Is the dam about to burst with sales tax being levied on Internet orders?

This isn't a complicated issue. The fact remains though that with technology and the internet, much has shifted and will never be the same again. I keep coming back to mail order. I used to purchase a lot of seeds and plants and various other things "back in the day". All of the mail order forms had a little chart of all of the states and their individual tax rate if any. The consumer looked at the chart, chose their state, figured out the sales tax, wrote it onto the form, added it with the shipping, and wrote a check for the entire amount. I'm sure mail order still exists although I have not done that for many years now.

My point is that this is all part of the changed landscape we are dealing with. Just as merchants in the 70's had to keep record and file for sales in different states, so should the companies selling on the internet. It is NOT that difficult. It should in fact be easier. The system already exists and has for decades, I don't understand why people want to make it seem so complicated. It's not. It will be the same as any business selling anything. They collect taxes from the consumer for the state. Whether they pay it or not is neither here nor there, we already have agencies whose job it is to oversee this.

I choose not to sell out of my state or my country. Businesses that choose to sell out of country have to pay import/export. Whether they report those sales or not has always been, and always will be, between them and their government.
 
When someone comes in to a shop and orders flowers to be sent out of state. (Lets take the WS out of this just to keep things clear.) The store rings in the sale and charged THEIR local tax. They then call up the shop out of state and do a tax free sale to where the goods are located. The goods are sold in one state and delivered in another. Now say those goods are delivered to a state that wants that sales tax, because the physical goods were delivered there. If that customer would have called that florist THEY would have payed sales tax to that state, not yours. What state earns that tax. Are you prepared to pay that tax to the other state at tax time? What about your state. Your business is located there and they want their share. I know we are talking internet sales here but you can see where it starts to get confusing. Who pays and who gets it, that is what it all comes down to. What is the difference in the little story above, a computer was not used. So what happens when the wire services receive phone orders and not internet orders. I bet they receive a ton of calls from their websites, I know I do. I know a lot of people that would never give their CC number online but would be more then willing to give it over the phone. Do they not pay tax then because this was done over the phone? It all comes back to what state gets the money. They all want it, they are all beyond broke. Times are changing.

Sorry, I'm stirring the pot today.
 
Me too Linda. But after living in one state and working in another, I just see that pencil and all of the tears trying to figure it out. I can't imagine doing it for 50 states LOL. I sure hope they find a way to get the money that is owed. But I also hope it does not become a burden on small establishments. Sometimes our government has been known to not look before it leaps.
 
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secretgarden said:
I just see that pencil and all of the tears trying to figure it out. I can't imagine doing it for 50 states LOL. I sure hope they find a way to get the money that is owed. But I also hope it does not become a burden on small establishments. Sometimes our government has been known to not look before it leaps.
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Not worried here, everything I sell and deliver is local ;)
 
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Being a Canadian our taxes are somewhat different up here ( NOT ANY BETTER, just different) and while I sympathize with what appears to be an unlevel playing field I cringe at the thought of the government finding ways to collect more taxes. Unfortunately their wild out of control spending at all levels has made the government a bottomless pit when it comes to collecting "sufficient" tax to operate.

My personal feeling is that rather than find ways to plug loopholes the majority of tax systems (civic, state, provincial, or federal) need a serious overhaul. I have never been able to wrap my head around the concept of a business or an individuals percentage tax rate increasing as their income does.Nor do I understand why residential property taxes are based on the value of the property. In all of these cases individuals receive no additional services to speak of for their increased contribution. What makes the entire tax system in both our countries so disheartening is that it really boils down to wealth redistribution (takes from the rich, gives to the poor) with the eventual goal being all are equally poor off.

In the US alone you now have close to 50% of eligible taxpayers that pay 0 (Zero, nada, nil) personal income based on income tax credits and the like.So my suggestion is a flat rate tax. Simple, effective and fair.

Excuse the musing, but in my mind excessive taxation is akin to armed robbery, after all the government under the threat of force takes your money right out of your pocket. The only real difference is the individual on the street who attempts the same things gets 7 years behind bars.
 
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Doug, I absolutely agree that a flat tax would be the fairest. Just think of how much more the government could get their hands on if all the drug dealers and prostitutes were paying their share, simply by paying a higher sales tax. They don't pay taxes on their income because the income is never reported. But they probably have more disposable income than many other people who DO file income taxes. That would truly even things out, those who consume more and higher end items would be taking the higher tax burden and there would be no need to chase down people who don't pay their taxes, only the businesses.

