“Wow…Geee…I can’t believe…B.S….Not Fare….I give up…Great…It’s about time”…Yes yesterday June 21st 2018 marked the day that the United States Supreme Court put into law that all states should collect sales tax on internet sales. Everyone who is involved in Retail should know that on July 1st 1921 West Virginia was the first to collect Sales Tax . That’s right collected; Sales Tax is not for the retailer. Sales Tax is a responsibility for every retailer to collect from the consumer and turn over to the proper authorities. Evading paying of collected sales tax, not collecting Sales Tax, overcharging Sales Tax and dozens of other tax schemes have caused many a retailer, problems and sometimes even failure.
Sales tax from inception through 2000 has been localized to the area the retailer operated in and the TaxMan could always find you. As we entered the New millennium things started to change. In 2002 a mere 70 billion dollars of E-Commerce was done in the US spring ahead to 2014 and we were pumping out over 350 billion dollars. Well wouldn’t you know in 2018 the “s–t would hit the fan”. So an economic problem gets adjudicated and all is supposed to be solved. Just wait a minute!
“Wal-Mart today is the largest retail company in america and collects sales tax in every state it operates, next is Kroger, Target, Walgreen, Home Depot, Costco, CVS, Lowes. Sears/K mart, Best Buy”; equaling total sales of 802 billion dollars.
Lets look at the top 10 e-tailers” Amazon, Best Buy, Apple, Wal-Mart, New Egg, Del, Costco, Target” ; equaling total sales of 51 billion dollars; these companies already have a national presence some in both retail and e-tail categories and are collecting taxes or taking advantage where they can. Lets just focus on e-tail in 2017 e-commerce sales totaled roughly 350 billion dollars; if the top 10 are collecting tax revenue on 51 billion that leaves 300 billion in available taxable sales, distributed across the country. e-commerce could be a windfall for lost retail tax dollars. In the same way traditional retailers turned a blind eye to e-tail so did state and local governments to the impact of lost Sales Tax Revenue.
It took a while for Retailers to recognize the benefits or consequences of e-tail. Now its the Tax Mans Turn. Unfortunately Judges don’t understand the complexity of todays evolving omni-channel market place. Sure you can set your shopping cart to collect taxes but that is not the problem. Unlike the local shopkeeper of yesterday e-commerce is home to entrepreneurs. Sure they can collect it but how do they deal with the entire USA not their hometown.
Many people who were able to build small businesses only because of the reach of the internet only collected and paid tax for orders delivered in their home state. For anyone who is not involved in whats required to file sales tax here is a quick idea. First you separate only the sales in your home state, then you assort them in zip code order, then you multiply the individual sales by the tax rate in each zip code you do business, fill out the proper forms and submit to collector with a check. a small e-tailer may do business in every state so you would repeat that 50 times. Thankfully the Supreme Court Judges put in a small criteria for filing. They said companies only have to file in states where you do 200 or more sales or $100,000.00 in sales.
In closing if Sales Tax is going to be collected Nationally and the purpose of this is not to hurt or benefit any particular segment of e-commerce just to recoup lost tax dollars; why doesn’t the government recognize e- commerce as a separate type of business model that requires a national e-commerce tax at a flat rate for the country. Let this tax rate parallel all the existing non taxable exemptions. Establish 50 tax code areas by state, have the shopping cart software withhold the taxes by categories when purchases are made and send the revenues. Continue to give small business the importunity to flourish that it has always had in this country; not get disillusioned or stymied by dealing with tax collection problems,
The internet has provided a great opportunity for entrepreneurs. the internet brings the world to your website, we have only seen the beginnings of its effects on our lives.
Your thoughts on this topic are appreciated…
alan b. meschkow
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