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Yes, the "internet sales tax bill" (marketplace fairness act) passed the Senate this week. It has White House support, so only needs to pass the House to become

Yes, the "internet sales tax bill" (marketplace fairness act) passed the Senate this week. It has White House support, so only needs to pass the House to become law. A summary: http://www.dangrossman.info/2013/04/24/what-startups-need-to-know-about-the-internet-sales-tax-bill/ http://www.dangrossman.info/2013/04/24/what-startups-need-to...

rayiner 14y ago
What's bad about it?
- dangrossman 14y ago
  I don't have time to read 50 states' tax codes, file 50 tax returns and potentially be audited 50 times a year. What small business does?
  - tptacek 14y ago
    Most of them. As soon as you have any real cash flow, you engage accountants.
    - dangrossman 14y ago
      My accountant would not be able to handle a XX-fold increase in the number of tax codes, forms and filings he has to handle per-client. We're going to have to train more accountants.
      - tptacek 14y ago
        I don't agree. Maybe you could ask your accountant? I guess at some point I could ask ours too.
        dangrossman 14y ago
        I have to make an appointment to see my accountant at least 1-2 months in advance if it's anywhere near tax time (late January-May). He's definitely no time to take on more forms per client, let alone advise me properly which states will tax which products at what rates. I run the online store for my father's retail shop, with several hundred SKUs. We sell fancy health water bottles for example -- some states this is not taxed, some it is, some it is depending on bottle size and whether it meets their definition of water or some other kind of beverage. Someone will have to reconcile every SKU against every state's sales tax classification changes every 90 days. That's not something any accountant does for small businesses operating in a single state right now.
        tptacek 14y ago
        Maybe get a better accountant? I'm being serious. I definitely don't need to ask a month in advance to talk to my person accountant or our business's.
        dangrossman 14y ago
        We'll obviously need one (where today this accountant meets all our needs, and has been a family friend for decades), but a small business accountant that can do what's going to be required doesn't exist yet. Only national chains have had to worry about such things.
        tptacek 14y ago
        Again, and respectfully, I don't think handling sales tax filings for a small business is a huge hurdle compared to some of the craziness that even small business accountants are routinely called on to do. Your point upthread was "no small business person can handle filings to 50 states". I'll stipulate that! My response is just, people with real businesses usually don't (and shouldn't) DIY their taxes anyways.
        deleted 14y ago
  - mikeyouse 14y ago
    Do you make over $1mm annually? If not, you're exempt from this bill already.
    - dangrossman 14y ago
      It's not make $1mm, it's sell $1mm. At a 3-5% net profit, that's $30-50k/year before taxes, or so small you can't even hire a first employee yet. And that's the category the online store for my father's retail shop is in.
      - mikeyouse 14y ago
        I'm genuinely curious which type of online store earns less than 5% net but generates $1mm in revenue.
        dangrossman 14y ago
        I'm not comfortable giving out too many details about his store without permission, but here's a list of 83 industries that average less than 5% net margin: http://biz.yahoo.com/p/sum_qpmu.html http://biz.yahoo.com/p/sum_qpmu.html
      - dragonwriter 14y ago
