Saturday, December 22, 2007

Coming Retailer Tax Nightmare

Starting Jan. 1st the way the sales tax is calculated is going to be changed for "delivered goods". Going forward, the retailer should charge you the sales tax rate where the delivery is going, not the tax rate at the store location. This is a ham-fisted approach to moving toward sales taxes on internet sales.

What it means for any business that delivers merchandise, such as a furniture store, is that there is a soon coming retail nightmare. All such businesses will almost certainly make mistakes in attempting to follow the complex new law. Once the laws are so complex that we all break them, then we are all criminals and the government can choose to arrest us for our "crimes" any time they wish. What a great system for crushing dissent!

Say I own a furniture store in Bentonville. Someone comes in from Eureka Springs and wants to buy furniture. If they pick it up, I am supposed to charge them Bentonville sales tax, if they want it delivered, Eureka Springs sales tax. The software to support this is either non-existent or not installed in the vast majority of businesses in this state. It might be manageable if there was a constantly updated list of sales taxes for various zip codes in the state, but some zip codes may have varying tax rates. Rates change in mid-year. People may not know what the exact rate is in their city. Some states have not signed onto this deal yet, so deliveries to those areas are taxed like pick-ups. And each business is supposed to track when they should do what.

If they want to tax internet sales, there are simpler ways of doing it. Our legislature seems to have only two settings. They either write legislation that is exactly what an industry wants- forget the consumer, or they write one that will hammer an industry with little thought to the actual burden inflicted on them in following the law.


Anonymous Anonymous said...

As an Arkansas resident, if you order a computer from Out-of-State-Computer-Giant-Inc. you are legally obligated to calculate the amount of tax you owe and send it in. Most folks aren't aware of that and break that law due to their lack of awareness.

2:51 PM, December 26, 2007  
Anonymous Anonymous said...

Wow, I didn't want to know that...

9:50 AM, December 28, 2007  
Anonymous Anonymous said...

If they pick it up, I am supposed to charge them Bentonville sales tax, if they want it delivered, Eureka Springs sales tax.

I smell a good lawsuit.

There are two concepts here. One is the sale of merchandise. The other is a service- delivery. It just so happens that the furniture store of your example does both.

The tax on merchandise should be based on where the physical location of the store is. The tax on the service may or may not take into account the ultimate destination (eg Eureka Springs, homosexual hangout of the heartland), but it is certainly ludicrous to base the tax on the service according to the worth of the merchandise being delivered! It is much simpler, fairer and germane to base the service tax on the value of the service.

12:47 PM, December 30, 2007  

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