ZSA Special Report – Quantum Sales Tax

From the Desk of Michael Zaldivar

“Let the future tell the truth, and evaluate each one according to his work and accomplishments. The present is theirs; the future, for which I have really worked, is mine”

~ Nikola Tesla (1856 – 1943)

ZSA Report 1101 – Nikola Tesla discovered electricity.  He tussled with Edison and the power elite.  He claimed he could split the world in two.  His childhood dream was to turn Niagara Falls into energy – and he did.  He lit the entire globe with the AC technology we use to this day.  He was a tireless discoverer of nature’s secrets.  We enjoy the benefits of his mind daily – X-ray, radio, electric motor, robotics, lasers, remote control and communications.  Rumor has it he had constructed a transmitting tower that could provide free wireless electricity to the world.  J.P. Morgan withdrew funding for the tower before it could be finished saying, “If anyone can draw on the power, where do we put the meter?”  Nikola Tesla was an amazing human being, well respected in his field of purpose, under-represented in history and ahead of his time.

Can sales tax keep up with Tesla?  Sales taxation is grounded in the tangibility of a thing.  For tax codes originally enacted during the 1930’s it is clear that perpetual updating is necessary. The world was profoundly different during the mid 20th century and the taxation code was built to draw from a commercial revenue base reliant upon technologies available at the time.  Who would ever conceive we would suddenly have this wonderful thing called the internet?  Who would ever conceive we would be turning tangible things intangible?  Who would ever conceive of sitting at home buying things through the tele-screen by use of energy beams coursing through our wireless existence?  The world certainly has a way of making the inconceivable conceivable and the impossible possible.  Technological advancement is a certainty and we continue to astonish ourselves with the next “new” thing.  These “new” technologies will assuredly change the landscape of commerce (and our lives) through another colossal paradigm shift – it is inevitable.

Tax code revisions and enforcement of dormant laws can be expected and are currently happening.  Use tax, for example, has been around almost as long as sales tax yet is only very recently being enforced.  Books, music, software, retailing itself has gone digital.  Phone service has gone wireless.  Data centers are popping up all over the world and states are taking notice. Internet commerce is pushing interstate commerce around and it is getting attention from taxing jurisdictions.  What are the solutions to this Amazonian problem of taxation?  Cut spending?  We know how that goes.  Raise taxes?  We know how that goes.  The “solution” is usually some perceived combination of the two and has been for years.  It is the classic battle between “good and evil” that we watch like a monumental ping-pong match – back and forth, left and right.

Presently, tax revenues are down and governmental resources are strained.  As a result, governments are investing in “new” technologies and their jobs can be done more efficiently – their collections, discovery and audit process can be executed more effectively.  The very same technologies making our lives easier have provided the government with the ability to accumulate useful data more quickly and aggressively.  The states are getting better at what they do best and that is to ensure that the revenue stream continues.  It seems very likely that forward thinking people will order the tax code to keep up with new technologies in our new world.  There exists a lasting necessity (to maintain a society such as ours) that the tax revenue remains attached to the whims of commerce.  We buy things differently now than we did before.  The advent of the internet and personal portable devices has filled our hands with astounding mobile commercial ability.  Previously impenetrable protections against nexus are being challenged and eventually will be pierced.  The online retailers are being “asked” to collect our use tax across the United States as corporate compliance footprints are forced to expand.

Tesla saw the future in his mind before he created things in reality.  He was able to envision his ideas and tweak them by trial and error with thought alone.  He was a true visionary.  He held more than 300 patents worldwide – some of which were taken away while he lived only to be returned posthumously.  Upon his death in 1943 he had relegated himself to a lonely existence in room 3327 in the New Yorker Hotel where he was found two days into his release from life.  His private notes and papers were impounded by the “authorities.”  What else did Tesla see in the future?

Keeping up with genius minds can be a daunting task, yet it is taxation’s task at hand.  As we move through our human discoveries, changing our lives accordingly, we must be mindful of the ever present tether of taxation; understanding that what once was is not what will be.  Changes are coming over the next few years that will create unavoidable necessities of registration, remittance obligation and unique taxation.  There are ways to remain informed and in comfortable compliance.  Find them.

For Further Information:

Tesla Memorial Society

Discovery and Use Tax

SALT Report 1224 – California State Board of Equalization to Verify Business Permits and Tax Compliance

SALT Report 1340 – California BOE to Verify Business Permits and Tax Compliance

SALT Report 1260 – Use Tax What Do You Owe?

SALT Report 1410 – California Use Tax Reporting Guide

SALT Report 1289 – Michigan Department of Treasury Reminds Residents of Use Tax Liability

SALT Report 1495 – Illinois Use Tax for Individuals

Amazon and Click-thru-Nexus

 SALT Report 1417 – Tennessee House Passes Bill to Implement Amazon Agreement

SALT Report 1337 – Amazon and Indiana Enter Sales Tax Agreement

SALT Report 1205 – Connecticut and Amazon Square Off

SALT Report 1468 – Utah Affiliate Nexus Bill Enacted

SALT Report 1434 – Iowa Click-Through and Affiliate Nexus Bill Introduced

Data Centers

 SALT Report 1576 – South Carolina’s Exemptions for Data Centers

SALT Report 1474 – Nebraska Offers New Incentives for Large Data Center Projects

SALT Report 1447 – New York Tax Guidance for Internet Data Centers