Which brings me back full-circle. This discussion is about internet companies charging sales tax to the consumer. If I as a business am required to charge sales tax, and file and pay those taxes I collect, then ALL businesses should. For some to be exempt is BS
 
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Doug Munro said:
Being a Canadian our taxes are somewhat different up here ( NOT ANY BETTER, just different) and while I sympathize with what appears to be an unlevel playing field I cringe at the thought of the government finding ways to collect more taxes. Unfortunately their wild out of control spending at all levels has made the government a bottomless pit when it comes to collecting "sufficient" tax to operate.

My personal feeling is that rather than find ways to plug loopholes the majority of tax systems (civic, state, provincial, or federal) need a serious overhaul. I have never been able to wrap my head around the concept of a business or an individuals percentage tax rate increasing as their income does.Nor do I understand why residential property taxes are based on the value of the property. In all of these cases individuals receive no additional services to speak of for their increased contribution. What makes the entire tax system in both our countries so disheartening is that it really boils down to wealth redistribution (takes from the rich, gives to the poor) with the eventual goal being all are equally poor off.

In the US alone you now have close to 50% of eligible taxpayers that pay 0 (Zero, nada, nil) personal income based on income tax credits and the like.So my suggestion is a flat rate tax. Simple, effective and fair.

Excuse the musing, but in my mind excessive taxation is akin to armed robbery, after all the government under the threat of force takes your money right out of your pocket. The only real difference is the individual on the street who attempts the same things gets 7 years behind bars.
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I absolutely agree with Doug! There, I said it.

BOSS<<<flat tax proponet!
 
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A little bit of background information on sales taxes. First, if an order is placed and delivered within a given state, state rules and regulations regarding sales taxes apply. Right now, in general, if you collect sales taxes on a local order that comes over the phone, you will also have to collect sales taxes on an order that comes in over the internet for local delivery. If you have an order that is going to be going to another state for delivery (and for a moment let's leave wire services out of this discussion) the sales taxes on that order are controlled by the Federal government not the state. The Federal government currently says it is illegal to require a retailer to collect sales taxes for another state unless that retailer has a physical presence in that state (which is called Nexus). So, it doesn't matter if a state decides they want a retailer in another state to collect their sales taxes on an order sent into that state. They don't rule. The Federal government does.

Now let's talk for a minute on wire orders. Many years ago the wire services went from state to state to get a uniform system of handling sales taxes on wire orders. Under normal rules a wire order sent within a state would be handled differently from a wire that went interstate. So, all the states that collect sales taxes agreed to have everyone collect sales taxes on the outgoing wire order and remit them to the sender's state and not collect sales taxes on incoming wire orders. That's been the system for years and continues to this day, with minor exceptions (Minnesota for example had different rules until this fall when they joined the band wagon). So much for wire orders....

It is true that states are losing billions of dollars in sales tax revenue (currently estimated at over $30 billion) on internet orders that are being sent from a retailer in one state to be delivered in another state. Because of this back in 2001 a group of states got together to work on changing the system and eventually collect these lost taxes. It is called the Streamlined Sales Tax Project. SAF and Teleflora got involved early in the game to lobby on behalf of the retail florist. For 7 years SAF sent me to the Streamlined meetings. In order to change the system the states would have to get the Federal government to go along with the change. In order to do that, it would require that all the states adopt a similar sales tax system so there would be uniformity (hence the word "streamlined") and that would overcome the Federal government's historical objection to making retailers collect sales taxes for other states. This program is moving along and presently has almost half the states on board. I believe they will eventually succeed, especially given the need for states to increase their tax revenue in today's economy. When this happens you will be notified by your local state's sales tax department of revenue and you will also be notified by SAF as to the impact on florists specifically. Everyone working on the project understands that whatever the final result it must come forth in a package that makes the collecting and reporting of these taxes fairly simple. I don't know all the intricacies of that plan, but I do believe it will be manageable for small retailers given today's technology. I am also sure there will be exemptions for small businesses. The threshold for those exemptions is not yet set, however, I expect most florists will fall under that threshold.

