B4UBUILD.COM Opposes "Online Sales Tax" Proposal in Maryland SB 523
This is not a new tax, it will not force vendors in other states to collect Maryland sales tax, and it will not "level the playing field" for "Main Street" businesses like mine. It will force the termination of advertising agreements within Maryland, transfer that taxable income to residents in other states, and Maryland residents will still be able to avoid paying sales tax on Internet purchases.
Proposed language in Maryland Senate Bill 523, commonly referred to as the "Online Sales Tax" or "Internet Tax" or "Amazon Tax" or "Overstock Tax" or the "Affiliate Sales Tax" or the "Main Street Fairness Act" among others, is currently being debated in the halls of Annapolis, as well as, by lawmakers in other States, Internet Publishers, and Constitutional experts throughout this country.
The cleverly worded names used to describe this bill, which are meant to generate an instant response from those reading or hearing them, are all misnomers. The Internet will not be taxed. Amazon.com will not be taxed. Overstock.com will not be taxed. Affiliates will not be taxed. It will not make things fair for small local businesses or help them overcome competition from very large vendors, regardless of whether those vendors are in a big store across the street or in another state thousands of miles away.
Most importantly, any online sales through vendors in other states, which are not currently having tax applied to them, will continue to be out of the reach of the taxing authority of local lawmakers. Sellers collect sales taxes from consumers on behalf of local tax jurisdictions, in accordance with applicable laws in the location where the seller's store is physically located. Consumers are responsible for paying sales & use taxes when they purchase a taxable product or service.
The "advertising nexus" portion of MD Senate Bill 523...
- Attempts to confer physical status in Maryland (tax nexus) on businesses in all other states by expanding a legal definition.
- Casts a very wide net in Maryland, which is likely to capture unintended targets, causing unintended consequences.
- Will not force any out-of-state vendors to collect sales taxes on Internet sales to Maryland residents.
- Will force the termination of advertising agreements between Maryland residents and businesses in other states.
- Will result in local businesses and Maryland residents losing all or part of their online, and offline, advertising income.
- Will decrease the amount of "taxable income" Maryland residents currently receive.
- Will continue to allow Maryland residents to make "untaxed" purchases, online and offline, from out-of-state vendors.
- Will cause advertising agreements with Maryland residents, and the taxable income they generate, to be shifted to other states.
- Will not result in additional sales tax revenue or income tax revenue to the State of Maryland.
- Will result in a loss of overall income to the State of Maryland as small local businesses, and the Maryland residents who own them, are forced out of business, or forced to move to another state where this law does not yet exist or where it has already been repealed after the inevitable consequences were experienced first hand.
This legislation attempts to apply physical presence (nexus) to out-of-state businesses in order to force them to collect Maryland Sales Tax, from Maryland residents, who are themselves already required by law to submit a "Consumer Sales and Use Tax Form" on the 20th of the month following the previous quarter, for any applicable products or services purchased from an out-of-state vendor, on which they paid less than "6 percent, as follows" sales tax in the other state. Any failure of Maryland residents to pay Maryland Use Taxes, is not the responsibility of vendors in other states — this proposal does nothing to resolve that.
Nothing about this legislation makes things fair for small "Main Street" businesses like mine, or the thousands of Maryland Web site owners with "affiliate advertising" agreements. Businesses large and small, online and offline; newspapers; magazines; TV & radio stations; non-profit organizations; schools; parent/teacher associations; religious groups; hobby clubs; home bloggers; and every other Maryland resident who currently receives taxable income, "directly or indirectly", from paid advertisements that refer potential customers "whether by a link on an Internet Web site, or otherwise" to an out-of-state vendor will be adversely affected by this legislation. Consequently, the State will lose income it currently receives.
The menu buttons above lead directly to an open letter to Maryland lawmakers, supporting documents at the time of this writing, and visual displays of some of the Internet related unintended consequences(?) that have and will result should this legislation be signed into law and become effective on July, 1, 2012 — when out-of-state vendors, large and small, comply with the law in the only possible way, and advertising agreements with thousands of Maryland residents are immediately terminated.
Please take a few minutes to read the information presented B4 U make a final decision on the status of this legislation.