Cuz taxes didn't suck enough ...

[JLSleather]

What are we doing about the EVER INCREASING number of states requiring tax collection on "out of state" sales?  First of Feb (19) adds some more.  You Alybammy folk, I'm talkin' bout the revenuers

Yes, I know many will put their head in the sand and ignore it.. I mean the actual businesses.  Really not necessary to reply to say "i'm a hobby, so I act like I didnt' get any money from it". 

I'm not the ignore the issue guy, but I'm also not the global conglomerate with teams of tax lawyers to handle all that in my absence. 

[VYO]

I don't know what we're going to do about it but I do know it is just another batch of red tape that will drive some small businesses out. Too much paper work, too many different rules and rates in the different states and counties/cities within the states....frustrating to say the least. 

[chrisash]

And you though us a nasty sods for taxing your Tea, how things change in 200 years

[bermudahwin]

Seem to remember they took all of our mineral rich real-estate at the same time...

Just kidding guys, some of my best friends are American

H

[JLSleather]

Well, much of it is based in the same old HYPE provided by "stores" and retailers about how they have "overhead" and other expenses "legitimate" for jacking up the prices of their often sub-standard "goods".  Basically, locals don't want you buying online crap tax free (and now days often free shipping too) because then you might buy less of THEIR crap!  And some are willing to spend CRAZY money "lobbying" to make sure you can't do that.  Because 'use tax' wasn't good enough?

I have no objection to "buy local".. if the charge is legit. But don't tell me about your "fancy smancy" lease payments, or franchise fees, your new car payment, blahblah.. all the "reasons" your $2 crap costs $14.  I know $2 stuff when I see it   If I'm buying in another state, it's because the locals either don't have what I need, or what they have is a sub-par version of what I need.

But bottom line is, here we are.  I guess the tax guys and the lawyers gonna make more money (again), I just don't have the time to keep up on the way-too-regular changes.

[kgg]

Two things you can't get way from Taxes and Death, that's right they have a tax on that to.

kgg

[chrisash]

I don't know about the USA but in England the shops are closing up left right and center, meaning the revenue to the local council in what we call rates is well down , so strong efforts now to tax the online establishment who have had quite a easy time up to now to pay there fair share, 

Perceived value as you say can be just great marketing; and not a guarantee of quality, and cheap prices can be high quality if labour and other manufacturing costs are very low

[JLSleather]

21 hours ago, VYO said:

Too much paper work, too many different rules and rates in the different states and counties/cities within the states

99 counties in Iowa, but fortunately most of them have nearly identical tax rates.  And it isn't "bad" compared to some.  But we're one of those beginning to apply tax on purchases that didn't have that before. 

Somehow, the people that other people were ignorant enough to elect got the idea that YOUR job is making sure THEY get paid.  They seem to know what they want, problem is they think YOU should pay for it

 

[VYO]

Oregon voted and won against a sales tax but we still have to do taxes for the other states who voted for it. Such is life - death and taxes, no way around either.

[Ed in Tx]

You can sum it all up with just one word.... AMAZON

 

[Lobo]

Let's see now:

50 states and 3 or 4 territories, plus the District of Columbia. Each is a separate taxing entity.

Each state has counties (usually several dozen each). Each is a separate taxing entity.

Each county has incorporated cities and towns (frequently several each). Each is a separate taxing entity.

Then there are fire protection districts, ambulance & emergency medical districts, library districts, transportation (bus, train, subway) districts, metro districts, municipal utilities, and several other types of taxing entities.

Postal zip codes frequently span multiple taxing entities, so a customer's address is not an accurate means of identifying appropriate taxing entities or tax rates.

How is a small business or mom & pop shop expected to identify each and every one, calculate the taxes for each, maintain accountability for collected tax revenues, file appropriate tax returns (hundreds and hundreds of those every month or quarter), and remit collected taxes to every taxing entity?

If a given taxing entity makes a complaint against a business about taxes collected or remitted that complaint will usually be handled by local authorities. How is Joe Businessman in Maryland supposed to respond and deal with such a complaint in California? Answer: pay an attorney or suffer a default judgement and tax lien.

Without doubt, complying with such laws and regulations would be an extensive and expensive exercise, well beyond the capabilities of most small business operations. The likely result will be the destruction of countless smaller businesses across the country.

Bad ideas make for bad law. Bad law makes for angry and disaffected citizens. Bad law, such as this, may also fuel a vast underground economy that is beyond any possible enforcement effort.

