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Supreme Court Rules States Can Require Online Retailers To Collect Sales Tax (npr.org)
New submitter zippo01 shares a report: Online shopping will soon become more expensive after the U.S. Supreme court ruled Thursday that states can require internet retailers to collect sales taxes. The 5-4 decision broke with 50 years' worth of legal rulings that barred states from imposing sales taxes on most purchases their residents make from out-of-state retailers. The decision was a victory for South Dakota, which had asked the court to uphold its recently passed law imposing an internet sales tax. "Our state is losing millions for education, health care and infrastructure, and our citizens are harmed by an uneven playing field," said Marty Jackley, South Dakota's attorney general.
You'll, of course, make it illegal to use this money for anything else, right?
Care killed the cat, but satisfaction brought it back.
Also known as the Accounting Software Developers And Consultants Permanent Employment Act.
Don't disappoint your bird dog. Go to the range.
If I call an out of state company and order something, no taxes. But if I do it via a web page, taxes? Seems fair...
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
States have no right to regulate interstate commerce. As much of a problem as sales tax is online, this isn't the way to solve it. We need a constitutional amendment to even give states these powers. I'm not saying we shouldn't do that either - just that we haven't.
This is not something that the supreme court should even have the power to decide.
The vote breakdown on this decision was really weird. Voting in favor of requiring online retailers to collect sales tax were Justices Kennedy, Alito, Thomas, Ginsburg and Gorsuch. Justices Breyer, Sotomayor and Kagan joined Chief Justice Roberts in the dissent.
I wonder if Trump ever foresaw his boy Gorsuch and Ruth Bader Ginsburg joining on a 5-4 decision.
You are welcome on my lawn.
Store fronts are closing but online sales are expanding.
It HAD to happen sooner or later.
Remember this the next time Samuel Alito, Neil Gorsuch or Clarence Thomas talk about the following the original text of the constitution.
The real "Libtards" are the Libertarians!
I'm thinking the solution is to dust of the U.S. Robotics 56K Fax modem and on-line retailers can accept fax orders.
-- Thou hast strayed far from the path of the Avatar.
You mean to tell me that the residents of South Dakota didn't self-report and pay the state use tax as they are obligated to do?
All this is doing is placing the burden of collecting those taxes on out of state taxes on the merchant instead of on the South Dakota residents as previously. This isn't imposing any new taxes on residents, merely making it impossible for them to avoid paying those taxes. If you already lived in a state where the retailer (Amazon) was incorporated or had a business presence, you were already paying sales tax and nothing will change for you.
This probably isn't too much of a burden as long as its limited to a single value for each state. If county or city level taxes start getting involved or any kind of fuckery involving different tax rates for different categories of products, then this is going to become an absolute nightmare for online retailers.
for everyone who sells anything online for a profit, including ebayers who flip stuff online for profit, every small retailer who also has a store front, online service and software developer with commercially sold licenses.
while i don't mind the sales taxes applied to online purchases.. there must be some fucking uniformity. there's 1000s of tax jurisdictions, and different states tax different things, and some tax different things at different rates.
until that is addressed, the status quo (seller's physical presence, and putting burden of reporting/paying taxes on out of state purchases on the buyer as is required by most) was a better way.
In general I am OK with states charging sales tax for online purchases. As Sales Tax takes advantages of both Progressive and Regressive taxing. Being that the Rich will in general buy more so they will be funding more to the government, while taking the simplicity of a fixed rate tax.
Online Purchases still need to be shipped to the sates, thus needing to use its infrastructure to deliver them. So all in all in this day in age Taxing internet purchases is perfectly reasonable.
However the argument that the tax revenue is hurting any particular initiative is more to blame on bad leadership, or misaligned priorities. If the state wants more money to Education, then they would find a way to fund it better. Even if it means cutting money on services it deems as lower priority, and the leadership will need to take the responsibility of saying that that service doesn't deserve the money over Education. Also their are other taxing methods that can be applied to help better fund thing, all at their own tradeoffs as well.
Sales tax on internet is an easy win with low political repercussion. Because the extra cost of sales tax, isn't going to hurt the economy. because if they want the product and it is prices closer to a local store. They may want to go to the store to buy it and get the convince of getting it now, and returning it the same day. If it is a hard to find item in the area, you can still get it online, just for 5-10% more.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
States have no right to regulate interstate commerce.
True, but I lived in the US for a while in Michigan and they had a campaign to get people to declare out of state purchases on their tax form so the state could collect the tax and so I asked my American colleagues how this was legal. Apparently the dodge they used was that this technically was not a sales tax but a "use" tax i.e. you had to pay in order to "use" the product in Michigan and the tax was not technically on the purchase. Slimy, but probably legal unless you can afford a very expensive legal team.
"You'll, of course, make it illegal to use this money for anything else, right?"
What difference would that make? It's a zero-sum game. They'd just reduce education expenditures from the general fund to offset.
"National Security is the chief cause of national insecurity." - Celine's First Law
Just wondering how this is enforceable. What mechanism under civil law would allow the state of South Dakota to bring an enforcement action against a resident of, say, Pennsylvania? Please forgive if this is obvious, IANAL.
Small businesses are thriving in states that have sales taxes. That will not change.
The ratio of intra/inter state commerce for small business is not significant.
As stated in TFS, the consumers will pick up the tab.
Since the ruling does not provide for exemptions, it's a level playing field.
It little behooves the best of us to comment on the rest of us.
States have no right to regulate interstate commerce.
That is NOT what the Commerce Cause of the Constitution says. It says [The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes. This wording does not prohibit States from having regulations regarding interstate commerce, it just means that Federal laws regarding commerce shall prevail in the event of a dispute. How this clause is to be interpreted has been the subject of debate since the founding of the republic but there is quite a lot of wiggle room here.
This is not something that the supreme court should even have the power to decide.
This is EXACTLY the sort of thing the Supreme Court has the power to decide. The entire job of the Supreme Court is to interpret whether a dispute about the law is constitutional or not and how the law should be interpreted with respect to the Constitution.
A small business that can't manage to collect a sales tax doesn't seem like much of a business to me.
"Old man yells at systemd"
Unless you're reshipping high value items with a super cheap carrier and no insurance, I wonder if the economics of that works out..
You store and ship your property wherever you want man.
"Everybody's naked underneath" -- The Doctor
This is terrible for small businesses, which could now have the administrative burden of needing to pay sales tax to all 50 states.
Actually, they get a 10% discount on that because five states don't have a state sales tax. That's how it works, right? Plus the South Dakota sales tax might not apply to small businesses. From CNN:
South Dakota's law applies only to those businesses with more than $100,000 in sales in a state.
Though the wording is a bit ambiguous. So small businesses only need the administrative burden to determine which of the remaining 45 states need to have sales taxes collected for and then figure out the appropriate tax rates based on product categories and whether county and municipality taxes also apply (which could kick Alaska back into play) and then apply these taxes properly to all sales and manage the process of submitting the collected taxes to every one of the 45 or fewer states and possibly several thousand other entities while also fending off lawsuits from any states they determined that they don't need to collect sales taxes for and/or states/municipalities that don't agree with the amount of taxes collected. Simple.
Remember this the next time Samuel Alito, Neil Gorsuch or Clarence Thomas talk about the following the original text of the constitution.
Heh... Yes this is a solid example of why originalists are so full of shit. It's almost always an excuse to justify some sort of behavior that is abhorrent under current social norms or to try stem the tide of political change that some people (usually conservatives) disapprove of. Originalists tend to ignore this principle when it is convenient for them but shout loudly about it when it helps whatever cause they are pushing at the time.
In this case internet commerce has changed the game dramatically and the laws were written in an earlier era with different circumstances. I haven't looked closely enough at this case to decide whether I agree with the decision but it seems clear enough that the old understanding regarding sales tax collection between states no longer makes much sense in the internet era. Change has to happen one way or another so such a decision isn't surprising even if it ultimately turns out to be a poor one. Maybe this will force Congress to actually address the elephant in the room and establish a new framework for States to collect sales tax that makes sense. (Dare to dream...)
The only problem I see with the state taxing online purchases is that small online retailers will have extra overhead to meet tax requirements for all states.
The problem here is if you are a three employee retailer with a small online presence, states and counties and cities have their own taxes, and you have to determine the applicable rate for every combination. Also, what happens when you order from international shippers, who don't hold dollars or have accounts with the state?
Small businesses now have to navigate several hundred different tax schemes (states have multiple tax zones, etc), That's going to be expensive. This ruling only benefits the big players such as Amazon by placing another burden on their smaller competitors. That's why Bezos dropped his opposition to it.
Ok what is the sales tax on a snickers bar? It will very from state to state, of course, but this isn't a table with a mere 50 entries, because the sales tax on a monitor will need a different table.
This sets a very high bar, and massively privledges companies like Amazon.
