57 Comments - Scott Summers - Monday, Apr 20, 09 @ 4:43 am: We already pay tax on Internet sales. Or at least we’re supposed to. It’s the Illinois Use Tax, to be dutifully (and cheerfully) filed by one and all on the ever-popular Form ST-44. According to the Illinois Department of Revenue: You owe Illinois Use Tax if you purchase an item for use or consumption in Illinois and * you purchase the item from an out-of-state retailer who charges no Illinois Sales Tax or charges sales tax at a rate lower than the Illinois rate, and * the item you purchase would normally be subject to sales tax if you buy it from a retailer in Illinois. Examples include * catalog purchases from an out-of-state retailer who does not charge Illinois Sales Tax; * purchases through out-of-state home shopping television and computer network (internet) services that do not charge Illinois Sales Tax … Source: http://www.revenue.state.il.us/Businesses/TaxInformation/Income/usetaxindividualsl.htm - Rich Miller - Monday, Apr 20, 09 @ 6:07 am: OK, then: Should Internet sales be taxed automatically at the time of purchase? - wordslinger - Monday, Apr 20, 09 @ 6:15 am: Yes. The original exemption was to allow the Internet to grow. I think it’s safe to say it’s going to make it. Even the playing field for the traditional bricks and mortar retailers. - oneman - Monday, Apr 20, 09 @ 7:13 am: a big chunk of this problem is how different States tax different things. For example sports uniforms, some states tax them differently if you use them for team sports vs just as apperal. Also if you want to tax Internet sales I am assuming you want to tax mail order too? - Nearly Normal - Monday, Apr 20, 09 @ 7:35 am: I do some ordering of out of print books and the like from vendors affiliated with Amazon. I have to admit that I was not aware that I needed to pay tax for out of state purchases as the first poster said. I prefer buying from Illinois vendors if the price is right. If they collect the tax I pay it. I have heard from Illinoians who are internet purchasers who won’t buy from Illinois vendors because they have to pay taxes. That does not bother me. I am getting what I want and if it comes from an Illinois vendor then I usually get it pretty fast. I do pay tax on books purchased from Doubleday Book Club whether it is from mail orders or online. I do online now since it saves on the amount of mailed offers coming from the book club. - Gregor - Monday, Apr 20, 09 @ 7:48 am: I don’t see a way it could be done consistently, and if it was going to happen, it would probably have to be on a federal level, not individual states, since the internet is borderless. - Excessively rabid - Monday, Apr 20, 09 @ 7:57 am: Yes, but the question is where and by whom. Sales should be taxed in the state where the business is located. Use taxes such as ours have been held to be constitutional, but I disagree. - SIUPROF - Monday, Apr 20, 09 @ 7:59 am: It is absolutely time to require internet sellers to collect sales tax. The issue is whether the company has enough nexus with the state to require them to ‘collect’ the sales tax, not whether they have enough nexus to tax the companies. For many of the internet sellers, the companies have artificially created separate internet subsidiaries that conduct the internet business. Examples: Barnes & Noble.com & Borders.com. As a result, even though Borders and Barnes & Noble may have brick and mortar stores in Illinois, they maintain the internet companies have no nexus with the state, for all of it’s property and employees are typically located in a no tax or low tax state. Two state that i am aware of have litigated the issue and California found there was enough cross contacts with the brick and mortar companies to constitute nexus, while Louisiana did not. To me, the solution is an update of the definition of nexus to comport with how business is done today. How can we maintain that an internet company like Amazon is not present in Illinois. It is everywhere, even in our family rooms-wherever a computer screen is located-Amazon is present. Today, a company does not need employees and property in a state to be present. It is also unfair to our local companies, who employ our citizens, pay property taxes and invest in plant & equipment to give Amazon and the like an automatic 6.25% plus local add ons pricing advantage. As far as the complexity issue-A good computer program is all that is required that can be updated on line for changes. - Leroy - Monday, Apr 20, 09 @ 8:19 am: I do not favor expanding taxes to the internet. The internet model is much ‘greener’. The environmental overhead of Amazon.com is a lot less than Barnes & Noble and Borders. No stores on every corner, less electricity used, less brick-and-mortar…. Besides, brick-and-mortar contributes greatly to sprawl. - Beowulf - Monday, Apr 20, 09 @ 8:33 am: Yes, Internet sales should be taxed immediately when purchased. It is amazing that