NYC protest permit; also, taxes

Joe Conason was startled to see that a New York Sun article

began by praising the mayor and the police commissioner for holding up a parade permit needed by antiwar protesters who plan to march past the United Nations on Feb. 15: “The longer they delay in granting the protesters a permit, the less time the organizers have to get their turnout organized, and the smaller the crowd is likely to be.”

(Thanks to GMB for the link.)

Also, 10 Nobel economists pan Bush’s tax plan. (Another GMB find.)

In other, tax-related news, the media last week were making much of the fact that Wal-Mart and Target and a number of other traditional, store-based retailers that sell goods online, have cut a deal with states to collect and remit sales* taxes on their Internet sales.

(Very boring discussion of Internet sales tax issues to follow.)

While this development has a practical effect for those of us who buy things online, most of these companies don’t really have a choice.

Traditional, store-based chains (called “brick-and-mortar retailers” in sales tax parlance) were already required to be collecting sales taxes in every state where they had a physical location, regardless of whether the transaction occurred over the Internet or in person.

Some of the companies have tried to avoid the obligation by spinning off subsidiaries and maintaining separate online and real-life operations. (During a dark time in my life, my job required me to be involved in advising some corporations on planning strategies along these lines.)

These plans to contain online and physical transactions in separate entities are one reason you can’t return online purchases at some retail chain stores.

But in reality the operations of the parent and subsidiary are almost always interconnected (cross-advertisting, cross-promotion, joint warehouse facilities, joint HR), and the states are starting to go after these companies for failing to collect taxes on their online sales.

(See, e.g., the California Board of Equalization decision that BN.com had to pay taxes on sales to California residents who redeemed $5 discount coupons passed out at Barnes & Noble stores during the Christmas shopping season in 2000.)

That’s why the deal includes amnesty for taxes the companies haven’t collected on past Internet transactions.

I’ve said it before, but contrary to popular opinion, the Internet Tax Freedom Act does not actually exempt Internet sales from tax. The reason you don’t pay sales tax on many Internet purchases is that, without Congressional authorization, the states can’t force out-of-state Internet sellers (like Amazon, which has a physical location and sales people in only one state) to collect the tax.

Theoretically, consumers are required to pay sales* taxes directly to the states on Internet and mail order purchases. Of course almost no one actually does this.

Anyway, it remains to be seen whether Congress will act to give the states authority to impose tax collection obligations on companies like Amazon–companies that don’t have a physical presence, and therefore don’t have sales and use tax responsibilities, in many states. With the powerful retailers on board and state economies in a tailspin, Congress might be willing to take a look at the issue.

Despite urging from most state governors last year, however, Congress historically has steered clear of the debate after calling for states to streamline their sales and use tax systems several years back.

The states’ streamlined sales tax project has some momentum now (although some say the teeth have been taken out of it by corporate interests).

It’s worth noting that the American Booksellers Association and a North CA Independent Booksellers Association reportedly have jumped into the act and are lobbying states for tax fairness–i.e., wanting Amazon to have the same collection and payment duties as other retailers.

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* These are actually “use” taxes, not sales taxes, but the effect is the same.


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