With only a couple of days to spare before the state unleashed its tax collectors to trample Constitutional and Court protections for interstate commerce, Pennsylvania’s Governor delayed the imposition of sales tax demands on retailers with no presence whatsoever in the state. Had this tax grab not been delayed, it would have threatened the livelihood of reporters and struggling media outlets across the Keystone State.
Back in December, the Pennsylvania Department of Revenue issued a “clarification” that imputes physical presence for any out-of-state retailer who places any paid advertisement with any Pennsylvania media publisher. That includes all local newspapers, magazines, TV, and radio stations, and Internet websites.
Pennsylvania tax collectors claimed that any ad placed with a state media publisher creates a physical presence for the advertiser. The new tax grab didn’t require that the ad be commission-based or that the publisher do any kind of “solicitation.” There was not even a dollar threshold for annual sales, so this rule would have covered even an occasional advertiser who serves Pennsylvania customers.
With this rule, Pennsylvania was set to go further than any other state to expand the meaning of physical presence — which limits how states can impose tax collection burdens on remote businesses.
Read MoreEvery once in a while, a rigorous debate will actually sway public opinion.
Yesterday, the Wall Street Journal published an impressive special section on tech issues that featured arguments from both sides. And it included a debate over new sales tax requirements for online retailers.
As I described yesterday, The Journal also published survey results based on a poll conducted weeks earlier, so there were already over 2,000 votes (60%) for the position that retailers should have to collect sales tax for all states — even where they have no physical presence.
I was initially troubled that the survey results were compiled before readers had a chance to understand both sides of the argument. But then, within one day of seeing both sides presented, the poll results were reversed.
Today’s Wall Street Journal features a full-page debate (p.B5) on whether retailers should be forced to collect sales tax for all states — even where the business has no physical presence.
The article includes a debate between Michael Mazerov, who wants force all online sellers to collect taxes for all states, versus my argument in favor of the present national standard established by the Constitution and Supreme Court rulings.
Take a few minutes to compare the arguments. And if you agree that the physical presence rule is the best way to preserve e-commerce as an opportunity for small businesses, please vote in the WSJ online poll. (this morning’s printed poll results came over the last several weeks — before this debate was published ).
Read MoreIt’s a common refrain that those who protest too much might have much to hide. Wednesday’s introduction of the “Marketplace Equity Act” (MEA) is a prime example of this behavior. Just like the Mainstreet Fairness Act before it, the MEA’s name has little to do with its true implications.
At a breathless Capitol Hill press conference, advocates for a new Internet sales tax regime exclaimed the benefits that an ill-defined, expansive and costly regulatory system would have for small businesses.
Not surprisingly, Walmart – a key advocate for online sales taxes and a significant constituent for bill sponsor Rep. Steve Womack (R – Ark.) – ceded the stage to a handful of small business owners who spoke admirably about the creation of a pseudo IRS.
Read MoreToday we published our September 2011 “iAWFUL” list of bad Internet laws. The worst offenders are new burdens on small businesses using the Internet, plus a Puerto Rico bill restricting how 17-year-olds can use social networking.
Our Internet Advocates’ Watchlist For Ugly Laws (yep, iAWFUL is an acronym) is the 10 items of state and federal legislation that pose the greatest threat to the Internet and e-commerce.
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