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US Supreme Court Will Revisit Ruling On Collecting Internet Sales Tax (theverge.com)
An anonymous reader quotes a report from Bloomberg: The U.S. Supreme Court will consider freeing state and local governments to collect billions of dollars in sales taxes from online retailers, agreeing to revisit a 26-year-old ruling that has made much of the internet a tax-free zone. Heeding calls from traditional retailers and dozens of states, the justices said they'll hear South Dakota's contention that the 1992 ruling is obsolete in the e-commerce era and should be overturned. State and local governments could have collected up to $13 billion more in 2017 if they'd been allowed to require sales tax payments from online merchants and other remote sellers, according to a report from the Government Accountability Office, Congress's non-partisan audit and research agency. Other estimates are even higher. All but five states impose sales taxes.
The high court's 1992 Quill v. North Dakota ruling, which involved a mail-order company, said retailers can be forced to collect taxes only in states where the company has a "physical presence." The court invoked the so-called dormant commerce clause, a judge-created legal doctrine that bars states from interfering with interstate commerce unless authorized by Congress. South Dakota passed its law in 2016 with an eye toward overturning the Quill decision. It requires retailers with more than $100,000 in annual sales in the state to pay a 4.5 percent tax on purchases. Soon after enacting the law, the state filed suit and asked the courts to declare the measure constitutional.
The high court's 1992 Quill v. North Dakota ruling, which involved a mail-order company, said retailers can be forced to collect taxes only in states where the company has a "physical presence." The court invoked the so-called dormant commerce clause, a judge-created legal doctrine that bars states from interfering with interstate commerce unless authorized by Congress. South Dakota passed its law in 2016 with an eye toward overturning the Quill decision. It requires retailers with more than $100,000 in annual sales in the state to pay a 4.5 percent tax on purchases. Soon after enacting the law, the state filed suit and asked the courts to declare the measure constitutional.
The earlier ruling was made because there was no law on the books either way.
Normally if people or states think it was wrong, they should petition their congress-critters to pass a new law. New laws generally give new structure for the courts to follow. In this situation a new law would have allowed it.
The lower courts have already said that there is no law in effect, and without a law the prior judgement of requiring an in-state presence applies. I don't think that should change. If people or states want it added, craft and pass a law to that effect.
//TODO: Think of witty sig statement
Quill invoked the Commerce Clause because the United States is set up as a free trade zone. If the states could regulate interstate commerce, they would start engaging in tariff wars -- as they did under the Articles of Confederation. To say this is "judge-created" is to express some rather deep ignorance about the Founders' intentions.
Dog is my co-pilot.
It's worse than that.
Texas, for instance, has state, county, and local sales taxes (usually just the city). The state rate is constant (with exceptions for differing types of goods, some of which are totally exempt and some of which have a portion of the price exempt). The county and local tax rates are usually—but not required by statute to be—constant within those counties and localities, but cities sometimes stretch across county lines, and then there are addresses with a city associated (because of the nearest post office) but that are actually outside the boundaries of the local taxing jurisdiction. Very little of this can be determined by ZIP code because those are allocated to the servicing Post Office rather than political subdivisions.
The other states with sales taxes probably aren't much saner.
No, if taxes must be collected based on destination, this is going to be another rent-seeking cottage-industry that exists entirely because some government goons disconnected from reality decided that something that was easy-to-write-down couldn't possibly be a complete pain in the ass to comply with. Square or PayPal or whatever will collect the taxes plus some compliance overhead fee and distribute it on your behalf. Compliance would be a completely unreasonable burden for small businesses to undertake themselves.
Pining for the days when The Glorious MEEPT!!! graced SlapDash with his wisdom.
Not so. The states have a right to collect taxes on things you buy if you buy them in the state. Where you receive them is where you "buy" them. What is up for debate here is whether or not they collect the taxes from the merchant or the purchaser.
Merchants contend that they have no filing requirements for states they do not have presence in, but the consumers do. Individuals are supposed to report and pay Sales Tax on things they bought and didn't pay sales tax.
This is where enforcement should happen. Otherwise, e-tailers in Canada or other overseas places will have an edge over US e-tailers who will have to collect the tax. Also, once you pay sales tax, you cant deduct it. If your tax liability hits "0" on your income tax and you have deductions which are not refundable, then you lost out because of where the collection and reporting happens. If you report your purchases and pay the sales taxes yourselves, you may deduct more taxes since the number reported will be higher, and non-refundable deductions will lower your liability.
Besides, do we really want a system where every e-tailer has to collect, report, and pay taxes to every jurisdiction in every country? The US alone has thousands of jurisdictions for sales tax at the state, county, and even city level. This is one of the effects of globalization. Sales tax should be collected from purchasers, not from retailers.
The term "Dormant Commerce Clause" refers to a rather specific doctrine that the courts have imposed on the states. The "Dormant Commerce Clause" doesn't exist in the text of the Constitution and it is a limit on the power of states rather than an additional power of Congress "found" in the penumbras of the Constitution by the courts.