        > It's not make $1mm, it's sell $1mm. Its not either. Its have over $1 million in remote sales in the prior year. > At a 3-5% net profit, that's $30-50k/year before taxes, or so small you can't even hire a first employee yet. Well, since net profit is after operating expenses (including labor costs), that's only "so small you can't even hire a first employee yet" if you expect the net value produced by that employee to be negative 30-50k per annum, in which case you it would be economically irrational to hire the employee even if you could afford it while remaining profitable. (While the numbers change, the general observation is true for any non-negative net profit amount: if you expect a positive return from an employee, you can "afford" to hire them -- and expect to be profitable afterwards -- anytime you have either a non-negative net profit, or a negative net profit that is smaller than the expected net value provided by the employee.)
  - rayiner 14y ago
    Federalism is a bitch huh.
  - dragonwriter 14y ago
    > I don't have time to read 50 states' tax codes, file 50 tax returns and potentially be audited 50 times a year. What small business does? If, even with the streamlining and support required for states to opt-in to the provisions of the MFA, you can't do that, you can just choose not to sell into those states. Why should remote sellers be favored over local sellers by not being required to make that choice about where they are willing to do business?
    - dangrossman 14y ago
      This is a false equivalency. Opening a retail store in a state is not the same as opening a website people in that state can access. There's no conscious decision, or deployment of capital to that state. My website does not use any of the public resources of infrastructure of other states. There's no legal or practical justification for having me taxed by those states. Laws should also consider practical aspects like whether they're going to dampen the economy, restrain commerce and favor corporations over small businesses. It may be equivalent in your academic mind, but it's not equivalent to the people who will have to do 50 times more work just to continue running their single-location family-owned business as they have for the past 10-20 years.
      - dragonwriter 14y ago
        > Opening a retail store in a state is not the same as opening a website people in that state can access. There's no conscious decision, or deployment of capital to that state. Yes, its much more expensive to open a retail store, and involves some contribution to the local economy to operate it, so the two are not equivalent. On the other hand, they are similar in that each is a conscious decision to conduct business with people in the State, and there is no rational reason to favor remote business.
        dangrossman 14y ago
        Neither should be favored. If a customer that lives in each of the 50 states walks into our retail store, we still only have to collect a single sales tax and remit it to a single entity. If a customer that lives in each of the 50 states logs into our online store, we have to collect 50 sales taxes and remit them to 50 entities. That's a law that favors retail store owners over online sellers. A law with the same practical effects could be written that favors neither by having a single federally-operated sales tax that's distributed to the states according to the relative sales volume to residents of those states.
mrgoldenbrown 14y ago
The post implies that there is some additional "Internet only" tax above and beyond regular sales tax. This is the confusion, I believe. The Marketplace fairness act is not imposing extra taxes on top of normal sales tax. It is simply removing the exemption that mail order and internet sales currently enjoy. Jeff Seems to be OK with the idea of Canada's goods and services tax - I'm not sure why he thinks sales tax is so different.