So, the bottom line is that currently florists do not need to worry about it. Wire order taxation will remain the same until there is Federal legislation. When it does happen, it should not cause too many headaches. I hope this lengthy reply will set most florist's minds at ease. Sleep well tonite. Paul Goodman
 
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Paul, thank you very much for your lengthy reply :)

One clarification. When you mentioned an exemption for small business, you lost me. Does this refer to not having to file separate sales taxes to each state that we've sent an order out for fulfillment? I would continue to charge my state sales tax for all of my orders and basically nothing would change for me?

I don't know that the concern is so much about how things might change for us, as it concerns us with others appearing to be a better bargain than us. Affiliate sites are paying nothing in sales tax to any government institution, nor are they collecting it. If there will be an exemption for a certain dollar amount, many of these could still be exempt then, and that still leaves the playing field unbalanced.

Of course, I may be misunderstanding completely, but it's something that needs to be looked at carefully. An average florist with revenues of $300,000 and an affiliate who "works" from home bringing in $300,000 in revenue cannot be compared. The affiliate is making WAY more money and should not be let off the hook based on those numbers. I still think that anybody running a business should be required to collect sales tax and I don't understand why they don't have to at least collect it for the state in which they reside, it's still a business in that state. Doesn't make sense to me. Of course, federal laws seldom do.....

Am I completely off-base? I know it's VERY possible!
 
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pgoodman said:
Now let's talk for a minute on wire orders. Many years ago the wire services went from state to state to get a uniform system of handling sales taxes on wire orders. Under normal rules a wire order sent within a state would be handled differently from a wire that went interstate. So, all the states that collect sales taxes agreed to have everyone collect sales taxes on the outgoing wire order and remit them to the sender's state and not collect sales taxes on incoming wire orders. That's been the system for years and continues to this day, with minor exceptions (Minnesota for example had different rules until this fall when they joined the band wagon). So much for wire orders....

Paul Goodman
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Paul,

Thank you for taking the time to comment here and with some most illuminating answers and commentary.

I am though puzzled by what you write on wire orders that involve inter-state commerce. IF I understood your comments correctly, you explain that the sending wire service collects tax and remits the amount collected to the sender's state and that this continues to this day.

I was surprised by this and went on-line to Teleflora - with a physical business presence in Arkansas, California and Oklahoma - and initiated the following purchases from my location, should it be relevant, in New Jersey.

In using the TF website, I wished to send a purchase to a suburb of Los Angeles. I was not charged any tax. I then intended to send a purchase to Oklahoma City and was told I would have to pay tax. I went to send a purchase to Little Rock and was duly informed I would have to pay tax.

If I understood your comments correctly, why is TF not charging sales tax for the CA destination purchase when, noting what you write, they surely should? Florists get annoyed when their customers have to pay sales tax when sending flowers into CA and companies - TF being one - do not levy the tax on the purchase of even the same design to the same recipient. Florists can, and perhaps rightly, see it as an unfair charge upon us that (helps?) drives the consumer into the clutches of the national wire services themselves.

I look forward to your reply.

Simon
 
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Linda & Simon: Let's see if I can address your concerns. First, Linda, an exemption would mean you would not be required to collect the taxes. I have heard various thresholds thrown around, but let's say it's going to be $500,000. This would most likely be interpreted as exempting any business doing less that $500,000 in interstate business from collecting and remitting sales taxes to the state where the order is going. Virtually all florists would fall below that threshold. What it will be is not yet determined, so we will just have to wait.

Let me say that this can be a complex problem, so I may not address your concerns accurately.

Next - fairness. Right now companies that sell into other states are not required to collect sales taxes. This has been true basically for ever. Catalog companies like Lands End have always had an advantage over Brick and Mortar companies. However until the Internet came along the volume that was being sold this way was insignificant in the scheme of things. The Internet changed all that and now there are literally thousands of companies selling into other states. Theoretically this difference shouldn't matter to the States because all the states have a 'use tax' law that requires people to pay the state sales taxes on purchases they made from outside the state. Most states enforce those laws on companies where large volumes are involved, however, it is impossible to enforce these laws on consumers. So, unless a consumer voluntarily submits the use tax, it goes uncollected. The Internet has made the volume of business going to consumers HUGH and the tax avoidance is now a problem for the states. I can't tell you why Teleflora did not assess sales taxes on the order going to Los Angeles. I can tell you that Teleflora is very aware of what is required of them and they will not knowingly break the law. The issue of nexus can be a bit tricky. Some have believed that you have to have an actual building to be considered as having a physical presence in a state. However, if you have delivery trucks, that is considered a physical presence. And I also believe (note I did not say "know") that if you have a sales representative in a state that qualifies for nexus as well. I know I can go online and buy a laptop computer from a company in New York and not pay sales taxes. However, if I order from Dell, they assess the tax. Some larger companies have already started to collect the taxes voluntarily.