[fredk]

We have basically one tax. Called V.A.T.  - Value Added Tax. Four rates in UK, 20% on nearly everything, 5% on fuels like coal, electricity, 0% on books and such and 'exempt' on things like food and baby clothes. Business' only levies and collects VAT when their turnover is above a certain amount = about £35,000 p/a afair

Big Limited companies pay a Corporation Tax on profits but small business' like your 'mom & pop' shops do not. Brick and mortar business also pay 'rates' a local tax for town/city services

As a small business working from home the only tax I have to pay is on my earned income.

I remember being stuck in an area of New York [called Jamaica !] years ago. I was in-between flights and for reasons I was down to my last $10. I went to a McD for a meal. Most everything was priced at 99c. Great, I thought. So I worked out a meal costing about $6 - as I thought, but it cost me $9.80 or so with all the local, city and state taxes added!

 

[chrisash]

I think the turnover limit is 85,000 not 35000 fred

[fredk]

aye, you could be right. Its still well above what most small business' make though

and I forgot, you lot have local council taxes, which we don't have, 

[CowboyBob]

So meanwhile here in the US they will probably have to hire some more inefficient workers & then have to build larger buildings (gotta spend the $$ you know) to track the non-payers down & I'm sure they will devise some penalty or interest for non-compliers!!

[JLSleather]

Iowa had us charging tax on sales within iowa and any other state where we have a presence, which is currently NONE.  99 counties with their own discretion at local option.  State tax is 6%. ALMOST all the counties add 1% local tax, total of 7%.  Its relatively painless.

As of Feb, Iowans pay sales tax on purchases from other states.  This is IOWA collecting a tax on goods shipped to IA, NOT the state sending the goods collecting tax.  States doing this incl [but no limited to] WA, SD, IA, OK, MN, ... i forget the rest.  So FL, for example, is now required to collect tax on purchases shipped to IA, even though they HAVE NO sales tax in FL   So they collect sales tax on goods shipped to IA, but in IA we do not charge tax on goods sent to FL .

Now - my personal OPINION admittedly not supported by actual knowledge - many people on THIS site will claim the dummy rule, sometimes called "plead ignorance".  On top of the "i didn't know" crowd will be some others -  when ordering materials, many like to say "Im a business" and when tax is due that same person claim "im just a hobby". 

Whatever - Im not the tax enforcement.  But I know for a fact that Cutesy, Ebay, and Amazon are all collecting and remitting sales tax ON BEHALF OF the people who sell on those sites.  I bought something on Ebay recently and the seller was surprised to see I was charged tax.  So I don't think it will take too long before what those sites report and what the individual sellers report clearly don't match... and then it will get far more interesting.

Edited March 6, 2019 by JLSleather

[fredk]

In the UK some business' show the price of goods including tax, and some don't, eg Le Prevo Leather. But in the end everyone pays that same VAT [tax] and no extra. Some business' can reclaim VAT paid on the stuff they bought. An example; one of the business I owned published magazines and booklets. We paid VAT [tax] on film, processing, cameras, computers et cetera, but magazines are 0 rated so I could claim back all the VAT I'd paid out. When I sold the magazines into other European Union countries they did not [with one exception] impose any tax on the magazine even tho they had a tax on mags produced in their country

What I'm reading here is the US States are acting like individual countries, not as members of one great big country, with free-trade between States but imposing 'import & export' tariffs. Whereas the individual countries of Europe are acting like they are part of one country with free flow of trade and recognising that VAT paid in one member country is tax paid

All this must really stifle any growth in any small business. It sounds like the amount of paperwork needed just to sell to someone in another state is a real burden and I guess the IRS is rather unforgiving of mistakes. We joke that our IR&C are hard nosed and bandits but they aren't bad really

[Lobo]

On ‎3‎/‎6‎/‎2019 at 1:57 PM, fredk said:

In the UK some business' show the price of goods including tax, and some don't, eg Le Prevo Leather. But in the end everyone pays that same VAT [tax] and no extra. Some business' can reclaim VAT paid on the stuff they bought. An example; one of the business I owned published magazines and booklets. We paid VAT [tax] on film, processing, cameras, computers et cetera, but magazines are 0 rated so I could claim back all the VAT I'd paid out. When I sold the magazines into other European Union countries they did not [with one exception] impose any tax on the magazine even tho they had a tax on mags produced in their country

