My 8 Simple Steps to #eFairness

I encourage the United State Congressman who are drafting new legislation in 2015 to consider an alternative approach.  I would be happy to discuss my ideas on a broader basis but here is my solution boiled down to 8 steps (for retail sales).

#eFairness 8 Simple Steps

Here is my solution to #eFairness:

  1. All remote retail sales would be taxable at the “one tax rate” per destination state. The “one tax rate” per state would apply to ALL “remote retail sales” (that cross state lines) from the “home state” and “nexus” states.  Basically, ALL retail products that are shipped in interstate commerce are treated equally by everyone. It “evens out” the playing field on all “remote retail sales.”  It would not apply to sales made to dealers that buy then resell. Only the resale to the end user/customer would be taxable.
  2. No third party software integration would be required.  No recoding of any websites.  It is simply adding “one tax rate” per state.
  3. Traditional mail order transactions would also have one tax rate per state. This would capture all offline interstate transactions and the tax would be easy to calculate.
  4. U.S. Customs would apply one tax rate per state for any inbound INTERNATIONAL retail purchases and forward the revenue on to the states.  NOTE: I amended #4 in the comments section below the article.
  5. States that have no sales taxes could use a host states system or a centralized filing system (such as a Certified Software Provider) to submit taxes.
  6. Auditing/civil/criminal jurisdiction over a “remote retail seller” is NOT expanded to all the states where a tax is submitted. The federal legislation would delegate that only the “home state” would have jurisdiction over “remote sales.”  Each business would be required to claim a “home state” for remote sales. NOTE: I amended #6 in the comments section below the article.
  7. All retail interstate transactions are taxable at “one tax rate” per state.  No exemptions for clothing or other items IF the items cross the state border.
  8. Tax Exempt Organizations would be allowed to claim a refund on their state income tax returns for sales taxes paid on remote retail sales.  This would simplify the paperwork so exemption certificates would NOT be required to be collected by remote retail sellers.

My plan encourages states to compete on sales tax exemption incentives within their own States.  How? This approach would make states review their retail sales tax rates on certain products.  For example, in Minnesota there is no retail sales tax on clothing.  All “remote sales” being delivered into Minnesota from out-of-state would be taxed at the base state retail rate.  Both Internet based and brick & mortar businesses located within Minnesota would have the intrastate (in-state) advantage of selling tax free clothing to its population. My plan would encourage states to provide incentives for companies to relocate or expand their physical presence in their state.  One incentive might be to exclude certain products from retail sales tax on intrastate (in-state) purchases like Minnesota does.  A retailer located in Minnesota still retains the right to sell tax free clothing.  For example, Overstock, which does not have “physical presence” in Minnesota would NOT have the right to sell tax free clothing in Minnesota until they establish physical presence in the state. This would encourage the growth of businesses to expand outside of merely one state and encourage tax competition between the states. States could also have agreements on “remote sales tax” collected to provide a portion out to the counties, cities, tribes etc…a revenue share since it is NEW money they was not collecting prior.  Everyone would be happy (maybe).

Facts: Alibaba #efairness False Statements and the Internet Sales Tax

ALIBABA has become the imaginary NEW villain of #efairness proponentsThe movie Alibaba and the 40 thieves come to my mind.  Articles are being written, videos are being produced all with the intent to add fear to the minds of those that dig no deeper into the issues.  Is it false information, deceptive propaganda or just spreading rumors to help their cause?  I will let you decide.

#efairness lies

  • Alibaba DOES NOT sell any retail products.  Alibaba shows they primarily monetize their retail marketplaces through online marketing services and commissions on transactions. For their wholesale marketplaces, they derive revenue by charging fees for memberships and value-added services. Source Alibaba.  Basically, they are an online shopping mall where businesses rent space from Alibaba to advertise their products.  Why is this important?  Alibaba is doing NOTHING that the Marketplace Fairness Act (MFA) aka Internet Sales Tax could regulate.  Alibaba is NOT the retailer selling taxable goods. 
  • “A consumer in Iowa is wary of buying products from some smaller mom and pop store in Wuhan, so how do you connect those two directly,” said Dawar [Alibaba Representative]. “The question is can Alibaba fill that gap, sort of the way EBay has done, through a reputation score system and monitoring of suppliers.” Source BloombergWhy is this important? Alibaba is doing NOTHING that the MFA could regulate.  Alibaba is NOT the retailer selling taxable goods.  The mom and pop in Wuhan, China is the retailer in this example. 
  • “At this juncture, the EU VAT [European Value Added Tax] and the RST [Remote Seller Tax] under the MFA [Marketplace Fairness Act] are in exactly the same position. Both require overseas businesses to collect and remit a destination-based consumption tax, but neither can enforce the requirement.” In addition, “The ability of a State to compel a foreign remote seller to comply with state tax laws (even after MFA passage) is difficult.” Source Boston University School of Law, Leveling the International Playing Field with Fairness Act Why is this important? The MFA is basically un-enforceable outside of the USA.