rayiner 14y ago

What's bad about it?

dangrossman 14y ago
I don't have time to read 50 states' tax codes, file 50 tax returns and potentially be audited 50 times a year. What small business does?
- tptacek 14y ago
  Most of them. As soon as you have any real cash flow, you engage accountants.
  - dangrossman 14y ago
    My accountant would not be able to handle a XX-fold increase in the number of tax codes, forms and filings he has to handle per-client. We're going to have to train more accountants.
    - tptacek 14y ago
      I don't agree. Maybe you could ask your accountant? I guess at some point I could ask ours too.
      - dangrossman 14y ago
        I have to make an appointment to see my accountant at least 1-2 months in advance if it's anywhere near tax time (late January-May). He's definitely no time to take on more forms per client, let alone advise me properly which states will tax which products at what rates. I run the online store for my father's retail shop, with several hundred SKUs. We sell fancy health water bottles for example -- some states this is not taxed, some it is, some it is depending on bottle size and whether it meets their definition of water or some other kind of beverage. Someone will have to reconcile every SKU against every state's sales tax classification changes every 90 days. That's not something any accountant does for small businesses operating in a single state right now.
        tptacek 14y ago
        Maybe get a better accountant? I'm being serious. I definitely don't need to ask a month in advance to talk to my person accountant or our business's.
        dangrossman 14y ago
        We'll obviously need one (where today this accountant meets all our needs, and has been a family friend for decades), but a small business accountant that can do what's going to be required doesn't exist yet. Only national chains have had to worry about such things.
        tptacek 14y ago
        Again, and respectfully, I don't think handling sales tax filings for a small business is a huge hurdle compared to some of the craziness that even small business accountants are routinely called on to do. Your point upthread was "no small business person can handle filings to 50 states". I'll stipulate that! My response is just, people with real businesses usually don't (and shouldn't) DIY their taxes anyways.
        deleted 14y ago
- mikeyouse 14y ago
  Do you make over $1mm annually? If not, you're exempt from this bill already.
  - dangrossman 14y ago
    It's not make $1mm, it's sell $1mm. At a 3-5% net profit, that's $30-50k/year before taxes, or so small you can't even hire a first employee yet. And that's the category the online store for my father's retail shop is in.
    - mikeyouse 14y ago
      I'm genuinely curious which type of online store earns less than 5% net but generates $1mm in revenue.
      - dangrossman 14y ago
        I'm not comfortable giving out too many details about his store without permission, but here's a list of 83 industries that average less than 5% net margin: http://biz.yahoo.com/p/sum_qpmu.html http://biz.yahoo.com/p/sum_qpmu.html
    - dragonwriter 14y ago
      > It's not make $1mm, it's sell $1mm. Its not either. Its have over $1 million in remote sales in the prior year. > At a 3-5% net profit, that's $30-50k/year before taxes, or so small you can't even hire a first employee yet. Well, since net profit is after operating expenses (including labor costs), that's only "so small you can't even hire a first employee yet" if you expect the net value produced by that employee to be negative 30-50k per annum, in which case you it would be economically irrational to hire the employee even if you could afford it while remaining profitable. (While the numbers change, the general observation is true for any non-negative net profit amount: if you expect a positive return from an employee, you can "afford" to hire them -- and expect to be profitable afterwards -- anytime you have either a non-negative net profit, or a negative net profit that is smaller than the expected net value provided by the employee.)
- rayiner 14y ago
  Federalism is a bitch huh.
- dragonwriter 14y ago
  > I don't have time to read 50 states' tax codes, file 50 tax returns and potentially be audited 50 times a year. What small business does? If, even with the streamlining and support required for states to opt-in to the provisions of the MFA, you can't do that, you can just choose not to sell into those states. Why should remote sellers be favored over local sellers by not being required to make that choice about where they are willing to do business?
  - dangrossman 14y ago
    This is a false equivalency. Opening a retail store in a state is not the same as opening a website people in that state can access. There's no conscious decision, or deployment of capital to that state. My website does not use any of the public resources of infrastructure of other states. There's no legal or practical justification for having me taxed by those states. Laws should also consider practical aspects like whether they're going to dampen the economy, restrain commerce and favor corporations over small businesses. It may be equivalent in your academic mind, but it's not equivalent to the people who will have to do 50 times more work just to continue running their single-location family-owned business as they have for the past 10-20 years.
    - dragonwriter 14y ago
      > Opening a retail store in a state is not the same as opening a website people in that state can access. There's no conscious decision, or deployment of capital to that state. Yes, its much more expensive to open a retail store, and involves some contribution to the local economy to operate it, so the two are not equivalent. On the other hand, they are similar in that each is a conscious decision to conduct business with people in the State, and there is no rational reason to favor remote business.
      - dangrossman 14y ago
        Neither should be favored. If a customer that lives in each of the 50 states walks into our retail store, we still only have to collect a single sales tax and remit it to a single entity. If a customer that lives in each of the 50 states logs into our online store, we have to collect 50 sales taxes and remit them to 50 entities. That's a law that favors retail store owners over online sellers. A law with the same practical effects could be written that favors neither by having a single federally-operated sales tax that's distributed to the states according to the relative sales volume to residents of those states.

mrgoldenbrown 14y ago

The post implies that there is some additional "Internet only" tax above and beyond regular sales tax. This is the confusion, I believe. The Marketplace fairness act is not imposing extra taxes on top of normal sales tax. It is simply removing the exemption that mail order and internet sales currently enjoy. Jeff Seems to be OK with the idea of Canada's goods and services tax - I'm not sure why he thinks sales tax is so different.