States Move Step Closer To E-Tax

WASHINGTON - Forty U. S. states and the District of Columbia have put out requests for bids on software and Web-based networks to track millions of Internet purchases and process the appropriate state sales taxes. The move is part of a continuing effort at compelling a reluctant U.S. Congress to take a voluntary state system of Net sales tax collection and make it mandatory.

The first request from November 2004 entailed making it easier for Internet sellers to collect sales taxes, with the states – participating in the so-called Streamlined Sales Tax Project – planning to award contracts to multiple vendors for the collection systems, according to several published reports January 28.

The second request, from January 21, called for bids on building a registration system where all Internet retailers – whether tiny online stores to big e-centers like Amazon – would go to declare intentions to collect and remit taxes on online sales to customers in SSTP participating states, the reports said.

The plan is for contracts to multiple vendors on the sales tax collection system components and no cost to Web merchants, with the vendors taking “a small cut” from the revenues, as one report put it.

The likely winning bidders, the reports said, would be companies or teams from one or more software companies whose specialty involves tax or other accounting software, or a systems integration company.

Internet sales taxes have been at least as controversial as Internet access taxes, the latter of which have been put back under a federal moratorium. Those who support Internet taxation have claimed state and local governments lost between $15.5-16.1 billion in revenue thanks to untaxed Net sales in 2003.

Most recently, Net taxation took another controversial twist when New York City Mayor Michael Bloomberg declared his administration would compel city residents who buy cigarettes in cyberspace to pay the sales taxes due anyway – which are considered crippling even by ordinary sales tax plans, thanks to crusades against smoking turning into laws that have now laid a $1.50-per-pack city tax, a $1.50-per-pack state tax, and a $.39-per-pack federal tax on cigarettes in New York alone.

http://www.avnonline.com/index.php?P...tent_ID=214945

Crazy stuff, this has been on the books for a few years now and i was hoping given the new EU taxation laws for online purchased that were passed a year or two back this would make its way to the sidelines, guess not :(

Hmm.. might be worth throwing a patent application in for some kind of e-tax technology though ;)

Regards,

Lee

Greetings:

I wouldn't worry too much about this Lee. It's unenforceable.

State Senators think up great ideas like that, but what they don't have a vision of, is the technical challenges involved.

Sure, they found 5 or 6 companies willing to take tens of millions of dollars from the States to develop a, drum roll please, "system".

They'll soon realize that trying to interface their "system" into the thousands of commercial and free ecommerce systems out there is impossible, and the courts would be quick to react to the undue hardship caused to commercial entities by forcing them to switch to a compatible system.

Then, even if all that weren't challenge enough, the system would get hacked within 10 minutes of being online by some disgruntled teenager that's pissed off he has to pay an extra $1.25 to buy the latest expansion pack for Final Fantasy Online.

Then, even if all of that weren't enough, what happens if I switch to processing through someone like, oh, say, Verotel that's located in the Netherlands. THEN what are they going to do?

Online sales tax? Not gonna happen.

The idea of taxing actual internet connections isn't going to happen either. The USA is WAY WAY WAY behind when it comes to getting its citizens hooked up via broadband. The Feds won't allow anything to be put in place that would further hinder that transition.