Even if our local governments try to enforce state, city, county, and Indian tribe tax collection regulations on a business only located in Wuhan, China, they will fail.  If I were a Chinese company I would merely invoke the “small seller exemption” or simply laugh at the futile efforts made to collect the remote sales taxes. I personally would like to see the cost to try and enforce a local law in the USA on a company only located in China.

Software is the answer…ya right…lets just say for a moment that the mom and pop business in Wuhan, China decides to put up their own website and start selling to USA customers without using Alibaba.  Do you think they will agree to integrate software like TaxCloud on their website?  The simple answer is NO.

The proponents of #efairness are using the fear of Alibaba and the 40 thieves to create propaganda to pressure our lawmakers into making bad decisions.  It is an imaginary fear. 

The Marketplace Fairness Act would be a TAX INCREASE in Virginia of $5.30 on Catalog Orders

Virginia Tax Increase

The Marketplace Fairness Act would be a TAX INCREASE in Virginia of $5.30 on catalog orders.  The Virginia sales tax rate is 5.3%.

Virginia Law Today: “If the total amount of purchases was from out-of-state mail order catalog(s) only, and $100 or less for the entire year, you do not have to pay the use tax.” Source State of Virginia

Virginia Law Tomorrow (if the Marketplace Fairness Act Becomes Law)

There is no exemption on catalog orders.  You owe taxes on ALL catalog orders even those under $100.  It IS a TAX INCREASE of $5.30 on your catalog purchases.  How can anyone from #efairness say this is not a tax increase to people shopping with catalogs in Virginia?

Software Capabilities Overstated by 972 Days and Counting: Marketplace Fairness Act

On March 28, 2012, David Campbell, FedTax CEO & Co-Founder wrote and signed a letter to Governor Paul LePage of Maine that showed, in part:

“In fact, using our TaxCloud service doesn’t require any resources at all, because it is completely free.” “Any retailer that uses an online “shopping cart” or order management system can register with our service and be ready to collect sales tax in 20 minutes (or less), no matter how small they are.“

  • Please Note: The “20 minute (or less)” letter was signed in 2012. This is 14 months before the U.S. Senate voted and passed their version of the Marketplace Fairness Act (MFA).

During May 2013, prior to the Senate’s vote, I contacted my U.S. Senator’s office and told them that my shopping cart (aspdotnetstorefront.com)  and order management system (Quick Books) was not compatible with FedTax software.

I contacted FedTax and informed them of this issue.

It has been 972 days since CAMPBELL wrote the letter to the Governor of Maine claiming “Any retailer that uses an online “shopping cart” or order management system can register with our service and be ready to collect sales tax in 20 minutes (or less), no matter how small they are.“

It has been 568 days today since the Senate voted on the Marketplace Fairness Act.

Here is a screen shot showing the status of my eCommerce software TODAY as shown on the FedTax website:

“We are in the final stages of testing. Integration sources files will be available on GitHub soon.”

Marketplace Fairness Act

Think of the Obama-care software provider claims when you think of the Marketplace Fairness Act.  I think the claims are similar.

Debate: Thomas Carlson vs David Campbell TaxCloud re Marketplace Fairness Act

Apparently TaxCloud owner David Campbell would like to debate me about the Marketplace Fairness Act.  I copied and pasted the debate so far from a closed LinkedIn group.  David feel free to debate me in the open here.  I will post all of your comments at the bottom of this page.  Also, anyone else can post comments too.  This blog has always been open to all comments pro or con.

