Tax Roundup, 4/25/2013: Internet sales taxes and Red Vines

April 25th, 2013 by Joe Kristan
Shapeways.com N scale Ventilated Boxcar

Shapeways.com N scale Ventilated Boxcar

Megan McArdle,  The Real Problem With the Internet Sales Tax:

Few of the commentators I’ve read have asked themselves what happens to the money after the software has collected the money. Do the sales tax fairies simply whisk it off to the nice folks at the state tax department?

Sadly, no. Rather, as an SBA guidebook for small businesses points out, you have to file a tax return with each and every locality for which you have collected tax. The bill streamlines this a bit, but you’ve still got to keep 50 states’ worth of records and file 40-odd states worth of returns.

For Amazon—the actual target of these laws—this is trivial. Its staff of  crack accountants can probably roll these things out before their Monday-morning coffee break. For a small vendor, however, that’s a whole lot of paperwork.

Speaking as a cracked accountant, I am sure that while Amazon can handle its sales tax burden, it is far from trivial.  It takes an expensive staff and a good organization with excellent systems in place to do reasonably well — and I expect they still get inexplicable notices from states quibbling over obscure tax issues.  Good sales tax compliance functions are expensive, affordable only in a large organization.   For some guy selling handmade N-scale boxcars out of his basement, it could be painfully expensive, if not ruinously so.   Like any expanded regulation, requiring online sellers to collect Internet sales taxes inherently favors the big.

Related:

Kaye Thomas, Taxing Internet Sales

Brian Strahle,  The “Pause” Button and the Marketplace Fairness Act (kind of)

 

Cara Griffith, Things That Make You Nuts (Tax.com):

According to the Streamlined Sales Tax agreement, the definition of candy  is a “preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. ‘Candy’ shall not include any preparation containing flour and shall require no refrigeration.”

So pursuant to that definition, a sweet with flour is not candy, while a sweet without flour is. For example, a Hershey’s chocolate bar is candy, while a Twix bar is not. Ditto for Kit Kat bars. Makes sense, right? But what about Twizzlers? Seems a solid bet that licorice is candy, but it isn’t because flour is a top ingredient.

So Red Vines are good for you, then.

Robert D. Flach,  LEARNING FROM YOUR 2012 FORM 1040:

In the past when a client got too big a refund I would scold him/her and say that he/she was making an interest free loan to the government.  While this is still true, I do not scold any more, considering the pitiful amount of interest being paid on savings account today. 

I’m not a big fan of excess withholding, but it’s a lot easier for a client to deal with a refund that’s too big than a tax bill they can’t pay.

 

Kay Bell,Where’s My Amended Tax Return?

 

David Brunori, Let’s Stop with the Revenue Neutrality (Tax.com):

Increasingly, I hear stories of relatively wealthy people contemplating moving to states that do not tax their assets upon death. These are not people with private jets or suites at Yankee Stadium. They are just people who had the good fortune to do better financially than most. Do New Jersey or Maryland or the other states with pretty onerous estate taxes really want their elderly wealthy to move?

While motivations for moving are complicated, taxes are one of them.  Why do the same people who want higher cigarette taxes to discourage smoking believe that higher income and estate taxes don’t also affect behavior?

 

Patrick Temple-West,  Congress looks at REIT tax exemption, and more

News you can use:  Leff Presents Tax Planning for Marijuana Dealers Today at Harvard (TaxProf)

Share

Tags: , , , , , , ,