This doctrine holds that since Congress has the power to regulate interstate commerce (a power given to them by the "Commerce Clause" in Article I, Section 8 of the US Constitution: "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"), it has that right exclusively and individual states are prohibited from doing so. For example, California can't impose a tariff on oranges imported from Florida - although they could put a tax on all oranges sold regardless of their origin.
(Hmm... In spite of the Dormant Commerce Clause, as of a week or so ago, California has made it illegal to import ammunition purchased in another state without going through a California dealer. Sounds like it's time to invoke the Dormant Commerce Clause!)
Why is there an "insightful" mod and why isn't it "-1"? If I wanted insight, I wouldn't be reading
Not quote right. Some states and localities have sales tax some states have "use tax" they are not the same. In the case of a sales tax, the sale is taxed, in the case of a use tax the receipt is taxed. You cannot be required to pay a sales tax on a purchase made across state lines by anyone but the feds, it would violate interstate commerce. You can be required to pay a use tax to your own state or municipality.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
Sales by zip code will not work, because zip codes do not follow municipal lines. The U.S. Post Office determines the zip code for a particular address based on the particular post office which they believe it will be most convenient to deliver the mail from. This has no relationship to what local municipality that address is in. In order for this to work it would be necessary for there to be a database which contains the taxing jurisdiction for EVERY address in the United States.
The truth is that all men having power ought to be mistrusted. James Madison
nah, this is just trump using the gop-led scotus to attack Bezos, who has the temerity to publish stories that, while true, are not within trump's ability to admit
Umm, you have that backwards. (Why doesn't that surprise me?)
Amazon is likely behind this push since they have a physical presence in just about every US state so they're already collecting and paying sales taxes.
Amazon also has the resources to determine what the sales tax for every political jurisdiction in the US happens to be, along with the resources to figure out which jurisdiction a customer actually resides in.
Many of Amazon's competitors don't have that physical presence so aren't required to collect sales taxes. And they won't have the resources to determine the proper sales tax.
This is quite likely Amazon trying to horse-fuck its competitors.
The root problem is not a Constitutional one. The question is this: with an internet (or snail mail) retailer, where does the transaction take place? Purchaser lives CA, seller lives in NV, billing address is in CA, shipping address is in CA. If this is considered a NV sale, CA can't collect sales tax. If it's considered a CA sale, they can.
By all rights, it should be a CA sale. The purchaser never crossed state lines, he had the goods sent to him in CA. It's no different than if he buys the item at the local Best Buy, who had it delivered to them from a distributor in NV. By all rights the sale should count as CA sale.
However courts created this legal fiction that it counts as a NV sale. In the snail mail days, they didn't want to burden catalog retailers with figuring out sales tax rules all over the country and remitting payments to hundreds of municipalities. So they devised a test based on a business's contacts and physical presence in a state to determine if they had to follow that state's tax laws.
Pop quiz: two internet retailers are located in TX. One has a warehouse in NJ, the other in VA. If you live in NJ, you have to pay sales tax on items bought from the first retailer but not the second - even if in both cases your item actually ships from TX. How does that make logical sense? Answer: it doesn't. It's just a convenient legal fiction for establishing jurisdiction.
What made sense in the snail mail days may not make sense anymore. Electronic tracking of sales tax rates indexed by shipping address makes it much simpler to handle these days.
The point is, designating the "location" of the sale is a court-created doctrine that is free of Constitutional issues. Once it's a NV sale, the commerce clause is in effect. However if the court decides to declare it a CA sale instead, then the commerce clause is irrelevant. It's all about how the court decides jurisdiction.
Now changing the test for jurisdiction isn't easy. I don't expect the court to go that way. I'm just pointing out that the issue does not inherently raise Constitutional implications. Yes IAAL.
Democracy is two wolves and a sheep voting on lunch.
Not so. The states have a right to collect taxes on things you buy if you buy them in the state. Where you receive them is where you "buy" them. What is up for debate here is whether or not they collect the taxes from the merchant or the purchaser.
They have no such right or power.
What's happening here is someone is buying something from in another state, and thus not paying sales tax.
States cannot collect sales tax in this matter. States don't get to dip into interstate commerce. That's a big fucking no-no. yes, some awful states force it anyway, illegally.
States can ask its citizens to pay a use tax on things used in the state by the person that were not already tapped for sales tax. States just set the use tax to be identical to sales tax. But states abuse this shit. New Yorkers often get screwed and pay sales tax twice, or paying taxes on things billed to New York but delivered (and used) elsewhere.
States just want more tax dollars. Squeezing online sales illegally for out of state sales tax in lieu of enforcing their use tax is bullshit. If you want the money and people aren't reporting it, audit some people and collect it. States don't have the authority to do anything else. The constitution expressly forbids it.