So much has been written about new tax laws States are imposing to gain revenue from buyers who fail to voluntarily pay Use Tax. The primary argument bloggers and syndicated columists use is that ‘It Levels The Paying Field’ between Online Retail and a Bricks and Mortar [B&M].
Lets dispel that MYTH
The term was invented by Legislators, primarily because they see a missing piece of the tax pie, brought on by the lack of enforcement of existing Use Tax law. You buy something online, the buyer is obligated to pay that States’ Sales Tax [Use Tax] on the product. It’s a line item on your yearly tax form that most consumers eith ignore or lie about when filling out the form.
What about this ‘Level Playing Field’ argument? Lets look at the facts and advantages/disadvantages of online retail vs. B&M:
~ A B&M does not share the same tax load on a community that online retail has. A B&M uses more police, fire and sanitation services than online. Should online be required to subsidize a B&M’s heavier tax burden?
~ What law prevents a B&M from selling online?
~ Both online and a B&M collect Sales Tax for in-state sales.
~ You can’t touch or feel a product online, and answers to questions can take days. Not so in a B&M store, and that sales person’s pitch often is the dealmaker for you to leave the store with product in hand. … Advantage: the B&M.
~ For heavy items, the shipping often offsets any cost savings online retail may offer.
~ For lighter items, even with Sales Tax included, online can still be cheaper, because they do not have the high overhead a B&M pays. Making / adding Sales Tax to an online purchase will not match prices Advantage: Online
~ What about the 5 States in the US that have no Sales tax? How are the pundits arguing that advantage/disadvantage, if there is one?
~ Shopping online is GREEN. Less travel, no standing in line, shop and buy @ 3AM in your PJs, and the delivery services still travel XX miles per day, whether delivering to that B&M with resellable goods, or to your front door. By buying GREEN, that alone should deserve a tax (carbon) credit, shouldn’t it?
Should States collect Uales Tax? According to existing law, yes, of course! The consumer is obligated to obey the law and remit lawful tax. That is a burden of the consumer, not the online seller. If States wish to ‘level the playing field’, they need to enforce existing law first before inventing new, bad, unconstitutional law like this affiliate tax passed in NY, RI, NC, and CO.
Unenforceable they [legislators] say? A) as an online retailer, that’s not my probem. B) There is a solution. They could get the Merchant Accounts (Visa, MC, PayPal) to collect the Use Tax at the point of sale, then remit the Use Tax directly to the State DOR, but that plan is too simple for Legislators to understand.