Illinois businesses (especially the Mom & Pop businesses in Illinois) have not been allowed to compete on a level playing field before this point. If I remember correctly, Illinois state senator Chris Lauzen was one of the first to say that for the sake of helping Illinois small business stay in Illinois as well as for the raising of state taxes in a fair & equitable manner all Internet sales should be charged an Illinois state sales tax. BUT, because Chris Lauzen said it and many of his fellow Republicans & Democrats have a problem with his independent nature /and sometimes arrogant personality, his well-thought out idea was immediately placed in a back broom closet down in Springfield. I could care less if I like the guy that I am working with or not as long as he gets his job done in an efficient and timely manner. It isn’t like I have to go out and have a beer with him after work. I wish our elected officials in Springfield could develope this same work attitude. Instead, we have a spoiled group of children that have come to be “Prima Donnas” and exist to feast on the principal of “Entitlement” for themselves and their children and other family members. Are you listening, Denny? We taxpayers / voters have allowed the inmates to run the asylum in Springfield for far too long. Hence, we are finally at that point where we are in danger of going over the cliff with the rest of the political lemmings that we have been following due to our apathetic nature. Charge sales tax on Internet sales and tell those politicians that have their palms open to another campaign contribution from lobbyists and corporations who this might hurt their sales to go “stick it”. - Cassandra - Monday, Apr 20, 09 @ 8:37 am: Yes. Why should, say, books at the local Borders collect sales tax but not books from Amazon. The simplest way of doing this would be to tax the buyer wherever he/she is. However, I believe there is a federal statute prohibiting that. Maybe it expires soon. No doubt lobbyists are working on that right now. Alas, I feel this is too difficult, politically, for the increasingly hapless Mr. Quinn and his merry band of Blago holdovers and tame state legilsators. It’s a lot easier to take the easy way out and hit up the middle class for an income tax increase. - Anon - Monday, Apr 20, 09 @ 8:44 am: SUIPROF: I understand your point, but wouldn’t the US Supreme Court need to be the one to *change* the definition of nexus. My understanding is that currently a company like Amazon does not have enough nexus with Illinois, or most other states, because of Supreme Court decisions. So technically states can change the law, but it would be risky because the law would be subject to immediate and legitimate lawsuits. - Reality is - Monday, Apr 20, 09 @ 8:47 am: I see no way of enforcing such a tax. It would just give more money to foreign companies who would be based in locations that would not apply this tax. - VanillaMan - Monday, Apr 20, 09 @ 8:47 am: No. We pay enough taxes. Our debt problems are due to a growing government lead by politicians playing Robin Hood at the expense of our liberties. The more taxes we pay, the more we empower an out of control, inefficient, dictatorial mentality. The Internet is one of the last places to be free. Keep it free from the greed of the pro-taxers. - Phineas J. Whoopee - Monday, Apr 20, 09 @ 8:50 am: My, you guys are up early today. Internet sales should be federally taxed on a per transaction basis regulated through the the main sight. For example, part of Ebays listing fee should include a tax that is paid every month like all their other charges. If the States and the Feds can work out how this money could be distributed to the states that would be good, however, a standard sales tax would be incredibly hard to collect state by state. - Rufus - Monday, Apr 20, 09 @ 8:50 am: From the view of Macro Economics: Yes. From the view of Micro Economics: No. - susie - Monday, Apr 20, 09 @ 8:51 am: if IL wants our tax money from catalog and internet sales, then it should be included on the form we order from so we know we are supposed to pay those taxes. it would be easier on consumers and since most don’t know they are supposed to send taxes to Dept of Revenue on catalog sales, it would be more $$ to the state and maybe we don’t need to raise the income tax as much. - Wumpus - Monday, Apr 20, 09 @ 9:13 am: Yes, if you buy it, pay what you owe on it. Origination tax or destiantion tax? Do you pay the taxes hwere it was shipped from or where it ships to? This is not some unfair tax, it is simple sales tax. - SIUPROF - Monday, Apr 20, 09 @ 9:14 am: Anon: You are correct, the U.S. Supreme Court could issue cert on a state court holding, but so far it has not. States are free to decide what contacts are sufficient for nexus, subject to the prohibitions contained in the due process clause of the 14th amendment and the dormant commerce clause. The cases so far have dealt with