Do away with Quill? I say keep it!
03 Jul 2009
In response to LA Times article - http://tinyurl.com/kqvbeo - The Internet isn’t tax-free
As an online retailer, I oppose any legislation to collect out of state sales tax.
The LA Times Editorial claims the Supreme Court decision (Quill vs. North Dakota 1992) is outdated. I say it preserves States Rights.
They also claim there is a disadvantage to the B&M (Bricks & Mortar) stores. Lets look at the differences:
~ A B&M does not have the same tax load on a community (police/Fire/Sanitation service, etc.) that an online seller has.
~ You can’t touch or feel a product online. Answers to questions via email can take days. Not so in a B&M.
~ What rule or law prevents a B&M from selling online?
~ For In-State sales, both the B&M and Online Sellers collect and remit Sales Tax.
~ A B&M does not charge separate shipping charges, for that Lazy-Boy chair, that could be $100 or more for shipping.
~ Shopping online is greener. No travel, no gas consumed, no waiting in line. Shouldn’t that deserve a tax advantage for helping to save the planet?
The disadvantage I see is that the Legislators, not the B&M, sees a lack of tax revenue.
LA Times claims it is too difficult to collect Use Tax from the buyer. As an online seller, my claim is that it is too difficult to collect tax for Out-of States sales. There would be 45 State returns to make each Quarter, and it would need to address over 7500 tax districts, which are NOT defined by zip code. It is impossible for me on the East Coast to know what tax law is required on the West Coast. Example: Is Sales Tax charged for shipping or not? In some States, it is, in others, it’s not. And what about the tax audit for an innocent mistake? You expect me to travel 3000 miles to present my case to the California DOR over a $100 tax bill? Enforcing collections of sales tax is so complicated, it would put most small businesses out of business.
A simpler solution would be to enforce existing law. … Use Tax. Make it mandatory rather than voluntary as it is now, and it is simple to do. Have the Merchant Accounts (Visa, MC, PayPal) assess and collect the tax and remit directly to the State (States pay related fees). eBay, Amazon and PayPal have the data, and software is available. Shopping cart info can be easily modified to upload the correct info to the merchant account. In this way, sellers would not need to know if shipping, or clothing, or other items have one special tax rate or none at all.
Best of all, this system would cover those buyers who travel out of state to buy goods (to save on Sales Tax) from a B&M. The billing/shipping info on the credit card would supply the information to assess the correct Use Tax. It would be the responsibility of the consumer to challenge any incorrect tax assessed, not the seller.
The LA Times wants to do away with old law and write new law. History has shown that Legislators are unable to write simple law, rather than enforce existing law. Worse is that they are clueless about online retail and how it works. My solution to collect Use Tax clearly is the best answer. Of course, we know why they won’t. They prefer to be re-elected and not deal with more wrath from consumers (voters).