UPDATE: David appears to have removed (deleted) his comments to me from the LinkedIn group.  It is a good thing I took a photo of his comments and copied them below here in this discussion. David, why challenge someone to a debate, delete the comments and run away? 

David Campbell FedTax TaxClourThomas Carlson (My response to Campbell BEFORE he deleted his statement shown above):

  • Vice President at Assisted Living Store, Inc.

    A great video showing the cost of free software.

  • Thomas Carlson

    Vice President at Assisted Living Store, Inc.

    First Debate Question:

    Was this statement true or false on March 28, 2012?

    On March 28, 2012, you wrote, “In fact, using our TaxCloud service doesn’t require any resources at all, because it is completely free.” “Any retailer that uses an online “shopping cart” or order management system can register with our service and be ready to collect sales tax in 20 minutes (or less), no matter how small they are.“

    David What is Your Answer? True or False

  • Thomas Carlson

    Vice President at Assisted Living Store, Inc.

    Second Set of Debate Questions:

    * Have you read the November 2013 SBA study that shows? “A more realistic estimate of 1,817 online retailers that could be subject to the requirements of the Marketplace Fairness Act” Link to study https://www.sba.gov/advocacy/analysis-internet-sales-taxation-and-small-seller-exemption

    * As someone in the industry did you (TaxCloud) have anything to do with this study? Telephone calls, emails, letters, etc….?

    * A TaxCloud video from 2011 (that you have been fighting to have removed from the Internet through DMCA take downs) shows 350,000 – 3,500,000 retailers is your market if the Marketplace Fairness Act passes. Here is link here to the video and removal requests:

    http://marketplacefairnesscoalition.org/taxcloud-video-up-to-3-5-million-retailers-will-be-impacted-by-mfamitfa/

    * Why are you fighting so hard to have this removed from the Internet?

    * Did you ever contact the SBA and tell them that the industry (you) thought that their study was wrong? Why not?

    5) Did you ever contact Dick Durbin and/or Lamar Alexander (who mentioned the SBA study in a speech last week on the Senate floor)? Did you tell them the SBA study was incorrect with your conclusions?

    David, we can debate below in the comments area:

The EPIC Fail by @eFairness All U.S. Senators and Congressman Must Read This Now

Epic #eFairness Fail

“I think this is an EPIC FAIL by @eFairness advocate TaxCloud a Certified Software Provider (CSP).  This company keeps on writing letters to law makers on how wonderful tax collection could be if people just used their magical software.  The sales pitch is akin to selling snake oil of the past that cures all ailments.  Buy my magic elixir TaxCloud says… 

One blogger wrote an EPIC response to TaxCloud’s letter to U.S. House Speaker John Boehner.  It outlines the misinformation and deception that is being thrown at members of the U.S. Senate and Congress about this legislation.”

Tom Carlson

READ THIS NOW:

Click Here “Taxcloud Letter to Speaker Boehner (11/18/14) – A Rebuttal

Wow, what a steaming pile of Pivot.

In case you haven’t heard the term, “pivoting” is what you do when your idea isn’t working.  It’s mostly associated with start-ups who realize their ideas/business model isn’t working, so they “pivot” to another.  It’s mostly a euphemism and frequently used as a mocking put down when the pivot clearly is something that is such a 180 degree turn from their previous direction.  Sometimes pivots work, many times they don’t.  More often than not, it’s a sign of desperation.

Click Here READ THE REST OF THE STORY BY CLICKING HERE

Simple Questions Shows How the Marketplace Fairness Act IS a NEW TAX

Internet Sales Tax New Tax

Will the Voter (your constituents – Senators & Congressman) believe this is a NEW TAX? YES – Therefore it is a new tax.

Minnesota Department of Revenue – Items for Use Outside Minnesota

According to the State of Minnesota publication, Items for Use Outside of Minnesota, it shows “Minnesota SALES TAX DOES NOT APPLY to items the seller delivers to customers outside of Minnesota, whether delivered in the seller’s vehicle, by common carrier, U.S. mail or parcel post. This includes items purchased for business and personal use and for items used as gifts.”

TODAY (with NO Marketplace Fairness Act)

  1. Question: If I buy a Christmas gift in Minnesota for my mother from a SMALL BUSINESS (only located in Minnesota) and have them ship it directly to my mother in Florida do I owe any Minnesota sales tax? Answer: NO
  2. Question: Can the State of Florida force me (a person living in Minnesota) to send a sales or use tax payment to the state of Florida? Answer: NO
  3. Result: You paid NO tax on the Gift.