internet subs of brick and mortar companies–with the cross contacts of the parent and the sub being at issue-like being able to make returns from the internet companies at the local stores–gift cards being good at both and discount cards being sold locally that are good on line. To deal with Amazon (no local stores that I know of) would require some type of legislative definition or judicial ruling that nexus is indeed met by an ever present entity like Amazon that is not overruled by the Supreme Court. And if I am not mistaken, the federal internet legislation outlaws taxing the internet transactions (like an tax on extracting a barrel of oil out of the ground). We are only talking about requiring the internet companies to collect a tax that is legally imposed on the citizens of the state (the use tax). - Paul - Monday, Apr 20, 09 @ 9:36 am: As long as it isn’t at the Cook County sales tax rate! Seriously, it seems appropriate that if sales taxes are applied to everything, internet sales should be automatically taxed also. I don’t know how much commerce is done online, but we probably buy 10-20% of our clothing from online retailers. Many retailers (Old Navy for example) already do apply the sales taxes automatically. Online retailers are retailers, fair is fair. - Ghost - Monday, Apr 20, 09 @ 9:43 am: Yes. In the modern age of computers, handling these electronic transactions, it is just a matter of having the computer set up to calcualte the approrpiate tax and add it to the transaction. I would include e-bay and paypal. it gives online entities too much of an advantage on large items over local buisness, and there is no need for the shelter. At this point we are looking at transfering the “tax free” purchases made online and paying for them with an income tax increase. IMHO this system is backwards. We should reduce income tax and increase use tax, particuarly on high priced goods. this was we capture income from those who are shletering earnings or living on a cash based model. - clearly - Monday, Apr 20, 09 @ 9:44 am: No, the barriers to actually collecting the tax are too high. If greedy states manage to get the Feds to force all internet retailers to collect sales tax, then those retailers will just locate their operations offshore. Besides, every time I buy something online I laugh because Todd Stroger isn’t getting his cut. To take that away would be cruel. - Pelon - Monday, Apr 20, 09 @ 10:07 am: Illinois essentially uses the US Supreme Court’s definition of nexus as it applies to sales & use taxes. They cannot extend it further without federal legislative changes. I’m of the opinion that this change should take place. The current situation has informed, honest people paying more than their fair share of the tax burden. The solution is either to change the law so that everyone pays the tax, or change the law so that no one pays the tax. The current situation is unacceptable to people who believe in equal taxation. If they choose to require all internet/mail order sellers to collect the taxes, it will be important for them to implement a streamlined system for the smaller companies. There is no way the average small business can keep track of all the laws in all of the states. - Six Degrees of Separation - Monday, Apr 20, 09 @ 10:07 am: Besides, brick-and-mortar contributes greatly to sprawl. The factories, warehouses and transportation facilities that produce, store and deliver online orders have lots of bricks and mortar, too. Unless you believe that everything you order online drops out of the sky when you press “Complete Order”. - Ahoy - Monday, Apr 20, 09 @ 10:11 am: Yes. The Federal Government should collect it and distribute back to states after collecting an administrative fee to pay for itself. - Plutocrat03 - Monday, Apr 20, 09 @ 10:17 am: So if we are to do as Ghost suggests, then all transactions between private individuals as well as business entities are to be taxed…. Do we send a State revenue collector to garage sales to extract the state’s share? Furthermore, should sales taxes charged go to the community where the sale is generated, or to the community of the purchaser? The do it for vehicles to a degree. Cook county resident have to pay the Cook County sales tax rate, regardless of whether the car is purchased in Crook County or the surrounding ones. I agree with VM. no more expansion of taxation. Taxation has become too intrusive. The mindset of it being more important for the government to have money than the citizens who pay the taxes has got to end. By the way, when I buy by computers from major suppliers over the internet, I pay a sales tax to Illinois. Does this mean the vendors are pocketing the money? - HoosierDaddy - Monday, Apr 20, 09 @ 10:24 am: Leroy– What does “green” have to do with taxes? Unless you are talking about the color of money… I am usually opposed to additional taxes, but in the case of taxing internet purchases, we are simply