By Erin Lale
That’s the common reaction of online shoppers on finding they are paying more when they check out. That was also what Nevadans said to the 2010 Nevada State Ballot Question 3, the internet sales tax initiative, which was defeated by the people of Nevada. Thanks to Governor Brian Sandoval’s directive to the state tax department and his deal with Amazon and other internet sellers, Nevadans are now paying sales tax on online transaction anyway.
According to the Nevada Dept. of Taxation, businesses that have a presence in Nevada are currently required to collect sales tax on online transactions when the point of delivery is in Nevada. The point of delivery is the shipping address. Businesses wondering if they are required to collect sales tax can call the Dept. of Taxation at (866)962-3707 and select option 1 after selecting a language.
Up until recently, the state of Nevada did not collect sales tax from Internet businesses, but Gov. Sandoval’s office maintains that these taxes were already owed and are therefore not a new tax. In April of this year, Sandoval announced that he reached a deal with Amazon to begin collecting sales tax in 2014. Amazon has a presence in Fernley, Nevada and also recently acquired Zappos, which has a call center in Las Vegas. Other online businesses are already collecting sales tax.
Las Vegas City Councilman Bob Coffin, formerly a Nevada State Senator, put it in perspective. The foundation in the law for sales and use taxes has been around for decades. “This whole thing started with catalog sales,” Coffin said. Before the Internet came along, there were already purchases being made through the mail. Internet sales grew to such an extent that Coffin says, “bricks-and-mortar businesses are dying.” Collecting sales tax on internet and catalog sales will help local businesses stay competitive, he believes. Coffin owned and operated a bookstore in Las Vegas during the print era.
As a Senator, Coffin sponsored a Resolution to Congress asking them to allow the state to collect sales tax across state lines, which passed unanimously in 2009. Currently, the federal legislature is considering such a bill, the Streamlined Sales Tax Initiative. It would allow all states to collect sales tax across state lines. Coffin says that currently, no Nevada businesses are legally exempt from collecting sales tax, although the tax dept. has traditionally ignored small merchants. Since the tax dept. also traditionally did not collect sales tax on internet sales but recently began doing so, it could start collecting from microbusinesses at any time. Coffin says small merchants like eBay sellers would be legally exempt under the Streamlined Sales Tax.
Local artist Maria Arango was one of the founders of City Lights Artists’ Co-op, which has a brick and mortar art gallery in downtown Henderson. Arango says, “I now sell my art exclusively through online venues due to the expanding international market and do almost all my shopping online due to convenience and selection.
“I think online shopping is becoming more and more popular. This year compared to years past, my various online stores are providing a steady income and I have noticed the proportion of mobile sales have also increased since the advent of the popular touch phones and tablets.
“As an online merchant, the internet allows me to keep my overhead low and thus maximize profits through various sales and by reaching an international market.
As a “manufacturer” of my own product, I enjoy a wider profit margin than those sellers who purchase a product for resale. Still, the online shopper more and more expects a bargain. Price comparison is an Internet shopper’s modus operandi and every online shop competes with the low-prices of Amazon and eBay and the like.
So for the very small seller, operating inexpensively and being able to compete with “the big boys” is essential. The “big boys” already have accountants and, due to huge savings on quantity buying, a big advantage on profit margins.
“Enter the Internet tax, and small sellers will fold due to yet one more complex accounting problem and the inability to compete in the subsequent price wars. Amazon will probably sell “tax included” as will the big box stores now rampant on eBay and many other online markets. The online shopper will continue to price compare and, in the very quick war of price comparison, the “all inclusive” pricing will win as it does now with “shipping included” pricing.
“The small seller will be the biggest loser due to increase paperwork and decreased competitiveness. Shoppers will lose as well as they will see an increase in prices. International selling will decrease because many international buyers are already paying import taxes (customs charges) and now an additional tax? To go to the USA’s pockets?
“Just my thoughts, Internet is the last frontier for pure and simple competitive sales where everyone big and small competes on uniqueness, selection and price. The less regulation the better for the consumer, the small and large business and the entire economy.”
Arango sells her wood block prints from her website 1000woodcuts.com.