My home state in the Northeast is now listing a line item telling
taxpayers to list how much we owe state coffers for online purchases for
the past year. (This has been theoretically on the books for years, but
only now is this item actually being printed on the tax return forms.)
But upon further investigation on different sources online and in
print...I'm seeing that this so called requirement is ultimately
voluntary...because how are states supposed to ENFORCE such an
impossible task like PROVING we purchased items we owe them taxes for
online purchases? Another problem is...which items are taxable and which
are exempt? Another is...if outside e-commerce sites aren't required to
collect tax info on out of state purchases who purchase items on their
sites...why should taxpayers keep this information? Since there is
little or no information on just exactly how "fair" the states have come
in ensuring online sales tax collection is "fair" why should taxpayers
believe this now?

Any thoughts on this?

On 1 Feb 2004 19:59:17 -0600, Alberich wrote:

My home state in the Northeast is now listing a line item telling
taxpayers to list how much we owe state coffers for online purchases for
the past year. (This has been theoretically on the books for years, but
only now is this item actually being printed on the tax return forms.)
But upon further investigation on different sources online and in
print...I'm seeing that this so called requirement is ultimately
voluntary...because how are states supposed to ENFORCE such an
impossible task like PROVING we purchased items we owe them taxes for
online purchases? Another problem is...which items are taxable and which
are exempt? Another is...if outside e-commerce sites aren't required to
collect tax info on out of state purchases who purchase items on their
sites...why should taxpayers keep this information? Since there is
little or no information on just exactly how "fair" the states have come
in ensuring online sales tax collection is "fair" why should taxpayers
believe this now?

Any thoughts on this?

If, by some accident, you were caught, what kind of penalties would be
exacted for omitting the info on your tax form?

In most states that collect a sales tax (and certainly those where they are
including a line on the tax forms), there is also a use tax. This tax is
owed on purchases in other states that would otherwise be subject to the
sales tax if purchased in-state. In most states, if you purchase an item in
another state but pay that state's sales tax, the use tax is not owed.

This is not a new tax, but, because of some Supreme Court rulings in this
area, states cannot compel retailers to collect the tax unless the retailer
has a physical nexus in a state. As a consequence, many e-tailers (and
catalogue retailers) are not collecting the tax. This does not mean that
the taxpayer does not owe the tax; it only means that it is not being
collected by the seller.

In that respect, this is similar to those who have cash businesses or
income. Here too there is no withholding of income, but the tax is still
owed.

While some may think this is harmless tax avoidance (although it really is
criminal tax evasion), the playing field may be changing. There are, for
example, some states that are actively considering seeking records from the
UPS and Federal Expresses of the world to document out-of-state purchases by
consumers. You can draw you own conclusion about their goal (and keep in
mind provisions providing for penalties and interest where knowing evasion
has taken place). At the same time, many of the larger e-commerce retailers
are ready to voluntarily collect these taxes in return for a simiplified set
of definitions of taxable sales and single audit from the collective states
willing to adopt the Streamlined Sales Tax Initiative.

I know that nobody likes paying taxes, but they are the price we pay for
ordered society, according to Justice Holmes. The sales tax has long been
one of the "three legs" of the state and local government tax stool (along
with personal income and property tax); e-commerce, catalogue sales, and
services have grown in prominance and erroded this base. This is the
primary reason that rates have increased and some sales tax rates now
approach double digits. This creates much more economic distortion (dead
weight loss in economic parlance) than would a lower rate with a broader
base.

Iowa has this line on its tax form, and yes, I will be adding up my on-line
purchases and remitting the use tax when I fil out my taxes.

Randy Bauer



"Mike Murray" wrote in message
...
On 1 Feb 2004 19:59:17 -0600, Alberich wrote:

My home state in the Northeast is now listing a line item telling
taxpayers to list how much we owe state coffers for online purchases for
the past year. (This has been theoretically on the books for years, but
only now is this item actually being printed on the tax return forms.)
But upon further investigation on different sources online and in
print...I'm seeing that this so called requirement is ultimately
voluntary...because how are states supposed to ENFORCE such an
impossible task like PROVING we purchased items we owe them taxes for
online purchases? Another problem is...which items are taxable and which
are exempt? Another is...if outside e-commerce sites aren't required to
collect tax info on out of state purchases who purchase items on their
sites...why should taxpayers keep this information? Since there is
little or no information on just exactly how "fair" the states have come
in ensuring online sales tax collection is "fair" why should taxpayers
believe this now?

Any thoughts on this?

If, by some accident, you were caught, what kind of penalties would be
exacted for omitting the info on your tax form?