Commerce Sales Tax Will Level Playing Field – #4
More than 40 States are asking the US SUPREME COURT to abandon the rule that has been in place during the recent growth of e-commerce. The reason for this mandate is very evident – a source of Revenue for each of these States that won’t affect the Resident who has witnessed significant increases in taxes across the board. If a business is shipping a product to a State where it doesn’t have an office, warehouse, or other physical presence, it doesn’t have to collect States sales tax – the buyer was expected to report that purchase and pay the tax voluntarily – the vast majority don’t. A person ordering an item in the State of Illinois from outside the State from a company that has no presence in Illinois, will automatically save 10+% in the price of the item. The higher the price of the item, the larger the impact of the tax savings.
How does this tax rule affect your current business, and more importantly how will your business be affected if the Supreme Court drops the presence rule and installs an e-commerce Federal Sales Tax? Right now e-commerce seems to be winning due to this law with the smaller retailer having to cease doing business as evidenced by empty storefronts, dying shopping centers, closed factories and the related unemployment that represent those businesses. Do you need a plan which clearly outlines present and future goals?
On April 15th the Supreme Court reverted the decision back to Congress indicating they should deal with the issue. Our solution is simple in that the least cumbersome approach would be to implement a Federal e-commerce tax on every sale and then have the Federal Government re-distribute the collected tax to each State. This would not only level the playing field, but avoid the added administrative costs to small business plus collection and audit costs etc.
How does this issue affect your business today and tomorrow?
source: Chicago Tribune