TOMORROW (WITH the Marketplace Fairness Act)

  1. Question: If I buy a Christmas gift in Minnesota for my mother from a SMALL BUSINESS (only located in Minnesota) and have them ship it directly to my mother in Florida do I owe any Minnesota sales tax? Answer: NO
  2. Question: Do I have to pay Florida sales tax?  Answer: YES
  3. Result: You PAID a NEW TAX to Florida.

The Marketplace Fairness Act IS A NEW TAX if it passes for people buying their mother a GIFT. It is simply a Grinch tax.

This is also true in New JerseyNew York, Texas, Nebraska, Utah, Wisconsin (these are the only states I have researched so far).

  • Will the Voter (your constituents – Senators & Congressman) believe this is a NEW TAX? YES – Therefore it is a new tax.

National Retail Federation Lies, Smears and Misstatements: Marketplace Fairness Act

Thomas Carlson:

The National Retailer Federation only represents big business interests.

Originally posted on Marketplace Fairness Act:

I allege the Marketplace Fairness Act (MFA) aka “The Grinch Tax” SUPPORTERS including the National Retail Federation (NRF) useall sorts of lies, smears, misstatements and distortions in order to create the false impression about MFA or maybe they do not understand the law.  Imagine that…our lawmakers and industry leaders who are pushing for new laws apparently do not know the laws in the states that they represent.

Internet Sales Tax

On March 3, 2013 David French, SVP, Government Relations, for NRF wrote an article on their blog titled, “Conservative Opposition to the Marketplace Fairness Act Misguided.”  NRF makes the following statements in their article:  

  1. NRF wrote, “Unfortunately, the bill’s opponents useall sorts of lies, smears, misstatements and distortions in order to create the false impression that lawmakers who support the bill are for “taxing the Internet” or violating pledges to support lower taxes or smaller government. These folks simply are not telling the truth…

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Marketplace Fairness Act: aka “The Grinch Tax”

Thomas Carlson:

Christmas is coming. Contact your U.S. Senator and Congressman and ask them to not be a “Grinch.” Some lawmakers want to pass internet sales tax legislation during the lame duck session. Merry Christmas.

Originally posted on Marketplace Fairness Act:

The Grinch Tax: Internet Sales Tax

In Minnesota, New JerseyNew York, Texas, Nebraska, Utah, Wisconsin (these are the only states I have researched so far) you can stop in at a brick and mortar store and buy an item SALES TAX FREE (maybe a gift for your mom who lives in another state).  The brick and mortar store does not have to charge you the sales tax if they ship the gift out-of-state for you.  This is also true if you order a gift online.

Here is an example of Minnesota’s law:

  • According to the State of Minnesota publication, Items for Use Outside of Minnesota, it shows “Minnesota SALES TAX DOES NOT APPLY to items the seller delivers to customers outside of Minnesota, whether delivered in the seller’s vehicle, by common carrier, U.S. mail or parcel post. This includes items purchased for business and personal use and for items used as gifts

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Best Buy’s Joly Actually Tells Congress Why NOT to Pass the Marketplace Fairness Act

Thomas Carlson:

Best Buy really does not have any understanding of the Marketplace Fairness Act. All they want to do is use lawmakers to crush small competitors.

Originally posted on Marketplace Fairness Act:

UPDATE: Best Buy Officially Responded to my article.  I posted it near the end of this article.  I also posted my response to their official response as a rebuttal.

On April 15, 2014, the Minneapolis Star Tribune wrote an article titled, “Best Buy’s Joly calls for Congress to pass Marketplace Fairness Act.”  He stated that Best Buy’s top concern is e-fairness.  They want the Marketplace Fairness Act aka Internet Sales Tax legislation passed.

This map shows the locations of Best Buy Stores.

After reading the article one point stood out to me.  Hubert Joly said, “the electronics retailer’s stores are profitable, and 70 percent of Americans are within 15 minutes of a store.”  This means that Best Buy has physical presence (brick & mortar facilities) close to 70% of the American population.  They currently collect sales taxes in all of the states (that have sales taxes) where they have a…

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