What I'm reading here is the US States are acting like individual countries, not as members of one great big country, with free-trade between States but imposing 'import & export' tariffs. Whereas the individual countries of Europe are acting like they are part of one country with free flow of trade and recognising that VAT paid in one member country is tax paid

All this must really stifle any growth in any small business. It sounds like the amount of paperwork needed just to sell to someone in another state is a real burden and I guess the IRS is rather unforgiving of mistakes. We joke that our IR&C are hard nosed and bandits but they aren't bad really

The recent efforts to collect sales taxes (similar to the UK VAT) has become an issue in the United States since the growth of the internet and on-line shopping. Such purchases have undoubtedly reduced sales and tax revenues from traditional brick and mortar stores across the country, and the various states and local authorities are attempting to replace those lost tax revenues by attaching taxes on internet sales.

The United States of America has always been a collection of individual states, each functioning as the primary government within its borders. Originally the national government was charged only with national defense, postal services, foreign affairs, and regulation of interstate commerce. This system of governance was called "federalism".

Starting in the 1930's under the administration of Pres. Franklin D. Roosevelt the national government began usurping state and local powers, centralizing authority at the national level. This was usually accomplished by subsidies and revenue sharing schemes, essentially offering state and local political authorities large pots of federal dollars in exchange for surrendering state and local control. This has been going on for 3 full generations of Americans now and most simply do not recall that we were intended to have far more control over our own affairs than has become the norm under federal control.

Hence, a Department of Education dictating school curricula and enforcing compliance with funding; a Department of Health, Education and Welfare dictating local benefit programs and enforcing compliance with funding; an Environmental Protection Agency with near-dictatorial powers over land use, development, etc, enforcing compliance with funding; and many more centrally-run programs that are used to control local government affairs (and elections) via funding, or threatening to cut off funding. None of these functions or entities are mentioned in or authorized by the US Constitution, and are thus of questionable legality to begin with; however no one seriously challenges such government over-reach because to do so threatens the primary revenue stream of state and local governments.

Here in the US our form and systems of government are fundamentally different than any others. Everything is based upon our Constitution as the bedrock of law, and the Constitution serves primarily to constrain government while guaranteeing the rights of individual citizens and the various states. Perhaps needless to say, many politicians do not like having their powers and authorities limited, and the debate over the constitutionality (legal basis) of laws and programs is never-ending (I am sure confusing, if not comical, to European observers).

So, a bit of an answer to your questions and a long-winded dissertation on American government and polity.

Best regards.

[WTXKid]

Yeah, we have to collect the tax and set it aside for a year. I have a separate google sheets (like excel but free) to keep track of it on top of the quickbooks I use. The state will actually send rep to your place if they realize you might need to pay. At least Texas does as I've learned. So forget making double on your investment. Not with Amazon, ebay, PLUS the taxes from the state and paypal or credit card provider.  I can only add 50% of my cost to the product and then add on the fee for shipping and paypal into the price. People want free shipping now. 

[PigasusStudio]

Late to the tea party, but ... :0)

This sales tax debacle in the USA is part of why I've been dragging my feet on creating items for sale. Between my other person and myself, we're capable of creating jewelry, some light metalsmithing, photography, ceramics, and I'm now dipping into leatherwork. All potentially salable things if someone's willing to buy. For anyone to buy it, we have to provide it for sale. In order for us to provide it for sale we have to be willing to track, collect, and remit sales taxes.

Every revenuer also has different rules on what $ sales threshold is required for filing, or in others the threshold might be a set number of sales, or in others a combination, or in some few no sales tax is to be collected at all, or in still others one must collect from everyone and remit no matter how small a sale or amount of tax collected. This truly places an undue burden on small businesses. We can't possibly be expected to know every rule for every possible tax jurisdiction and be able to calculate this for our customers and be able to remit sales tax collected on all the varying schedules required. 

There are sales tax programs out there, e.g. TaxJar and Avalara, etc. that can help in track what's been collected and what's owed to whom. They, of course, come with their own fees. 

Some sales channels (e.g. Etsy, Amazon) will be the "seller of record" and auto-collect sales taxes for some sales based on some customer locations, and then auto-remit those collected taxes for you to the appropriate revenuer, though for some reason you still have to do the actual filing and say that sales channel x collected and remitted the tax. Yet,  even they don't cover every state / county / municipality / etc. / etc. / etc.. so then you're still left trying to figure out where they've collected and where they've paid and what to charge for everyone else and where you owe and how much. 

