Date: Wed, 21 Dec 2005 12:31:41 -0500
From: "Michael Walsh" <MJW at press.jhu.edu>
To: <WSFAlist at KeithLynch.net>
Subject: [WSFA] Re: Shopping online?
Reply-To: WSFA members <WSFAlist at KeithLynch.net>

> omni at omniphile.com 12/21/2005 12:12:26 PM >>>
>At 12/21/2005 12:02 PM, samlubell at verizon.net wrote:
>> >From: "Mike B." <omni at omniphile.com>
>> >I suspect they are going to have problems in court over that one.

>The
>> >Constitution very clearly states that the Federal Government has
>the power
>> >to regulate interstate commerce, not the states.  They can tax
>those
>> >entities operating in their own borders, but trying to tax ones
>operating
>> >elsewhere isn't going to work, and e-commerce sites will just
>move to
>> >places that don't have sales tax
>>
>>I think you are misreading the argument.  The sales tax that applies

>is
>>that of the *buyer's* state, not the seller's.
>
>Then it isn't a sales tax, it's a purchase tax, and the buyer would be

>responsible for collecting it and submitting it to the revenue
>agency.  That's not what they are talking about.
>
>They are talking about regulating (controlling the behavior of) a
>business
>in another state.  Requiring them to collect tax and submit it to a
>"foreign" state is not something a state government has the power to
>do for
>any entity not within their borders...even if the buyer is.  This is
>exactly the sort of thing the commerce clause was intended to
>prevent.  It's clearly interstate commerce when the seller and buyer
>are
>not in the same state, and interstate commerce is clearly the domain
>of the
>federal government.

The states are precluded - by a Supreme Court decision [Quill vs North
Dakota] - in requiring vendors located outside their state with no
physical presence in their state into collecting sales taxes.  The
bottom line reason was that it would be an onerous burden for a
"foreign" business to know what sales rate to impose.  There are
approximately 7500 sales taxing jurisdictions in the US - 5 states do
not have a sales tax.

With the rise of online business, the states are desperate to get their
hands on this untaxed business.  Note that most - if not all - states
have a "use tax" that requires you the individual to remit to your state
comptroller the appropriate "use tax" for your online purchases.

The "Streamline" initiative is an attempt to overcome the Court
rationale by creating fewer taxing jurisdictions and to make a common
definitiion of taxable items.

Only the Congress can overturn the Court ruling.

And even if Congress were to overturn the decision, I could see vendors
in the 5 non-sales taxe states launching a lawsuit.

For more boring details... Google this:  quill "north dakota" "sales
tax"

mjw