including transactions which would already be taxed if they were taking place under any other circumstances. Rather than imposing a new tax, we are simply implementing the tax more fairly. Yes, the feds would probably have to get involved, but it would not take Supreme Court action. Under the commerce clause, Congress could simply step in and say that internet purchases are deemed take place at the merchant’s place of business. The only problem with that is for international businesses. You’d have to have a different rule. As for competition between businesses in different states, I really don’t see very many states NOT imposing taxes if they were allowed to. Who is going to pass up that revenue in these times? - The Teddster - Monday, Apr 20, 09 @ 10:41 am: Yes we should have to pay taxes on purchases that we make over the internet. My question is, are we talking about some base state sales tax rate on the purchases or are we going to include the differnt county sales taxes on the purchases. I ask because if it is some base state sales tax rate, then that will be very easy for the merchant to calculate. If we are including the county sales tax rates then it becomes a nightmare for out-of-state merchants. - KPK - Monday, Apr 20, 09 @ 10:46 am: Yes but it must be in a way so that smaller or growing sites do not have to file sales tax returns in all 50 states + DC + possibly many cities & counties. Any law needs to be done at the Federal level to establish the nexus (physical presence) standard , otherwise statelaws will possibly face legal challenges similar to Quill v North Dakota. There is the Streamlined Sales Tax Project but I think there are not many states that are members and a company in a member state is not mandated to collect the sales tax. New York’s law, that went into effect 6/1/08, says a company has nexus when it pays a NY based entity for referring customers. I do not think NY’s law will hold up if any case makes it to US Supreme Court. I am not sure if Amazon.com appealed the NY Supreme Court’s ruling to the Federal level though. - Leroy - Monday, Apr 20, 09 @ 10:52 am: ==”Unless you believe that everything you order online drops out of the sky when you press “Complete Order”.== Compare Amazon’s footprint to Barnes & Nobles. Hint: Barnes & Nobles has 800+ stores as of mid-2008. Which has the bigger environmental footprint? Even bigger hint: that’s 800 parking lots, electricity, heat, and air conditioning for 800 stores, 800 stores worth of computers, telephones, and loading docks. Not to mention 800 stores worth of garbage and sewage generation. - Captain Flume - Monday, Apr 20, 09 @ 11:09 am: Part of the attraction to buying online is the built-in discount of not having to pay a sales tax in many instances. The cost of doing business for the internet good provider is also less because the paperwork to file and pay state sales taxes is nil, which of course helps make online prices cheaper for the consumer (among other factors), and profits better for the provider. The question (at least one of them) becomes then would there be an increase in potential tax revenue if online taxing were mandatory? Conversely, is there really a loss of revenue by not taxing the sales of online goods? If sales decreased online, would that mean a loss of business and revenue to the state from the decrease in UPS or FedEx business and the taxes they pay in fuel and income? To me, it will probably be a wash, but I’d like to see a serious and proveable study on the effects of taxing online purchases. - Angry Chicagoan - Monday, Apr 20, 09 @ 11:23 am: Absolutely they should be taxed. If I’ve said it once I’ve said it a thousand times. One. Low. Rate. That should be our mantra for sales taxes. What does that mean? It means taxing services just like we tax goods. It means taxing out of state purchases. It means using the proceeds to lower the currently ridiculous rate on in-state goods purchases. So that we end up with One Low Rate for everything. Under the current circumstances I’d be happy with a solution that provides revenue neutrality for in-state goods and services, with the state pocketing the new-found revenue on point-of-sale taxation of internet purchases. An overall rate of as low as four to five percent, including local option taxes, could do the trick. - Six Degrees of Separation - Monday, Apr 20, 09 @ 11:27 am: That’s 800 parking lots, electricity, heat, and air conditioning for 800 stores, 800 stores worth of computers, telephones, and loading docks. Not to mention 800 stores worth of garbage and sewage generation. Well, this could be the wave of the future. No more shops, grocery stores, or small businesses. Everyone stays in their home fortress, works online, and gets goods and groceries delivered by FedEx and Peapod. - Capitol View - Monday, Apr 20, 09 @ 11:29 am: Leroy and others - part of local businesses is local jobs. If everyone ordered by the internet, imagine the