By that standard every flat tax is "progressive" since the rich always pay more of every tax, but this Amazon tax will mainly be paid by the lower classes. Collections at Soetheby's will not increase
That is an easy technology fix. Sorry. A simple table with Zipcode and Taxrate.
You add the tax to your final total. Then pay the states the tax.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
You are missing the point though.
It's one thing to have your business registered in your home state, you'll already have a corporate presence a tax id number and whatever else you'd need. Usually remitting sales tax is one extra form that you send in monthly or quarterly depending on the sales volume.
However you now need to do this in fifty states. Some states let you do that for free, but lots of states have charges just for being able to remits sales tax, others further require that your business be registered with the secretary of state (and also charge for that too). If you are a small (or even medium-sized) business, this will result in filing dozens if not hundreds of extra government forms every year. Plus you run into the fact that different states have different rules about what's even taxable.
That's a huge burden for a small internet retailer, but an insignificant one for a large internet retailer.
It'd be nice to have some kind of harmonized form that all states could agree to use and make this process less cumbersome, or perhaps go down the EU path and make businesses exempt if they do less than $100k of sales to any state would make it a bit more manageable.
The ratio of intra/inter state commerce for small business is not significant.
That's the whole point. A lot of paperwork for a handful of sales in each state is a huge burden - it doesn't even pay for the effort. The bulk of your online sales in one state? Filing sales taxes is easy. Especially if you only have one warehouse - everyone pays exactly the same sales tax rate.
Sales taxes distort markets, income taxes do not.
For a 10% income tax If a product costs $9.50 to make and can be sold for $10.00 the transaction will occur a profit of $.50 will be generated which can then be taxes for $.05.
For a 10% sales tax. If a product costs $9.50 to make and can be sold for $10.00, the tax will be $1.00 and revenue only $9.00. As such the transaction will not occur
You ask. Cant we just lower the sales tax to %.5? Sure, however, given the large variety of margins generated in the whole of the market, it is impossibly impractical to customize sales taxes so they do not create these market distortions.
Purely looking at market dynamics, all sales taxes should be abolished and replaced by income taxes. It would increase market efficiency substantially.
It's not nearly that simple.
There is an area in Illinois (around Chicago + some) where a Snickers bar gets taxed less than a package of Starbust, because anything that contains flour does not qualify for the "candy" tax. There are strange laws on sales taxes in many municipalities all across the country. Don't think for a second that they don't expect those to all be followed to the letter.
This ruling makes collecting sales taxes in America just as complicated as managing tariffs for international shipments. Hopefully minus most of the corruption.
Bzzzt.
Zip code does not translate into tax rate.
You need complete address information, there are websites that do it as a web service.
But more realistically, 3 person company can safely ignore any other states tax authority. The worst that will happen is a harshly worded letter, which can be ignored. Just make sure it's incorporated, or owners are liable to get a surprise when on vacation.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
"You'll, of course, make it illegal to use this money for anything else, right?"
What difference would that make? It's a zero-sum game.
Indeed. Money is fungible. Taxes targeted for specific spending priorities are just a way to dupe voters into accepting stupid taxes. Like lotteries targeted for education. So do states with lotteries spend more on education? Of course not.
Comment removed based on user account deletion
Yeah! Super easy! Only 42,000 zip codes to keep track of! And setting an update schedule and mechanism and determining who is responsible for the update. And if you're relying on someone in each zipcode to make sure that their's is accurate, you'll need some method of authenticating people who can make that change. And then there's collecting address/payee info about where to send the tax for each one. And dispute resolution. And you'll probably need to keep track of what you sell as well, because some zip codes will be allocating the tax from one type of item (soda taxes, e.g.) differently than others.
And that needs to be implemented correctly by every online business with a presence in the US.
Velociraptor = Distiraptor / Timeraptor
The Rich cheat by sending empty boxes to their home in a sales tax free state. Famous New York jeweler admitted to sending empty boxes to the clients home while they walked out with the $100,000 ring.
It also happens in the big art auctions. Buy the $100,000,000 painting for my "tax free state home" but keep it in New York city.
While true on a technical level alone, does every state have to create a treaty with every other state in order to start expecting a tax?
Perhaps (yikes). That's why Congress might have to actually get off their ass and do something about the problem. I'm an accountant and this definitely has the potential to be a very expensive and complicated mess. There are ways to solve the problem but the best ones involve Congress not being a bunch of asshats only concerned with political infighting.
Are the states going to close their borders to open trade in response?
No they just have a lawsuit in federal court just like they do now. But this could really swamp the courts with needless litigation which is an obvious problem.
They have not ruled that states can require online retailers to collect sales tax in general. They have overturned the argument that there is no nexus because of No Physical Presence, and Nexus can be established in other ways for large National retailers such as Quill or Amazon, for example. The court ruled there --- This quantity of business could not have occurred unless the seller availed itself of the substantial privilege of carrying on business in South Dakota.
And respondents are large, national companies that undoubtedly maintain an extensive virtual presence. Thus, the substantial nexus requirement of Complete Auto is satisfied in this case
Service already exists. IIRC mostly used by Australians, to avoid their government theft.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
will be companies moving to states with little or no sales tax.
Anyone looking for a new idea to make money should start working on sales tax software for small businesses.
You will also need a table that lists every item to determine if it is taxable or not. Every 'item' is not taxed the same in every state/county/city. This table is going to get really, really big...
I sell on Ebay, amazon, and a few other market places. The real cost is not the tax that we collect. That will be passed on to the customer. The real cost is trying to figure out what tax each order is. We are based in the state of Washington. When we sell to somebody in this state we must add on the taxes. But there are city, municipality, and county taxes. There is a web API we can pass in the address and get the result, but it is buggy. The API keeps changing and it is down half the time. Also customers don't always supply a correct address. Now multiply that by 50. Every state will have its own system for figuring out the tax. If you are Amazon you can put a team to solve it. But for my business there is just me. The real cost is the overhead needed to do the right thing.
By that standard every flat tax is "progressive" since the rich always pay more of every tax, but this Amazon tax will mainly be paid by the lower classes. Collections at Soetheby's will not increase
Amazon has been collecting sales taxes in all states for over a year
http://money.cnn.com/2017/03/2...
And that needs to be implemented correctly by every online business with a presence in the US.
Not necessarily. I'm fine with a state being able to collect sales tax on online purchases, but it's the state's responsibility to provide a simple mechanism that the seller can use to determine what the sales tax should be. A different API for different states would explicitly be considered not simple. There would have to be something like a web service hosted by e.g. the FTC, where the seller just submits address and item name/description and gets back the tax rate. If the state can't provide the necessary information, then they'll have to simplify their tax code before they can collect sales tax from online purchases.
The problem here is if you are a three employee retailer with a small online presence, states and counties and cities have their own taxes, and you have to determine the applicable rate for every combination. Also, what happens when you order from international shippers, who don't hold dollars or have accounts with the state?
This is a solved problem. I wrote an integration with Avatax (one of many competitors in this field), in about 4 hours, fully tested.
They have been collecting sales taxes in every state for over a year.
http://money.cnn.com/2017/03/2...
Amazon already offers sales tax calculation services to marketplace sellers
https://sellercentral.amazon.c...
Bet they offer it to external ones too soon
I don't recall seeing a single person trying to talk the voters out of it who wasn't a Democrat.
Christ, I need graph paper to figure that sentence out.
Ken
The only problem I see with the state taxing online purchases is that small online retailers will have extra overhead to meet tax requirements for all states.
The South Dakota statute in question only required collection/remittance of South Dakota sales tax if the online retailer had more than $100k in sales in South Dakota and/or more than 200 annual transactions in South Dakota. The Supreme Court specifically discussed those thresholds in its analysis, which will be a signal to other states that if they follow suit, they'll need to have some sort of reasonable minimum threshold as well. It would be hard for a truly small retailer to exceed that threshold in a single state in the first place, and then if they did it would only apply to transactions in that state.
So long as the "patchwork problem" can be handled by standard, easy to use software, it should not add appreciably to even a small retailer's costs. Just don't make them handle any tax differential that affects an area smaller than one zipcode.
That is an easy technology fix. Sorry. A simple table with Zipcode and Taxrate. You add the tax to your final total. Then pay the states the tax.
This is wrong. Well, not all wrong, but the only correct part of this is that it is an easy technology fix. That technology is an API call to a tax calculation service (there are many of these).
Zipcode/Taxrate table is woefully oversimplified to the problem at hand. Zip codes cross county/city lines frequently, which each have their own general sales tax rates. Additionally, there are tax rates by product classification. Prepared food will be taxed differently than unprepared, a diamond ring will be taxed as a luxury good, there are tax holidays where anything classified a "school supply" has no sales tax, but only for a certain day, or set of days. Do not write your own sales tax calculations. There are services available to calculate it for free, and pay options for services that will file taxes for you.
