That is the reality. I agree with Josh. This Internet sales tax law will effect tons of people and may put some out of work or reduce their business dealings.
I am a consultant who just happens to support a business that does all their business on-line. It takes 8 people plus the 2 owners to keep the company running. We deal with some unique challenges because the company is truly virtual. There is no brick and mortar and there is no offices. Everyone who supports this company work out of their home office. We do everything online.
Adding the requirement to collect taxes for 10,000 different jurisdictions, doing the reporting to 50 different states with completely different reporting requirements will be a formidable task.
This will require knowing the tax rate based on the location of the shipping address at the time of the sale. Then this info needs to be stored along with other information that will be needed to do the reporting. Also different products can have different tax rates. Read the bill - that is what it says. More code and more data. Then this info must be compiled into 50 different reports that have differing requirements.
So at a minimum this company will need to modify their shopping cart at a cost of maybe $5-10k (plus on-going changes), hire someone to deal with all this data, creating reports, and cutting checks. Paying for all this extra infrastructure IS NOT FREE MONEY! It comes out of someones pocket.
Working with these people has been a real eye opener. One of the things I have learned is the cost of the product is not the manufacturing, it is all the other costs.
I am not sure that a brick and mortar company spend more than an online business. To truly be in business online, there is a lot that needs to be done. And it all cost money, lots of money. For instance driving traffic. How do you do that without spending lots of cash? What about shipping and handling? Some of that is paid by the customer, but not all of it. Online businesses need to utilize a fulfillment center. Time and money. There is still the need for an operations department to deal running the business. There is the need for accountants and lawyers. All of this cost money. you will also need developers to deal with the ever changing requirements of your business. And designers to make the daily changes to your website....
If the Internet sales tax bill becomes law, I estimate the company I am talking about will need to spend $50,000 - $75,000 a year to be in compliance. THIS IS NOT FREE MONEY! Someone pays for all of this. AND NONE OF THIS HELPS THE BUSINESS BECOME MORE PROFITABLE, or serve is customers better.
Then there are those audits. Just went through one. Lots of time and money. Data must be pulled so they can see the raw data. Processes need to be explained so the data makes sense. Accountants need to be involved and the business people are pulled from making the business better to doing non productive things.
In reality this will add a huge burden to the smaller, but over $1 mill a year online retailer. I think it will put people out of business or modify how they do business. Those at 1 mill will probably reduce their sales so they do not have to comply. That will remove money from the econ. Others might just sell out to other companies that are big enough to absorb the extra cost.
What we will see is the Walmart phenomena - big business comes to town and kills main street. If Internet sales tax become a reality, it could dry up the small guy's business - your neighbor, and the money goes to a very small group of people - Walmart is an example. You and I become poorer while the ruling elite and big business laugh all the way to the bank.
I deal with these issues on a daily basis. This bill hits me where I live. I can see there is a ton of misunderstanding out there.
It deeply concerns me when people do not understand that more government means less freedom and less money in your pocket.
When you are dealing with government compliance, you are not doing what you are in business to do - make money ans service your customers.
------------------------
Keith Smith
--- On Wed, 5/8/13, josh <
joshcoffman@gmail.com> wrote:
From: josh <
joshcoffman@gmail.com>
Subject: Re: OT: Internet Sales Tax Passes the U.S. Senate
To: "Main PLUG discussion list" <
plug-discuss@lists.phxlinux.org>
Date: Wednesday, May 8, 2013, 7:49 AM
Also 10M a month is a lot different than 1M a year. Sales! = profit; this will finally be the big push that causes people with no real skills to lose their jobs to robots or to Foreign countries.
Not just low/no skill labor. How many developers do you think there are in the US building and maintaining commerce sites for these business? Ops people keeping the sites running or managing the data center? Project managers? Software sales staff? Small contractors and businesses who do work for those development firms or data centers?
At the lawyers and accountants will be happy if it passes. :-/
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