small businesses that would be undercut. People are also carbon based creatures. - Boscobud - Monday, Apr 20, 09 @ 11:34 am: If we were to tax purchases made online than what tax percentage would they charge. Would it be once a person puts in there zip code than will they get charged the tax in that zip code? That sounds like a lot of work for the companies that want to sell online. They would have to put all zip codes than put all the tax percentages. What a inconvenience for something that was supposed to be convent for millions of people. - Little Egypt - Monday, Apr 20, 09 @ 11:35 am: Well darn. I was hoping this subject would never come up. I’m enjoying not having to pay tax on my Ebay purchases, 99% of which are brand new items. However, this gravy train will end some day, so I guess I’d have to be real honest and say yes we should pay taxes on internet purchases. The rest of what I buy on the internet comes from catalogs that do charge sales tax or from Ticketmaster (which really gouges) thus making Ebay is my only cheater. - Little Egypt - Monday, Apr 20, 09 @ 11:37 am: Actually the attraction for me to buy on-line is not having to drive 22 miles into the nearest town to buy in the store. Nothing quite beats front door home delivery. - Judgment Day Is On The Way - Monday, Apr 20, 09 @ 12:27 pm: No. Because this would be the opening that local and state governments need to be able to start creating and implementing all sorts of add-on taxes onto Internet based services. If Internet retailing, why not Internet based services? Why shouldn’t there be an add-on tax to each subscriber to the Cap Fax? Or “The Bond Buyer” on-line publication? Or InfoWorld? Or PCMag? What about charges for obtaining access to information over the Internet? What about new e-books to Kindle? Does this mean we are going to start taxing Google because they collect keyword search fees, and would have to charge taxes on searches coming from Illinois? Bad idea to tax Internet retailing. May start there, won’t end there. And I certainly don’t trust the political class with any more of our tax dollars, and with a direct opening to access Internet taxation, they’d be off and running wild. - Rich Miller - Monday, Apr 20, 09 @ 12:32 pm: ===Why shouldn’t there be an add-on tax to each subscriber to the Cap Fax? Or “The Bond Buyer” on-line publication? Or InfoWorld? Or PCMag?=== Easy, now. - Judgment Day Is On The Way - Monday, Apr 20, 09 @ 12:34 pm: Rich, I’m not in favor of it at all. I just know where it could go. - GA Watcher - Monday, Apr 20, 09 @ 12:47 pm: Yes, Internet and catalog sales should be taxed to level the playign field between e-tailers and brick and mortar stores. Don’t expect the impact to be as great in IL as is reported in MA. IDOR put out a report in February which showed IL would realize $153M in added revenues with a sales tax on e-commerce. - 2010 - Monday, Apr 20, 09 @ 12:59 pm: No. Cut the budget instead. - zatoichi - Monday, Apr 20, 09 @ 2:09 pm: Tax internet purchases same as a brick and mortar location. How big will Internet purchases get as a ratio of the economy? Books, CDs, clothes, wine and small, “inexpensive” stuff are easy. Gonna buy 300 2×4’s, a new suit, or next weeks groceries from out of state? I prefer some place to go to if the product goes bad. That comes from local stores who provide hands on service. Make it a level field. As others have said local purchases equal local jobs. - Ghost - Monday, Apr 20, 09 @ 2:16 pm: === then those retailers will just locate their operations offshore. === why? we could let the retailers keep a portion of the tax collected as a fee for doing so. This owuld actually increase their income for nothing more then a computer program to manage the transactions and send off the occasional disbursement. easy money. ==== There is no way the average small business can keep track of all the laws in all of the states. ==== Sure there are, a number of software companies make these tools for a business seeking to do sales nationwide. Pluto your argument makes no sense. it is more improtant for individuals to keep their money then to fund the goverment which creates the very structure which allows them to have and accumulate money? Our governemtn and its various protections and systems of aid are what allow use to earn and accumulate wealth in the aggregate. If you want less governemtn what would you cut? Aid to the impoverished? Thus increasing the crime rate as those without scvange to survive, requiring the building of more prisons and the hiring of more police at greater expense etc. - Leroy - Monday, Apr 20, 09 @ 2:22 pm: = Leroy– What does “green” have to do with taxes? = You tax things you want less of. Right now, the environment is getting a lot of press. Internet sales are “greener” than brick an mortar sales. Ergo, tying the two together should make some sense….claim that consumption via the internet is less harmful than consumption via brick