Applying that logic, every dollar spent on police, fire departments, roadway construction, parks, sewage, water, etc, etc is lost money that could have gone towards education - think of the children!
Ken
But more realistically, 3 person company can safely ignore any other states tax authority. The worst that will happen is a harshly worded letter, which can be ignored. Just make sure it's incorporated, or owners are liable to get a surprise when on vacation.
This is false. Do this at your own risk.
The only problem I see with the state taxing online purchases is that small online retailers will have extra overhead to meet tax requirements for all states.
Seems like a pretty good business opportunity to sell an automated tax system to small online businesses.
When politicians designate new tax revenues as going towards some worthy cause (lottery profits for education, for example), rather than increasing the money spent on education, the lottery money instead offsets other tax revenues, freeing them up to be spent on politicians pet projects.
If the lottery generates $20M for education, the net result is that $20M in lottery money takes the place of $20M that used to come from property taxes.
Politicians expect you to think that the new revenue is in addition to what was already being spent, but it isn't.
Ken
AFAIK there is not one "master" chart showing sales tax rates for all these locations, and for which items. Amazon or Walmart may use such a thing internally - but small businesses do not.
If Amazon can do it it's doable. So no doubt what will happen is some enterprising individuals will replicate what the big retailers do and sell it as a plug-in service to small businesses. Maybe Square will do it?
a three employee company is unlikely to be doing enough business to meet SD's thresholds, and since the SC talked about those thresholds it's not very likely for other states to impose a rule that doesn't have any thresholds.
Also, it seems unlikely that a state law is going to worry overmuch about sub-state regional taxes; they just want the state-level cut.
42,000?
Like, forty two THOUSAND? OMG. That would take a team of 5-10 people a few WEEKS to comb through and organize. Think of all the ledge paper and pencils that will go to waste. Especially when they need to update or change something! Horrific!
Now fast forward 50 years to today when mapping apps can reliably tell you not only every street name in the country (and much of the world) but the speed limit on them as well.
Or the parking rules in NYC which vary by the time, day and even portion of the block you're on.
And so on.
And considering states have direct financial motivation to have this data accurate and available, I don't expect it would be that difficult to implement, or use.
You can get rich if you own a politician, but you have to be rich to buy one in the first place.
I really can't find fault in collecting sales tax across the internet for ecommerce, now that commerce is the major function of the internet and is no longer needing the protection from taxation. There are numerous services that can provide tax calculation and payment on behalf of small companies; not everyone needs to build their own tax engine.
Have a Day!
So you expect someone to open a business that ships you items for a fee to avoid the sales tax in your state? Why isn't the 'reshipper' considered a business and your state would expect tax revenue from them?
Also, gov't take a dim view of citizens that actively work to avoid paying their tax obligations.
Why don't you want to pay 'your fair share' of taxes to fund police, fire, education, etc?
Ken
Man, I wish we had some mechanism for the states to work this out together instead of doing this way. Seems rather complicated, doesn't it?
Velociraptor = Distiraptor / Timeraptor
These already exist, it's just a matter of providing it at a cost that isn't onerous to the small businessman
Have a Day!
that kind of threshold is in the SD law and likely to be a necessity for any other state's law to pass muster.
Great! Where's the repository so we can download your code?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Actually, they get a 10% discount on that because five states don't have a state sales tax. That's how it works, right? Plus the South Dakota sales tax might not apply to small businesse
Even better, retailers get to keep a portion of the sales taxes collected to compensate them for the collection burden.
Ken
Per the Commerce Clause, yes Congress holds this power. I'm guessing that omnichad was thinking an Amendment would be required in order to say "Congress no longer has this power, it lies with the states", but I suppose technically speaking there is nothing stopping Congress from saying "we are regulating interstate commerce by letting the states collect out-of-state tax".
Based on this ruling, states can collect state taxes, therefore only state taxes will be collected.
If a company has a physical presence in the state, then local (non-state) taxes come into play, just as they always did.
This will enrich the states, not local gov't.
Ken
Your example is full of holes.
For one, sales tax is added to the price, not included in it, in the US. And since this article refers to US taxation and the US supreme court that seems pretty relevant.
Also you're confusing corporate income tax with personal income tax and then trying to compare with sales tax. At least make the comparison apples to oranges, not apples to sneakers. You need to look at the macro picture including personal tax, corporate tax, sales tax and how it all impacts spending power/corporate revenue/taxation income.
You can get rich if you own a politician, but you have to be rich to buy one in the first place.
Which means that an online retailer will have to be able to prove he/she/it doesn't meet those minimums anytime the government of South Dakota requires them to. It'll be interesting to see the reaction the first time the State of South Dakota audits a resident of, say, Maine....
"I do not agree with what you say, but I will defend to the death your right to say it"
Does a candy tax fit the court's definition of a sales tax?
Apologies in advance for replying to myself.
It'll also be interesting the first time someone in Maine says to a customer, "I'll have to delay delivery of your order by three weeks so I don't hit the 200 annual transactions limit for South Dakota orders."
"I do not agree with what you say, but I will defend to the death your right to say it"
You will also need a table that lists every item to determine if it is taxable or not. Every 'item' is not taxed the same in every state/county/city. This table is going to get really, really big...
I hope states will take a hard look at their tax code and look to make them uniform with other states.
> considering states have direct financial motivation to have this data accurate and available, I don't expect it would be that difficult to implement, or use.
How have you loves this long and never dealt with a government agency?
In my experience, agency employees are wrong in what they think the law is, as often as not. For example in Texas the statute states very clearly "X service is not taxable", the taxing authority told me it was taxable. It took several hours to get one of their employees to simply look at the tax code, look at the section I was pointing out to them, and see that plain as day it's not taxable. Even then, the employee didn't know what to do because "yeah the law says it's not taxable, but my boss says it is. I can't fix this."
If their own employees can't even see what's taxable when you point out the specific code section to them, it seems rather optimistic to think they'll:
A. Figure it out, for all items and services
B. Make that info available in an easily parseable way
AND
C. Keep it up to date
Actually I'm not sure that B is even possible. Others have pointed out the tax rate can depend on the ingredients, the size of the package, etc.
Did the internet change things, or the telephone? I also haven't read the text, but I never understood why internet orders are any different from telephone catalog orders.
Because catalog orders were always going to be a limited volume business. Ordering something by phone is actually quite a lot of work relatively speaking both for buyer and seller. It also requires distribution of expensive catalogs, having staff to take orders, and lots of other overhead and transactional friction. Therefore the rule about having a physical presence actually was a reasonable compromise given the realities of catalog shopping. The internet has made shopping FAR easier, faster, and spreads out the infrastructure all over the place. Instead of calling a single call center you might be dealing with servers in one state, payment processing in another, inventory in a third, and staff in a fourth.
The practical realities of internet shopping are actually quite a bit different than catalog shopping. Catalogs never were going to drive brick and mortar stores out of business.
That's ok , in about 3 years that slush fund will be used by the democrats to repress anyone who opposes the atheistic communist regime of 'taking care of everyone' and anybody who dares to disagree with them about the way it is done. So swings the pendulum because most people are so sick of both parties they keep switching back and forth hoping something will change. You got any better ideas?
âoeTolerance applies only to persons, but never to truth. Intolerance applies only to truth, but never to persons.
There are over 9000+ individual taxing districts in the US. Each has their own crazy rules on what is taxed and what is not. Example in MN a pair of gloves is taxed if they are used to keep the buyers hands clean. But not taxed if the are safety equipment, used to hand glass with sharp edges for instance..
;)
This is going to change the face of online sales. The small operations may shutdown. And the, Amazons are loving it.
Just my 2 cents
The burden of following the law will fall onto the business. If you sell enough stuff over state lines and draw attention to yourself, the state will want their share. It's your responsibility to pay them or otherwise face legal consequences.
All these reasons are why cross state sales tax should not happen. It is definitely a burden for small timers.
Over-burdensome regulation was a listed reason as to why there are fewer startups, as mentioned in an article posted earlier.
So does the state where the company is headquarter get to charge the tax? The state where the companies warehouse is? or the state where the purchaser resides? Is that the same as the shipping address? What if someone coming in on a VPN from vermont, uses a card issued with a billing address in Washington state and has the product shipped to Ohio? who gets to charge the tax?
âoeTolerance applies only to persons, but never to truth. Intolerance applies only to truth, but never to persons.
One place putting restrictions on isn't onerous. 50 states plus a bunch of cities all putting different restrictions on is onerous. Especially when it only applies to Internet shopping and not other methods of out of jurisdiction shopping.
Yeah, because filing 50 state taxes is definitely not over head even if you know the numbers.
200 transactions at a $100 average (reasonable average for an eBay seller if some type) is only 20k.
For that 20k, one will need to send and file monthly or quarterly?
