Myth: The Internet Tax Freedom Act of 1998 gave Americans a
three-year sales tax holiday.
Fact: The moratorium only affected
"new" taxes. It did not impact existing sales taxes. While the law
requires buyers who weren't charged sales tax to voluntarily hand it over
to the state on their own, few comply.
Myth: E-commerce companies are "infant" fledgling businesses
that need a break.
Fact: Massachusetts-based Forrester Research
expects electronic sales to surpass $184 billion by 2004.
Myth: E-commerce businesses argue that the software doesn't
exist that can handle complicated tax collection
scenarios.
Fact: Software does exist, and is already used by
businesses across the country. Taxware International (http://www.taxware.com/), considered
the market leader, integrates with Netscape's CommerceXpert software, to
provide accurate sales tax calculations. IBM and Open Market have similar
systems, as well as DPC Computers' Zipsales (http://www.salestax.com/) and Vertex's
Quantum (http://www.vertexinc.com/). – C/NET
Myth: But the software can't handle all the different taxing
jurisdictions found in the U.S. and classes of products
taxed.
Fact: It can tax different products at different rates.
It can tax at all jurisdiction levels. It can exclude tax-free products
automatically. It can accommodate special tax situations (such as a local
jurisdiction's annual tax-free days).
Myth: Since tax laws are always changing, no software can keep
up.
Fact: Several of the commercial software companies are
providing the most complex level of tax compliance by continuously
expanding and updating their products. Some e-mail upgrades to their
clients on an average of every 28 days. The upgrade takes only minutes.
Myth: The software is too expensive for most
businesses.
Fact: Some of the tax software solutions for
e-commerce sales retail for as little as $1,000.
Myth: Collecting sales taxes adds to business
costs.
Fact: Many states allow vendors to retain a portion of
the sales taxes they collect. The portions retained by vendors across the
nation can range from 1% of total sales tax revenue collected in Indiana
to a high of 4% of total sales tax revenue collected by small vendors in
Virginia.
Myth: Tracking of local sales taxes just can't be
done.
Fact: "By offering integrated calculation and tracking of
local sales taxes, Netscape is making it even easier for merchants and
publishers to conduct commerce on the Internet." Jim Sha, Vice President
and General Manager, Internet Applications, Netscape Communications Corp.
– Taxware, 1999
Myth: The total sales taxes lost is
"insignificant."
Fact: According to the National Association of
Counties' 1998 Wage and Salary Survey median for the position, recent
estimates of 1998 losses of $170 million would have enabled every county
in the nation (3,066) to hire two additional law enforcement officiers.
Myth: Those businesses that collect sales taxes on e-commerce
purchases will not survive long on the Internet.
Fact: Some of
the most recognizable corporations collect taxes on e-commerce related
sales, such as IBM, Mobil, Microsoft, JCPenney, Staples, Gateway
Computers, Circuit City and The Gap, and their sales continue to rise
dramatically.
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