and mortar, so we should encourage internet commerce, not restrict it. - Pelon - Monday, Apr 20, 09 @ 2:58 pm: For those who think implementing a sales tax is as simple as plugging some numbers in a software program, I recommed you check out the wikipedia site on sales taxes to see the differences between the states. Each state taxes different things at different rates. Tax software can’t analyze your inventory and tell you what rate you should be charging on each item in each state. - WOW - Monday, Apr 20, 09 @ 3:19 pm: Leroy … since when do we tax things we want less of? Not trying to start a fight just curious. If we didn’t want these things (I am assuming you mean tobacco, alcohol … sin taxes) then shouldn’t we just ban them outright. Sorry off topic. Yes we should tax things on the internet but I am not well versed enough to know how you could keep track of everything or if that is possible. But maybe it should be at a set lowetr rate for everything that is bought and sold. - Rich Miller - Monday, Apr 20, 09 @ 3:27 pm: ===since when do we tax things we want less of?=== Since probably at least the end of Prohibition. We don’t ban anything but recreational, non-alcohol drugs in this country. We just tax them. - Mike an Ike - Monday, Apr 20, 09 @ 3:32 pm: Flat tax 4%.Divide it between the Feds and the state the buyer resides in. - Reality is - Monday, Apr 20, 09 @ 3:50 pm: From a Fox News article : “The sheer complexity of sales-tax-collection in the U.S. — it’s estimated there are about 7,000 different states, counties, municipalities and other governmental agencies that collect it — has made it nearly impossible to collect taxes from online retailers.” http://www.foxnews.com/story/0,2933,516988,00.html - Jechislo - Monday, Apr 20, 09 @ 4:56 pm: Wow, just what we need. Another tax. - Jechislo - Monday, Apr 20, 09 @ 5:06 pm: And before anyone says, “but its already the law”, I’ll voluntarily pay all the tax on my Internet purchases right after the people Obama appointed to his cabinet start paying their income tax obligations without being forced; if this were you or me, we’d be needing a very expensive lawyer about now. This country is, is, well I’m not going to say it or Rich will ban me. - Rich Miller - Monday, Apr 20, 09 @ 5:08 pm: ===if this were you or me, we’d be needing a very expensive lawyer about now.=== Most likely, if it was you or me, we’d negotiate the unpaid tax amount way downwards. - The Teddster - Monday, Apr 20, 09 @ 5:26 pm: Did a google search for “calculate sales tax” and came up with a number of very simple sales tax calculators. Here is an example of one: https://thestc.com/RateC.stm I did a test using the address of a friend in Iowa. The sales tax calculated for my test address was the general sales tax rate. If my item had been something that was taxed at a higher or lower rate the general sales tax the rate would have been off. My worry isn’t for the big online retailers, they can take care of themselves. I’m worried about the small retailers. Imagine a small business that sells wine or some other item that is usually does not fall under a general sales tax. Calculating the different tax rates would be a nightmare. - Retired Non Union Guy - Monday, Apr 20, 09 @ 6:16 pm: A bit off topic but related. In the past several years, I’ve bought both a classic car, a replacement car, and a camping trailer out of town or state because I could not locate exactly what I wanted locally. The state and city (through computers, etc.) had no trouble identifying fully and getting their sales tax from me, which I expected to pay (irony, I tried to pay city tax before they billed me and they had trouble figuring out how to handle it). The point is that computers run everything today and it really isn’t very hard to get them to do the tax portion of it. I regularly use automotive parts online sites that also have brick operations locally because it is more convenient … they have tax calculators for the stuff they ship straight to me. If you want to tax internet sales, it isn’t rocket science … the big boys already have it in place … and it wouldn’t be that hard to develop a plug-in application for the little guy … the State could even create it and supply it free, like online tax returns. - Emily Booth - Monday, Apr 20, 09 @ 7:19 pm: We have a state government that hasn’t passed a balanced budget since Edgar and you want to expand revenues from sales taxes? Why? - Heartless Libertarian - Monday, Apr 20, 09 @ 8:27 pm: What the states need to do, is start forcing these companies to pay taxes for internet purchasers. And then Illinois should pass a law declaring protection from other states taxes on internet orders, driving big businesses into our state. Give them the protection of our Attorney General, and reap the benefits of stupid states that think they can make a quick buck. Never would happen though…. So, NO INTERNET TAX!!! Sorry, comments for this post are now closed.