Sure, they're simple to calculate (software, likely Free even), but there is real overhead to filing taxes with different states every month.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Every item sold will need to be categorized as taxable or not taxable for every state that has a sales tax. This is as simple as you'd think.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Or the little issue with WHERE to collect taxes. It is based in the purchaser's place of residence, not their brick and mortar store's location. To do that for me you need to collect the 6.5% state tax, bit then you get the fun of detecting county and city, both of which have sales tax levies right now (stadium and courthouse). If the city and county fail to get their cut , more lawsuits will certainly happen.
They won't make it uniform because each state uses taxes to try and implement it's agenda. For example, a state that wants to try and cut down on the consumption of sugar snacks and drinks for health reasons will heavily tax them. Another state that isn't interested in such a program will tax them at the standard rate. Some states may tax bottled water because it's a convenience item but other's won't because water is a necessity.
I think you're very confused and failing some basic economics. If you do $10 worth of work you can pay 10% income tax = $1 and have $9 to buy the product or you can buy the product for $10 and pay 10% sales tax = $1 it works out exactly the same. The only difference comes from having different tax brackets, deductibles, capital gains and import/export. Assuming the government want the same total tax income the first three are easy to deduce, if you pay above average tax you want more sales tax, if you pay below average you want less as the sales tax is a flat percentage for all. As for the last the ideal would obviously to work in a state with no income tax and buy your stuff in a state with no sales tax, so all other things being equal one encourages employment and the other consumption and tourism. Though trade leaks will typically force an alignment so that it's not worth it to most people most of the time.
Live today, because you never know what tomorrow brings
It sounds like you're describing VAT and not income tax.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Which means that an online retailer will have to be able to prove he/she/it doesn't meet those minimums anytime the government of South Dakota requires them to.
Any online retailer that doesn't keep a log of every single transaction, including destination, is doomed to be a failed retailer PDQ. Sure, if they're being harassed for frequent reports it could become an onerous burden, but given it's an annual sales requirement, I think doing a per-state printout once per year isn't that crazy.
The Quirkz Handbook of Self-Improvement for People Who Are Already Pretty Okay
If you only sell in one state, but online, you still have to keep track of things down to the county level. Brick and mortar store obviously has one single sales tax because all purchases are made on location.
So even being a small business in a large state with many counties and cities that all charge different sales tax is a burden.
This must depend on the state. In Illinois, when Amazon ships from the warehouse outside of town, they charge me local tax. When they ship from anywhere else in the state, they only charge me the base state sales tax with no local taxes.
The issue is not whether it is doable or not, because clearly it is doable. It's how much said service will cost the small business. It is just one more thing to add to the overhead of running said small business. With ever increasing regulatory burdens thrown onto a startup, it is no wonder there are fewer of them.
Perhaps if every state had a 100k threshold of sales in their state only, it might be nothing to worry about for a small business. If it means any business that does more then 100k period, then you are screwed.
The problem here is if you are a three employee retailer with a small online presence, states and counties and cities have their own taxes, and you have to determine the applicable rate for every combination.
No, you don't, that's not how sales taxes work.
A retailer with a fixed presence charges the state, county, municipal taxes due based on the retailer's physical location, not the delivery address of the customer. Here's an example: in NJ there is an 'enterprise zone' around Newark NJ where the tax rate is one-half the normal NJ sales tax rate. There is an IKEA there, when you buy a piece of furniture they don't ask you if you live inside or outside the 'enterprise zone' to determine the tax rate to apply to the purchase, you pay the lower 'enterprise zone' rate because that is where the store is.
Internet retailers that have no physical presence in a given state will not be beholdened to collect local, city, municipal sales taxes because they are not located in the city or municipal district.
Sales taxes are charged based on the store location, not the customer's location.
This ruling allows states to collect state sales taxes, not city taxes.
Ken
Are you sure about the ratio?
I know an eBay seller that sells almost exclusively bout of state.
Probably doesn't break 200 transaction/year to a single state, but it isn't out of the realm of possibility he'll get there.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
200 transactions is a pretty low threshold IMO.
100k is reasonable though.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
For a 10% sales tax. If a product costs $9.50 to make and can be sold for $10.00, the tax will be $1.00 and revenue only $9.00. As such the transaction will not occur.
No, you are wrong.
An item that costs $9.50 to produce, sells for $10, andvis subject to a 10% sales tax will cost the consumer $11, with the seller sending $1 to the state tax collector.
Sales taxes are paid by the customer, not the seller.
Ken
And the retailer was fined, they risked jail time, and the customer was forced to pay the taxes.
It is, and has been for a while, a serious crime aggressively pursued by N.Y. tax regulators.
Ken
What the law says and what they do are only very loosely correlated.
I'm dealing with that with a government agency right now. The agency's own operations manual tells their employees how to handle a certain request based on the dollar amount:
Under $10,000 : Automatically approved, online if desired, only the request form is needed and nothing on paper required.
Under $25,000: Fill out form XYZ. Approve it if X is less than 72.
Over $25,000: Fill out long forms XYZ, YYZ, XXZ, ZZY, ZXY. Approve if the result is less than 60.
My request is less than $10,000. It's supposed to be approved with no paperwork. The employee is making me do all the long forms as if it's a request over $25,000, and suggesting they won't accept the "less than 60" answer that they are legally required to accept.
I'm all for a healthy VAT.
I'd personally distribute 50% of it evenly to each citizen over 18 to solve the regressive nature of one, and probably ramp it up slowly, but overall I'm very proud VAT.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
That's similar to states that don't have a sales tax on food, well some food. Whether something you eat qualifies as a food that can be taxed sometimes depends on whether you have to cook it or you can simply eat it right out of the package.
States, counties, and cities created this jigsaw puzzle of tax jurisdictions; and states, counties, and cities need to simplify the system. How about one simple sales tax rate for the whole freaking state?
Here where I live we have a 4% state tax, a 4% county tax and a 2% city tax. We pay as much to the government in sales tax as we tithe to the church. And just the other day I heard that a city nearby was seriously considering raising their sales tax to 3%!!
Standardized software could make tracking and changing the taxes easy , unfortunately filing and paying the taxes would require a lot more to make sure all 50 states filings are done on time and in accordance with the states requirements. This also doesn't account for any fees for a tax ID just so you can pay the taxes.
Great! Where's the repository so we can download your code?
Contrary to popular belief on this site, most business code is closed source. However, I am a solid middle of the pack developer and if I can do it just from the Avatax API docs, I'm sure you can too.
Did you read the part about, "online?"
That's not paper.
I use Amazon a lot and all the stuff I order is subject to state sales tax.
It's calculated right at the point of purchase.
They know what state I'm in and how much to charge.
That portion is e-filed right to the state.
What the simple fuck is hard about that?
Even for small businesses that do credit card business online, having their payment system add that small program change that directly charges the customer is negligible.
That's how e-store works.
It little behooves the best of us to comment on the rest of us.
So, let's discuss Amazon's approach to this.
It's well-lubricated, as is the other retailers who do online business.
No need to invent wheels.
It little behooves the best of us to comment on the rest of us.
The summary obviuosly also covers health care and infrastructure. Those three could easily cover anything they would wan't to spend the money on. A giant gold statue of the governor sounds like a infrastructure project to me, not a particularly useful one. Buying a copy of the governor's combo autobiography/geometry text for every school for education. Huge contract to an "exercise coach" cousin for health care services.
I think keeping these tax payments more local to the masses is better to keep the wealth distributed. Instead of the taxes going to the state that happens to have the company incorporated.
My greater concern is states double dipping and both charging sales tax.
A better outcome would probably be legislation that all sales across state lines occur in the buyer's (not seller's) state. It would prevent what I think of as consumer colonialism. Where the company sits quietly in its tax haven state and from there rules over the commerce of many other states. Concentrating tax revenue in the state with the lowest taxes. Mostly I'm thinking of Amazon here.
What the simple fuck is hard about that?
Building or licensing a system like Amazon's.
It's much worse than you think. Such software would have to keep up with every state, municipality, and local government in the US. You're going to have to know which items are taxed at what rate, and whether sales tax applies to certain types of items when combined, and what rate they're taxed at. I bet if somebody took any statistics on these, they'd probably find there are multiple sales tax code changes daily in all of the US.
All of the major tax software companies are no doubt salivating over this. It will cost a lot, and if any rules are proposed to try to even standardize reporting alone, you bet your ass that their lobbyists will kill it, just like what happened with the IRS's proposal to do everybody's taxes for free (mainly because they already have all of the information they need.)
If I live in say MO.....and the state of NM sends you a letter or bill....just WTF can they do to you if you don't pay or what can they do to compel you living in another state to give that state some money?
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
No, it will go to Teacher Unions to fund the next "my turn" candidates doomed White House run. I'm not supporting the GOP here, just upset that Democrats erected the stupid "super-delegates" and rigged primary election process.