It's tempting to just say "sales tax included in price" and then deal with the how much owed to whom later. However, not all sales channels allow for that and just tack on and collect whatever tax they think is needed per their software, so one can't even state that "sales tax included" bit on the product since some customers will still get charged separately (and thus also have paid an increased price, unjustly I think most would say).

There's no easy solution here, and it's very daunting, no doubt.

What are we doing about it? The masses are bending over and ... or, as the OP says of some, ignoring it completely. Us personally, option #1 and not liking it one bit. Once we have enough sales/mo to justify the monthly fee for Tax Jar or Avalara or the like, we'll be using that. Until then there will be hair pulling, throwing things, probably crying, and paper cuts, and ranting.

Oh, and don't get me started on income tax if you're a mobile crafter/seller as I plan to someday be. Ohhh, oooh, ooooh, and that there self-empolyment tax (y'know, that extra FICA and MEDI amount you're supposed to pay on all your earnings that your W2 employer would otherwise pay if you were so employed?).  The combination of the three really makes me question this desire to make and sell.

But if I don't sell, I can't afford to make. 

And I wanna make. 

Edited July 27, 2019 by PigasusStudio

[Hildebrand]

Just curious Pigasus do you plan someday to collect Social Security or Medicare?  If the answer is yes why the complaint about self implement tax?  You are your own employer and somebody has to make deposits into the system if you are to draw back out.

Don't get me wrong I am not pro tax anything nor do I want to start a tax battle, but I think sometimes we start complaining about a tax just because its a tax before realizing there is a benefit.  On the income tax I am right there with you, if they gave me power to change one thing I would institute a federal sales tax.  No income tax only pay tax on what you spend.

I know there are varying beliefs as to how long SS and Medicare will be available but I also remember getting the letters saying SS would be broke by 2018 and its still going.

Just my $.02

Todd

[PigasusStudio]

20 hours ago, Hildebrand said:

Just curious Pigasus do you plan someday to collect Social Security or Medicare?  If the answer is yes why the complaint about self implement tax?  You are your own employer and somebody has to make deposits into the system if you are to draw back out.

Hi Todd,

Rational conversation and discussion is always welcome!

My comments on sales tax complexity are a definite complaint, no doubt, and I can see how that would color the reading of the rest of it.

My  comments on income tax complexity are more expressing a woe, if you will. I do intend to be mobile, so this one will affect me at some point, though in a much less complex way than the sales tax. Also, there is a bill being considered which would greatly reduce the burden on the mobile workforce so there's the potential for relief on that in the next few years.

My comments on self-employment tax are not so much a complaint as expressing an "ouch". It's also an element which, in my experience, many writers, artists, crafters, real estate agents, etc. don't remember to weave it into their accounting so I tend to mention it now just by sheer habit. Yes, we do get a deduction related to it when paying income taxes, and yes, in theory we'll get it back someday (on that I'm in the "hopeful but I'll believe it when I see it, they still have 20 more years to fitup" camp), but still, it's a pain point to carve out that extra 7.65% of all revenue and set it aside with the rest of the taxes (fed, reg fica, reg medi, state, and local).

Now, if that proposed federal sales tax / no income tax is a flat tax across the board for everybody, every business, and everything -- no loopholes, no exemptions, no deductions -- well, that wraps up the income and sales tax into one nice neat bundle and I'm in, I'll vote for you. :0)

Edited July 28, 2019 by PigasusStudio

[JerseyFirefighter]

https://www.taxjar.com is a way of handling the growing complexity of the tax codes countrywide. It is however a shame that companies like this or turbo tax can thrive on an ever increasing complex tax code so that the layman is forced to sub out services. 

[JLSleather]

 

2 hours ago, PigasusStudio said:

in theory we'll get it back someday (on that I'm in the "hopeful but I'll believe it when I see it,

Makes me think of ALL THE TIMES I saw a doctor or dentist and waited in line behind 3-5 people who DO NOT WORK (and some NEVER HAVE) despite their being nothing wrong with them.  WHO do we think is paying for that? (hint:  when doctors/hospitals have patients who don't pay, costs for YOUR visit are jacked up to recover the losses)

1 hour ago, JerseyFirefighter said:

companies ...thrive on ...sub out services. 

Yup.  You PAY lawyers BECAUSE OF lawyers.