Comment by brokentone | Hacker News Reader

Comment by brokentone | Hacker News Reader

Playing devil's advocate here. No one pays "use tax" -- the tax you already owe your state for things you purchase online/on the phone etc and do not currently pay sales tax on. This is already an illegal activity that I'd hazard nearly 100% of the US is in on.

If I wanted to come into compliance here, I'd have to save all of my reciepts from every time I shop online, and probably hire an accountant to figure out all the extra tax I owe. This doesn't sound interesting to me, or enforceable by the government. However, online stores collecting this for me could be a value add in some ways.

Let's take a look at the free market though (although I get that issues of tax law cannot be fully free as they start in a non-free place). What if online retailers _offered_ to collect the tax for me, with the note that you owe it either way and they're trusting you to pay it on your own otherwise? I would likely opt-in much more often. Similar to suggested tips increasing tipping in NYC cabs, this might move the needle in the right direction.

I pay use tax. I've also been audited several times. It's easy to say, "oh, everybody ignores x tax, it's completely unenforceable," but if you get audited, yeah, the state can look through your bank and credit card records and get a pretty good idea of what you owe.

Honest question, what sort of process does it look like for you to total everything up? Do you keep running totals or do it at the end of the year? Do you have an accountant? Would you prefer that online stores collected for you?

Usually I'd use a combination of my Mint records (which had convenient totals for each online merchant, of which I really only used 5 or 6 in a typical year) and the Massachusetts safe harbor law (which essentially allowed me to assume that I spent 1% of my AGI on untaxed purchases less than $1000, and pay use tax based on that number). If I bought anything online or out-of-state that cost more than $1000, I'd add that in separately, but that happened rarely enough that it was pretty hard to forget how much I spent on those items.

What we have right now is a situation where some stores collect taxes in some states. As a consumer, I would prefer it if all stores collected taxes for all states, for three reasons. First, I wouldn't have to figure out which stores already collected taxes, so it would save me time. Second, because I like seeing how much I'm going to pay for something, taxes included, at the time of purchase. And third, because I believe that taxes should be levied fairly and consistently, and that would put online stores on the same footing as brick-and-mortar stores, and honest taxpayers on the same footing as people who are inclined to see what they can get away with.

As a startup founder, however, I'm less enthusiastic. The process of filing taxes in all 50 states would be a huge burden. If a national sales-tax clearinghouse existed, it would be a different story, but under the status quo, it's just too much paperwork for a small company to handle.

Sales Tax Clearing House as a Service!

Amazon and others already offer this as a service, though they tend to be on the expensive side as far as these things go.

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