Both parties have super delegates, not just the Democrats (though the Democrats have more of them, IIRC). There isn't really anything wrong with them. Primaries are for selecting the party's candidate for the general election. It's reasonable for the party to want to have a counterbalance against populism, or an attempted hijack of the party. Hence, super-delegates, who are universally party insiders and presumably have the party's best interests in mind. The super delegates are part of the process, everyone knows about them, and election strategies account for them.
On the other hand, when a small group in the party conspires to put their thumb on the scale to get a candidate selected, in secret, THAT is where you have a problem (i.e. the coronation of Hillary, and the attempt by Republican leadership to freeze out Trump. To be fair, I think posterity will likely wish they would have succeeded in the latter case).
What part of "shall not be infringed" is so hard to understand?
Easy peasy - just collect underpants, charge the highest possible sales tax from any locality nationwide! ... for retailers to determine the actual tax rate so they can pocket the difference as profit!
Then there's a financial incentive
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
Why in simple hell would anybody, for crying out loud, build?
That's the thinking that spawned. and still does, in-house tracking systems using Excel or Access.
You don't seriously think that e-stores will break out in a sweat adding the taxing module to the current e-verify system, do you?
It little behooves the best of us to comment on the rest of us.
.
So they'll keep using super rosy assumed rates of return on their underfunded pension plans, buy votes by spending some tiny fraction on popular initiatives and hire more bureaucrats to increase the warm seat count, increase the old guard pay and bennies, and generally carry on as usual - till they, too late "discover" that this money didn't comein and now they need to borrow...again.
.
"I said no camels, that's six camels, can't you count?"
Why guess when you can know? Measure!
Why in simple hell would anybody, for crying out loud, build?
Amazon did. Lots of companies do. Part of it is planning for long-term growth, and another part is being in control of your own systems.
Also, the few companies that offer sales tax calculation as a service can charge as much as they want - you have no cost controls. What on earth do you think e-verify has to do with sales taxes? You're hardly making sense here.
Neither are you.
Read your stuff and think, "small business."
It little behooves the best of us to comment on the rest of us.
I'm coming around on Trump. He's still an idiot, but he might not be an awful president.
Not going to answer about e-verify?
Are you saying every small business should use cookie-cutter solutions? Where is the competitive advantage in that? If you already have a custom system because it was easy to do, you have to throw everything out in order to use a pre-made sales tax system. The size of the business does not dictate that you do things poorly.
Small businesses have nothing to throw out.
They just have to add the tax module to what they already have.
The additional cost is the consumer's burden.
Small businesses don't prosper because of price. Big box killed that years ago.
Many single-owner online businesses use e-store.
Why would anyone build?
there are regulations out the wazoo for that shit.
It little behooves the best of us to comment on the rest of us.
The online retailers had a sweet sweet deal for over two decades here, being able to offer lower prices than their brick and mortar alternatives. They did not compete because they had a better product, or because they lowered the cost of operations through efficiencies, instead in so many cases the customers chose the online retailer precisely because there was no sales tax.
Maybe these online retailers should instead say thank you to the supreme court for the many years of preferential treatment they had been given instead of whining that this is going away.
Before online retailers there were stores that still shipped by mail, and they managed to figure out how to collect sales taxes even without today's modern computers helping them out. I think there's a lot of exaggeration when using the word "onerous" here.
So don't sell to those states? If an online retailer's business model was predicated upon having sales tax so that they could compete unfairly with local businesses, then maybe it's a good thing if they go out of business.
I can only see this as a net benefit to the economy. Fewer online sales but more local sales, more local stores can stay in business, more revenue to the states to keep the infrastructures working, more local jobs, etc.
The alternative of allowing online retailers an unfair commercial advantage is an even worse situation. Either get rid of sales tax in every state or require all retailers to collect the sales tax. The method we had was fundamentally unfair. The sole reason Amazon got off the ground was precisely because they didn't charge sales tax, and this put most local book stores out of business.
And don't forget the rest of the world. Each country may have their own rules, so why stop at whining about merely 50 US states? Most online retailers would prefer to sell worldwide if they can, and in order to do so they must follow each country's rules.
If profit is involved then viable businesses will figure out a way.
Yes it's hard. But the situation as it was yesterday was unfair since it gave an unfair competitive advantage to online retailers. So the question is, do you prefer a fair and level competitive playing field or do you think the government granting unfair advantages is a viable long term economic strategy?
Finally, we'll stop subsidizing the do nothing states, and our revenues will finally enable us to go 200 percent renewable energy!
Someone has to build the bike lanes!
-- Tigger warning: This post may contain tiggers! --
The main issue is that it's not all tech.
I'm sure some states support online filing, but i know my company still fills out a paper form and mails a check. You'd think states could work together and streamline this process since they'd likely get more compliance if you didn't need to establish ~45 different relationships, but it seems to not be the case. In any event it's easy for amazon to add a couple of CPAs to deal with the burden of filing all that, much harder for a small retailer.
If states can mandate collection then it seems self-evident that cities and special tax districts can too. In colorado your ZIP code alone doesn't answer which tax jurisdiction(s) you are in and for some of the special tax regions it's nearly impossible to find out if an address is in them or not. Here's the actual definition of where denver's transit tax applies
Counties of Denver, Boulder, and Jefferson. Generally, Broomfield County (except certain
areas immediately adjacent to I-25 and Highway 7 interchange), Adams County (west of Box
Elder Creek), Arapahoe County (south of I-70, generally west of Picadilly Rd. to Jewell, then
west of Gun Club Rd. to Quincy, then generally west of Monaghan Rd., including Arapahoe
Park and Aurora Reservoir), and Douglas County (northern portion consisting of the City of
Lone Tree, the Town of Parker, the Acres Green area and most of Highlands Ranch), the area
within the boundaries of the Town of Castle Rock does not have RTD sales/use tax, parts of
Weld County that have been annexed by the city of Longmont and the town of Erie since 1994
How do you resolve something like that? It'll obviously create a market for a secondary service that exists to figure out the applicable combination of tax rates, which again will be disproportionately costly for small businesses.
No, it's not a net benefit to the economy to spend more of your money on taxes. If that were so, the ideal situation to "boost the economy" would be to raise tax rates across the board to, say 99%. That would really boost the economy, right?
IOW, no, raising taxes isn't a "net benefit to the economy". Taxes are necessary. But "higher" doesn't automagically translate to "better"....
"I do not agree with what you say, but I will defend to the death your right to say it"
In Soviet Union no in line tax for you.
In Capitalist USA double online tax for you.
Think of what your state will do with your net tax.
All the new off the street hires for your gov.
Domestic spying is now "Benign Information Gathering"
Article 5 of the U.S. Constitution describes the process in broad strokes. Two thirds of state legislatures can compel Congress to hold "a convention for proposing amendments". It doesn't specify which delegates shall participate in such a convention; it could be governors, state legislators, or whatever, depending on what the state legislatures put in their petition. But once the convention proposes an amendment, and the legislatures of three fourths of the states vote to ratify the amendment, the amendment becomes part of the Constitution. Or a proposal can come from Congress if two thirds of both houses vote to propose an amendment for the state legislatures to ratify, which has been used more often than a state-initiated convention.
True, but most states require it quarterly at a minimum, which can be a pain.
That's where it will get interesting. Photographers have been dealing with this for as long as sales tax has been around. If you take a picture that you plan to sell, you have to collect the sales tax based on where the photo was taken a lot of the time.
Do not forget that in some places you only have to pay sales tax on purchases over a certain $ amount in certain categories. now what would happen if someone places multiple orders keeping each below the minimum? Any brick and mortar store I been to would not care especially if the person went through different check outs even in a short amount of time but what about an online store who notices they have 6 different orders going to the same person at the same address?
John
The problem is that it's not 50 different tax rates. It's sometimes several hundred per state. If I drive one town over and purchase a 99c taxable item, it'll cost me $1.07 due to taxes. If I drive two towns over and by the same 99c item, it'll cost me $1.08 because the tax rate is different due to city and county taxes. Unless the rules state that it needs to be the base state tax, and the local municipalities are not going to get their share, you're looking at a large number of tax districts.
Look at Seattle and their sugary drink tax. If I drive a little further to Tukwila, I don't have to pay that extra tax. So, if I have that same bottle of Pepsi or Coke delivered to my house, will I have to pay that tax or not?
Bring up tax evasion charges, then request that MO arrest you on said charges and extradite you to NM?
IIRC, you pay the state, along with a report of where the goods were sold to just like a photographer does when they shoot at different locations, as it's based on where the photos are delivered to. The state then distributes the city and county portions of sales tax to those municipalities.
see: Washington Photography Tax Guide
Exactly this!
If I order a product from Amazon (I'm also in WA State) and ship it to my house, I get charged the 8.8% sales tax that includes my city/county taxes. If I ship that same package to my daughter's dorm, I get charged 8.3% sales tax. It doesn't matter that Amazon is in Seattle, it matters where the final product will be delivered.
