Friday, March 18, 2011

Sales Tax: Online Retailers vs. States or Me vs. The New York Times

Yesterday's New York Times editorial weighed in on the Amazon vs. Sales Tax issue saying that online retailers'

"frequent exemption from collecting sales tax is "ridiculous now when so many states are in deep fiscal trouble," and that "Collecting state taxes is not an unreasonable burden for online retailers. Amazon already collects taxes in five states, including New York, and it also collects taxes on behalf of physical retailers that sell through Amazon. The best outcome would be for Congress to pass legislation requiring all retailers, online and off, to collect sales taxes everywhere they are due. In the meantime, states should not give in to Amazon's pressure tactics."

In an extremely naive position the Times has equated big box retailers such as Amazon.com with indie bookstores in their ability to keep records. To suggest that collecting sales tax on ALL online sales and remitting that paperwork and monies to all 50 states would not place an "unreasonable burden" on small businesses is ludicrous.

We don't have and can't afford to have software written for us that can automatically calculate sales tax remittance for 50 different states.  Manually calculating the tax due for NY alone is difficult enough... having to break out and total up orders for 50 different states every quarter would take several days each time and conflicting rules for each state would be a nightmare for a small business to attempt to process.

The only feasible (and fair) option for online retailers is to collect a flat "online" sales tax - an equal percentage with a single set of rules.. preferably remitted automatically to a single processing location with sales data by state.  While still difficult, this would be far less an impossible task than to attempt to navigate sales tax rules for 50 different states.

The New York Times should know better.  Amazon.com isn't the only online retailer.

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