley Fool recently published a great piece about Internet taxation, and in it, the author pointed out that Internet sales tax is a reality that’s coming – regardless of whether the online world is ready. There will be winners and losers across the board when Internet sales tax does eventually become a common practice. For instance, EBay will have a definite edge over Amazon since it is nothing more than a platform for sellers to make transactions on their own. EBay doesn’t hold any inventory, so it will have the ability to mitigate sales tax far more effectively than Amazon.

Plus, according to the Fool article, EBay has unique access to a possible loophole in the tax code. Since individuals sell their goods on the platform, they could fall under a special exemption – which may mean sales tax wouldn’t apply.

This all translates to a shift in the online retail dynamic – and we’ll see companies rise and fall as taxes are applied to ecommerce companies. Services like EBay and PayPal have definite advantages, but physical retailers such as Amazon may struggle markedly in the years ahead.

Conclusions

For you and me, all this may seem to mean nothing. But it does – even though it appears that Internet sales taxes would be a bad thing for us as consumers, it may end up being good. We’ll see companies lower prices and claw at one another to stay afloat by attracting our business. We’ll come up roses after state taxes regulate online commerce, and our wallets will be fuller as a result.

That’s it for me, my taxpaying friends! I hope you learned something today, and don’t forget to tune in next week for another round of ol’ Penny’s tax-loving adventures.

Making Cents Count,

Penny