Don't forget the City and County taxes for every potential shipping destination in each State, and also what types of items they tax differently (clothes, food, etc... tend to have different sales tax rates in many places) and which specific items fall into which category in each individual locale.
Having done this since the beginning of e-commerce, it's way more complicated than people think, which is why anyone with half a brain outsources it all to a specialist company/software. As a result, it actually costs the online business more to collect and comply than it does the local brick and mortar business.
The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
Why would anyone build?
Many already have. And I really don't think e-store is as big as you think, as I've never even heard of the platform.
For out-of-state mail order in the past you generally didn't have to worry about particular municipalities or counties. The difference is that for mail-order you are paying "use tax" to the state and not "sales tax". Each state had different rules of course, a mish mash just like today with online retail. The courts and congress agreed that such use tax on out of state purchases were allowed.
There were rules to decide if a company was liable for use tax or not. For example in 1993, Alabama held a company was not liable if it only sent catalogs into the state, in Colorado it were not liable if its only connection to the state was by US mail or common carrier, in Georgia and Hawaii it was always liable, and so forth.
So you basically figure out for each state if you were liable for paying use tax, and if so how much.
"I'd personally distribute 50% of it evenly to each citizen over 18 to solve the regressive nature of one, and probably ramp it up slowly, but overall I'm very proud VAT."
Oh, good idea. Reward laziness and mediocrity and punish success. And you know what the lazy are going to do with the money, right? Spend it on drugs. booze, and cigarettes.
Hmm.. ok, and since I live literally three minutes from Delaware, I guess I could just get a PO box or something..
Can you really remember the last time you bought something online and weren't charged sales tax? I can't.
I never pay sales tax online.
--- Liberty in our Lifetime
e-store is a generic offering by every web site that caters to small widget-sellers.
Alternative names for the activity are "e-tailing", a shortened form of "electronic retail" or "e-shopping", a shortened form of "electronic shopping". An online store may also be called an e-web-store, e-shop, e-store, Internet shop, web-shop, web-store, online store, online storefront and virtual store.
It little behooves the best of us to comment on the rest of us.
Not only is figuring out the correct amount of tax to collect difficult, but keeping records of taxes collected and remitting them to the proper location would also prove to be a major issue.
No, it's super easy. Try a Google. There are plenty of services that collect and remit sales tax for a business.
I don't respond to AC's.
They only collected sales taxes if they had a presence in the state. Internet sales worked like mail order or telephone sales do. Governments never went after those because it was never became a big enough percentage of sales like online sales have. And as other people have pointed out it is quite complex when you are selling items that can be taxed at three different levels (state, county, city) with three different set of rules and rates. It has been traditional to keep it to places where you have a physical presence as your company would be aware of the rules. Now basically every medium to large sized company needs to know the sales tax laws for every jurisdiction in the country and to keep up with all of their changes.
It's a bloody stupid decision that will force retailers to either subscribe to one or two software solutions which will limit their choice of operating systems (probably not going to run on Mac or Linux) or force them to sell everything through another online store that can easily handle the taxes but take a large cut (Amazon). This just becomes another hurdle to growing a company. When you are small but growing then expect an audit from the states you don't have a presence in if you don't use one of the two previously mentioned options.
I looked this up, different states had different rules about what "presence" was, and even just mailing in catalogs to the state might count as having a presence. And you were also only taxed at the state level because this as a use tax and not a sales tax.
You solve that by multiple billing companies in the same place of business. So Taxcheating company No1 to Taxcheating Company No99, the numbers buried in the fine print, the same company but different for billing and taxation purposes. Computers can do it real easy, automatically.
Chaos - everything, everywhere, everywhen
In at least some states, the burden of paying sales tax falls on the *buyer* if the seller does not *choose* to do so.
I know about this because about a year and a half ago, I bought a home in Florida from a seller in another state. Guess who had to pay the sales tax on 30-something grand?
Il n'y a pas de Planet B.
This is what Sweden does, only it's 25%.
Il n'y a pas de Planet B.
It's not that simple. Different items can be and are taxed at different rates. Did you miss the Twix vs Snickers discussion earlier? And that's just one tiny example.
Il n'y a pas de Planet B.
Great! Where's the repository so we can download your code?
Contrary to popular belief on this site, most business code is closed source. However, I am a solid middle of the pack developer and if I can do it just from the Avatax API docs, I'm sure you can too.
Woosh, dumbass! He's not talking about seeing your code to use it (because it's most likely shit), but so he can point out all the issues he can identify. Read the thread re: some of the nuances of calculating tax. Here are some you missed:
This is not as easy as using a JAVA library to calculate tax and calling it aday.
Is that a roll of dimes in your pocket or are you happy to see me?
Ken, me thinks you're mistaken ...
South Dakota wasn't arguing about charging businesses in their own states selling to other states. They were arguing about all the other businesses selling to South Dakotans. From the text of the suit:
That means each retailer will have to know what tax rate to collect on an item, not just for their own state, but for any of the other 49 and the provinces the imperialist U.S. government has sitting around its borders.
Is that a roll of dimes in your pocket or are you happy to see me?
Jeff? Is that you?
Is that a roll of dimes in your pocket or are you happy to see me?
Reasons why people don't shop at local stores:
1. It's more expensive, even before sales tax
2. The gas to drive to the store costs money
3. Standing at the checkout line is a waste of time
4. Some things simply aren't sold in your area, and even if it is...
5. It can take you several hours and many stores to find what you're looking for
6. Comparing 2 products sold by 2 different stores means going back and forth between them
If profit is involved then viable businesses will figure out a way.
Oh? Then why don't we have the cure to cancer yet? There's billions in profits waiting there.
Businesses are not magic, it's composed of real humans with very human limitations. If the rules are too complex or too vague, businesses are not going to take that risk. And even if they choose to, why do you want them to waste money on tax law compliance? Wouldn't you rather take that money as taxes?
The term "use tax" is not a very logical replacement of / addition to the term "sales tax". With mail order / online sales - it is not clear where the sales happened. On the computer when clicked "Buy", in the bank branch from where money was deducted for the customer, in the bank branch where money was deposited for the seller, at the godown where the product was stored, or at the place where the product was delivered.
With "use tax" - the product might be used / consumed while travelling in multiple places. An online ordered hat can be worn all over the world. Generally people don't mean to tax that.
So what we need is still "sales tax", but a more well defined definition of where the sales happened (it could be defined to have happened in multiple parts).
Bingo Dictionary - Pragmatist, n. A myopic idealist.
This is not a "raising" of taxes. It is a different distribution of taxes - better distribution according to the GP. The proof of "better" is extremely difficult, so I won't get into that.
But at least understand the statement you are replying to.
Bingo Dictionary - Pragmatist, n. A myopic idealist.
If it is a hard to find item in the area, you can still get it online, just for 5-10% more
Why would the "item in the area" not be liable to sales tax and only online would ? Or are you saying different taxes are applicable between getting locally vs getting it online ?
Bingo Dictionary - Pragmatist, n. A myopic idealist.
If collecting income taxes for all states is going to work, there's going to have to be some sort of legislation to rein in the wildly expanding scope of what is/isn't taxable and at what rates. How about this
A one-to-one table of state/territory with a fixed sales tax rate for each.
Each "out of state/territory" tax rate is an average of all the rates within that state/territory.
No exceptions for any items to avoid quibbles like the candy with/without flour scenario described earlier.
Each state/territory tax agency will have an office for collecting and processing incoming and outgoing sales taxes.
A online/mailorder seller files a report of sales taxes collected broken down among the 50 states and 6 inhabited territories and pays just that agency.
The agency is then responsible for distributing tax monies to other agencies.
A retailer must gross at least $100k (adjusted for inflation) for three years before this kicks in, otherwise only the home state gets to share in the booty.
Which should have exactly ZERO bearing on the constitutional issues involved.
Sure it does. Any time a new technology comes into play you have to take some time to figure out how it fits into the existing legal framework or if you need to revise laws to better deal with the new reality. You can't just automatically plug in the old legal framework for interstate commerce to something as game changing as the internet and assume it will be a perfect fit. Some new laws will have to be written and new legal rulings will have to be made to decide how the details should be handled going forward. You can keep the basic principles unchanged if desired but the details matter greatly when you try to ensure those principles are upheld.
The government doesn't get infringe on your right to speak, or assemble, or defend yourself - and not only when you only do it a little, or a lot. Those principles are one size fits all.
The principles don't have to change but the circumstances and technologies do and so the legal details necessarily must change to properly support the principles. The internet didn't exist when the Constitution was written so we have to figure out what free speech and free assembly and privacy etc means under the circumstances that arise. This isn't always obvious and prior precedents don't always make sense anymore.
Phoning, faxing, driving, mailing, or app-submitting an order to a retailer should have nothing whatsoever to do with whether that business is obligated to act as an agent of an out of state government where the business's owners don't even have a vote.