The whole purpose of the Streamlined movement is to level the playing field and collect taxes at the same time.

FYI - one of the areas that creates a lot of challenges when trying to get states to adopt the same system is where a tax is 'sourced.' The Streamlined project is going to source the tax at the destination of the product. In other words the tax that will be collected and remitted is determined by where the product ends up. Some states 'source' the tax to the origin of the sale. The tax is determined and paid to the city/county where the sale is made. In those states I might find it cheaper to buy my washer and dryer in an adjacent town because their taxes are lower and then bring it home myself or have it delivered. Whatever the taxing system is in a given state it is a harrowing project to change it. For example, let's suppose a county where Amish people live has an origin taxing system. All the products and goods that the Amish sell provide sales taxes to that county. Let's also assume for example purposes that the county is largely inhabited by Amish. No big towns and no industrial areas. If that county is forced to go to a destination taxing system, they will lose basically all their revenue. How will the county survive financially? Anyway, as you can see, it gets complex.

What I can tell you is that everyone is at the Streamlined table and they are working diligently to come up with a solution that will not be too disruptive, bring lost revenue back to the states and level the competitive playing field. Large task. Stay tuned.

Paul
 
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Paul,

Thank you for the detailed reply which, on the question I put, answers it.

Sad to report that Teleflora has not been charging sales tax on purchases from outside CA for delivery, off their website, into CA at least since Q4 2006.

If, as your two postings on the Streamlined sales tax matter suggest, the apparent majority of florists at some date in the (not too distant?) future will not have to collect sales tax on out of state deliveries through another florist, we will, at last be able to score some small victory over the giants in the business who will have to collect the tax. I hope that it does not turn out to be a Phyrric victory for the small and mid-size florist.
 
This really just does not make sense at all. I don't sell flowers from my website that are not in my delivery area. The only time I send an order out of state is when one of my customers asks me to, and they generally do that in store. Would that sale then be a non-taxable item? I'm doubting it.

Paul, thank you so much for the info you have provided so far. Is there ANY way for SAF to have an impact on the final outcome?
 
Linda - see if this helps: Leave all wire orders out of the discussion. They are handled by the sending order collecting the sales taxes and the receiving florist collecting no taxes. On all other orders you receive from a customer (web, phone or in person) that want delivery in your area, you collect and remit the sales tax. If you sell something to be delivered outside your state (not a wire order) and you send it out via UPS or whatever, you don't have to collect sales taxes on that item unless you are in a state that taxes all sales at the origin of the sale. Sorry this is so confusing. You really need to have a sales tax discussion verbally so you can clarify a lot of these points that make a difference. Paul
 
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pgoodman said:
Linda - see if this helps: Leave all wire orders out of the discussion. They are handled by the sending order collecting the sales taxes and the receiving florist collecting no taxes. On all other orders you receive from a customer (web, phone or in person) that want delivery in your area, you collect and remit the sales tax. If you sell something to be delivered outside your state (not a wire order) and you send it out via UPS or whatever, you don't have to collect sales taxes on that item unless you are in a state that taxes all sales at the origin of the sale. Sorry this is so confusing. You really need to have a sales tax discussion verbally so you can clarify a lot of these points that make a difference. Paul
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Paul, I think you are misunderstanding me. I'm not confused about when I'm supposed to collect sales tax. I just deplore the fact that any business would be exempt from collecting sales tax. Expecting consumers to file their use tax is laughable.
 
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josie posie said:
how come you are an ex saf member out of curosity
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Not sure who you're asking this question to, but I myself dropped SAF because they chose for years not to speak out about order gathering and deceptive marketing by non-florists and florists alike, not to mention the wire services. In fact, Mr Moran basically condoned the practice in one editorial.
 
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