That's a reasonable statement of principle but you need to flesh out the details. The simple fact is that commerce via internet has introduced some new challenges to address and we need to come to a collective understanding of how they will be handled. States have a reasonable interest in taxing commerce that occurs within their state both incoming and outgoing. Our previous system (only tax the purchaser if in state) made sense both in principle and from a practicality standpoint prior to the rise of the web. But it's pretty easy to argue that while the principles still holdsthe practical realities in the face of the internet no longer make much sense in a lot of cases. So Congress sooner or later is going to have to get involved and work out some laws to address the day to day issues presented by internet commerce between states. This isn't a bad thing necessarily.
But you have elected representatives that can face that CA legislator in the house or senate and speak (and vote) on your behalf.
It's adorable that you actually believe the elected representatives in my municipality have any interest in speaking or voting on my behalf. In my state every branch of state government is controlled by a single political party and let's just say that we don't see eye to eye on very many issues. And the fact is I DO have an elected representative that can (in principle) deal with the issue because interstate commerce is regulated by CONGRESS and they are perfectly free to pass laws to deal with interstate sales taxes.
You do NOT have anyone representing you some other state house as that state sets up it's own rules for sales taxation that suddenly YOU are obliged to collect for them in your own state.
When I travel to another state in person they often charge sales tax on purchases I make while there and I didn't get any vote on that tax rate so I don't see any reason why it should be different in principle just because I'm buying something over the internet. If I don't like the price I'm perfectly free to decline to purchase. And honestly it kind of makes sense to allow states to tax both incoming and outgoing sales if we allow sales taxes at all. I suspect you'll see a lot of internet businesses start to warehouse products in states where there isn't a sales tax if states get too greedy.
I can see the Feds being able to get you for federal tax invasion.
But, I'm wondering if a state, you don't live in, never enter....can reach over state lines to bring you in.....
It's going to be interesting to see where this ends up.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
If it were just 50 state sales taxes it would be simple. If this stops at state sales taxes then it's not bad but this will lead to counties and cities applying Internet sales taxes which will likely see court challenges. It will probably also lead to states trying to leverage excise and other local taxes against online retailers as well.
This is a general problem for businesses and not one isolated to online retailers. The problem is no different for Amazon than it is for any brick and mortar company and the burden is approximately equivalent. The sales in S.Dakota are peanuts compared to many other states and there's enough states they don't have nexus in that would be sufficient to justify picking up a tax system to handle the myriad of taxes which need to be collected which could also handle the peanuts they get from S.Dakota. The online retailers that can be hurt by this with onerous costs are the smaller ones that many only have a small number of sales with respect to the state's population and that's why the transaction count and dollar amount limits are crucially important.
200 transactions is a pretty reasonable limit for S.Dakota. It means you have to make a sale for every 4,350 people living in S.Dakota. That's a fairly significant market penetration for the state. If you compare a limit of 200 transactions for a state like California then you're talking about making a sale for about every 200,000 people living there. That's barely penetrating the market in California. In the case of S.Dakota you pretty much have to be an online vendor physically located in the state, a regional vendor selling mostly in S.Dakota and it's neighboring states, or a behemoth retailers like Amazon.
"Lack of speed can be overcome. In the worst case by patience." --Znork
For the purpose of taxation you need to know the product being sold as well as the physical address of the sale. Taxation levels can be different on different sides of the same road which can be within the same zipcode. If you ever get involved with tax collection for business you'll very quickly realize that it's obscene.
You're assuming that this is where the buck stops on taxation of online purchases. This is just the opening salvo. Next up is going to be county and city sales taxes. After that will be excise and other taxes.
The transaction count limit or dollar limit for compliance is crucial but S.Dakota did it in a bad way. They shouldn't have wrote 200 transactions. It's non-scalable. Hopefully the courts are cognizant of that when California drops theirs into the fray because if they wrote 200 transactions then that's going to be an onerous high compliance cost to do business in California. Ideally, the transaction/dollar thresholds should be based on census population counts.
"Lack of speed can be overcome. In the worst case by patience." --Znork
The burden of paying the sales tax is on the buyer in all cases. The seller is just legally required to collect it on behalf of the collection agency.
Sellers may opt to pay the sales tax for you or would be required to pay it for you if they neglected to collect the sales tax.
"Lack of speed can be overcome. In the worst case by patience." --Znork
Business already exist that provide that service. They're not cheap to use.
"Lack of speed can be overcome. In the worst case by patience." --Znork
You said there was a "module" for "e-store." You're the one making it sound like a specific product. There are 3rd-party products for existing platforms that do this, but they are already expensive and the price is likely to go up now.
200 is a perfectly reasonable threshold for South Dakota. The last census put South Dakota at 814,191 and the current population estimate is for 869,666. You need to have sufficient sales penetration for roughly one sale for every 4,350 individuals in South Dakota which is already a fairly significant market penetration. That's assuming your product can be targeted at all demographics. Most likely your upper end for demographics is 20% of the population if you're lucky and at that point we're talking about making a sale for every 900 people in your audience. This is remarkably penetration for an online retailer and at this point we're talking about a vendor based out of South Dakota, a regional vendor in South Dakota and it's neighboring states, or a large national vendor.
Taking California as the other extreme, 200 transactions is definitely not enough. You only need to make one sale for roughly every 200,000 people living in the state. Again, maybe your product's target demographic is only 20% of the population. It's still one sale for every 40,000 people. If California pass a law with that low of a transaction limit and it faces challenge and prevailed, that would be a court case that was botched because at the level of penetration, the tax collection creates too much of an overhead burden to conduct business within the state.
"Lack of speed can be overcome. In the worst case by patience." --Znork
I doubt Amazon built their own tax calculation system. Unless they're foolish, they outsourced it to a company like Vertex which has the infrastructure and staff in place necessary to accumulate all the tax information necessary to calculate the correct tax rates for an order. Amazon probably built the system which makes the query to Vertex or whatever entity they use.
"Lack of speed can be overcome. In the worst case by patience." --Znork
Collecting is easy. Knowing how much to collect is hard. Remitting the tax is hard.
"Lack of speed can be overcome. In the worst case by patience." --Znork
It's adorable how you think that condescendingly using words like "adorable" in a fit of lazy ad hominem to avoid the topic is somehow persuasive.
Fair enough. I think your arguments are badly flawed but you are right, that was unbecoming of me.
There is no such path for me to alter who sits in YOUR legislature or governor's office and sets/executes your local sales tax laws.
Sure there is. You think voting is the only or even the most effective means of changing policy? I'm perfectly free to wander into your state and to try to influence your election to my hearts content. Odds are it will actually have more effect than my vote. The notion that only my vote matters is manifestly absurd.
But YOU are making the choice to physically enter that state and subject yourself to those tax laws.
A distinction without a difference. Seriously, you fail to make any compelling argument why that should matter at all. There is literally no meaningful difference between that and "subjecting" myself to their local tax laws by having them ship the purchase to me instead of showing up in person. It's a useless distinction.
You are completely, 100% not understanding what this is about. It doesn't MATTER where the goods are warehoused.
Yes it does matter because the state where they are warehoused is going to want a cut of the tax revenue. This didn't matter a lot when people didn't buy much stuff from warehouses but now that it accounts for large percentages of total commerce it suddenly is very relevant. States were willing to forego a modest percentage of sales tax revenue but the amount is no longer modest so we have to rethink how we want to do things.
With this new situation, it's where you SHIP it to that suddenly becomes the issue.
That is incorrect. The problem we have is that we have separated the physical location of the buyer and seller. It used to be that they generally had to physically meet for most transactions so we could get away with ignoring the sales tax problem by saying it only applied to in-state purchases. This was an act of expediency, nothing more. States could afford to let this go because the volume of inter-state purchases was relatively small. That is no longer the case so now states are looking at how to structure taxation to account for the fact that transactions may not have buyer and seller physically co-located. Just because we've historically done it one way does not mean we have to continue to do the same thing no matter what.
The world has changed and now the laws have to catch up to the new reality.
Now recognize that there are over 10,000 taxing authorities you'll have to interact with, on millions of products that have different rules in each of them, and which also have the tax rules change on different days depending not on when you ship the goods, but on the day they are delivered.
Yep it's complicated. Which is why Congress will sooner or later HAVE to get involved so we don't have states and cities feuding over the problem. I'm an accountant so I understand the complexity better than most. But what probably will happen is that there will be some sort of computerized clearinghouse system to provide tax rates and shuffle the money where it needs to go. Some middleman corporation will basically make a killing maintaining and selling access to such a database. There are other possible solutions as well. Congress can make this simple but even if they don't it's a solvable (albeit big) problem. Probably the easiest thing to do (still not easy) would be to establish some sort of standard interstate tax rate which recovers most of the lost tax revenue for states and simplifies the transactions.
What is clear is that the old system of only paying tax on in-state transactions is probably going away for good sooner or later. We can get ahead of the problem or ignore it and reap the consequences.
That was the first and easiest. Further laws will be passed to begin collecting county and city sales taxes. It may also spread to other excise taxes.
"Lack of speed can be overcome. In the worst case by patience." --Znork
Indeed Amazon uses Vertex:
https://sellercentral.amazon.c...
But they still have a lot of work to do in order to present data and store/process the results of the query. They also resell those services. So they may have the incentive to run their own system. It really depends on how reasonable the rates at Vertex are for an entity the size of Amazon.
I highly doubt Amazon "does it". Mostly likely the contract out to a company like Vertex, query the address, and receive all the tax information for the location. It would be incredibly stupid, read significantly more costly and less risk indemnification, for Amazon to build and maintain the information database in house.
"Lack of speed can be overcome. In the worst case by patience." --Znork
I can see where I miscommunicated that "e-store" was a brand name.
Had it been, I would have presented it as, "e-store."
It's understandable that you would not know that.
Still, in the literature, "e-store," is a generic name for adding credit card purchasing capabilities to an online store.
The products support different features, including the ability to collect taxes.
The increase in cost, like the increase of prices due to the collection of taxes (should a state choose to do so) will not be a shocker to consumers who already pay state sales tax on every goddam thing they buy right now.
It little behooves the best of us to comment on the rest of us.
I highly doubt Amazon "does it". Mostly likely the contract out to a company like Vertex, query the address, and receive all the tax information for the location. It would be incredibly stupid, read significantly more costly and less risk indemnification, for Amazon to build and maintain the information database in house.
The point is, it gets done. And the fact that there's a third party that has this service set up (Vertex, apparently) suggests that it would be easy enough to develop a similar product targeted at small businesses.
We had the same issue with mail order before the internet, a process that was working well for longer for a very long time. What's paid is "use tax" and not "sales tax" and the company pays to the state and not to counties or municipalities.
For example, in California you are required to pay use tax for online purchases you have made, but the rate is flat for the entire state, you don't have a complicated table listing all cities and counties.
So don't report the use tax if you buy some food and eat it w/o bringing it into your home state. It may not be logical but it's been the practice for ages, it's nothing new. Use tax is essentially the same as sales tax (but only at the state level). Normally it's not an issue since the state you purchased in applies their own sales tax that you can deduct, and taxpayers do their own assessments, so it's rarely worth the effort to figure this out for purchases made in person. However for mail orders, phone orders, online purchases, or anything that gets shipped, then often the vendor is required to collect and pay the use tax based upon the delivery location.
The difference with online purchases is that for slightly more than two decades the internet was given an exemption from collecting use tax under the rationale that the US wanted to grow the fledgling internet economy.
Congress has full power to change some of these rules as well.
States tend to have certain requirements, in order to pay the sales tax you first need a state tax id which is paper work and a fee and many have to be filed for every year. Then there are different requirements for filing and paying the taxes in each state some quarterly some annually. Some have different types of sales taxes that are paid on a different schedule. Some states have approved tax software not all states have the same approved tax software.
Basically if all 50 states decided that online retailers had to pay state sales tax they would bury them in paperwork not a problem for very large retailers like Amazon who have tax attorneys but an issue for any start up.
Heh, tell that to Nawth Ca'lina. Those pukes at the capitol even stole the lottery profits!
Normally it's not an issue since the state you purchased in applies their own sales tax that you can deduct, and taxpayers do their own assessments, so it's rarely worth the effort to figure this out for purchases made in person. However for mail orders, phone orders, online purchases, or anything that gets shipped, then often the vendor is required to collect and pay the use tax based upon the delivery location.
Yes, and the "exemption" that mail order / internet etc sales enjoyed was because most sales were not made this way, and it would complicate the law without much benefit if things were taxed in more complex ways. Now a much larger proportion of sales is being made through internet, so something must be done.
But that something being "use tax" is a very wrong solution. It is another false oversimplification - where no one really cares about use. People care about the infrastructure used to enable the sale in the first place. The following jurisdictions deserve to collect at least some tax :
1. The state(s) where the buyer lives / works obviously provided economic opportunities to the buyer to earn the money and keep it to make this particular purchase.
2. The state(s) where bank transactions happen obviously provided a lot of financial security - through good laws , regulation and law enforcement.
3. The state (s) where the company selling the goods is located, where the warehouse is located.
The jurisdiction where a person wears a hat, or drinks his Amazon ordered Coca Cola has a much much lower moral right on any tax about that sale than the ones I listed above, right ? Then why another false oversimplification of "use tax", instead of defining the jurisdiction of the "sale" more rigorously and divvying up the "sales tax" appropriately between all the involved jurisdictions ?
So don't report the use tax if you buy some food and eat it w/o bringing it into your home state
And where to report it if I wear the hat all over the world before reaching my home state ? In France I wear it 20 hours but take only 45 photos of which 22 were uploaded to Facebook getting 8653 likes so far. What is the France tax rate ? On the other hand, in Japan I wore it 83 hours, slept wearing the hat once, took 21 photos and shared the photos only through email to family. In Nigeria, I used the hat to save myself from the hot sun, though I am not sure I lost an opportunity to make some Vitamin D in the process. What is Nigeria tax rate ?
Bingo Dictionary - Pragmatist, n. A myopic idealist.
When I was in California, going to Subway, if you had the sandwich toasted it was prepared food that had full sales taxes, but if it wasn't it was considered groceries and had no taxes applied. Where I am now, for normal items it's 6.5%, but for restuarant food, it's 11% (not sure what the city/state breakdown is)
The irony is that South Dakota made it very clear in 2016 that they don't *want* healthcare and education.
The presidency can go on and on, president or no president. If POTUS was impeached and the V.P. refused to take on the role, it is likely that Congress and the Senate could do a better job than what the population is experiencing today.
By the way, without immigration, the population is shrinking in numbers.
Leslie Satenstein Montreal Quebec Canada
In real estate? Sue the escrow company. They should have collected all transaction fees and charges.
Not sure if true in Florida, but it would be a weird exception.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
I had hoped that the rise of the internet would lead to the death of sales tax, the most regressive form of taxation, and force a shift to income and property taxes instead. Sadly it has not played out that way, and governments have moved to protect their sales tax revenue rather than shift to fairer forms of taxation.
Income, sales, and property taxes are the three major basic forms of taxation; nearly everything else is a special case of one of them. (A tariff, for example, is a sales tax that is only levied on imported goods.) Sometimes the names disguise the true nature of the tax. (Massachusetts has what the state calls an excise tax on car ownership, but it's based on the value of the car so it's really a property tax. A true excise tax is a tax that is levied at the time of manufacture rather than the time of sale, and usually has the same net effect as a sales tax.) There are less common taxes like residency tax and poll tax that rarely constitute a significant part of government income; those usually have non-financial goals as their primary motive. (Poll tax, for example, is about keeping the poor from voting.) Governments can also raise money with fees for using government services and fines for minor violations, which can effectively be another form of tax if most people pay them.
"Sales taxes are paid by the customer, not the seller." That is simply propaganda. You have obviously never taken an economics class. In econ 101 somewhere around the 4th week they will discuss who pays a tax. The answer is "it depends on the supply and demand elasticity." The only time a consumer pays the whole tax would be if the consumers' demand is perfectly inelastic, and the producers supply is perfectly elastic. IE never in the history of the world.
Because of this decision I will be spending less online than I would of done.
I won't be spending any mire locally than I would of done.
Previously about 90% of my online purchases were through Amazon, so I would have paid state sales tax anyway.
And since I am not spending so much, I don't need to earn so much, so I am less likely to pick up hours - So I will be paying less (state and federal) income tax.
Sounds like a good way to put the country back into recession.
So long as the "patchwork problem" can be handled by standard, easy to use software, it should not add appreciably to even a small retailer's costs. Just don't make them handle any tax differential that affects an area smaller than one zipcode.
Taxing jurisdictions have nothing to do with zip codes.
Even the states cannot keep track of which taxes apply to which items in each taxing jurisdiction yet they expect others to be able to do it under penalty of prosecution if they get it wrong. Software is not going to make it easier; it will make it more complicated.
That is an easy technology fix. Sorry. A simple table with Zipcode and Taxrate.
You add the tax to your final total. Then pay the states the tax.
Tax jurisdictions do not follow zip codes.
Like that will happen, why would the states want to make it easy?
Ignorance of the law is no excuse and the more people potentially violating tax law means more work for government employees and more fines. This is going to be like printing free money via traffic tickets but now they can persecute people who are citizens of other states who have no representation.
You will also need a table that lists every item to determine if it is taxable or not. Every 'item' is not taxed the same in every state/county/city. This table is going to get really, really big...
And when the state gets it wrong, you get prosecuted.
Like that will happen, why would the states want to make it easy?
Because Congress can force them to make it easy if they want to be able to collect the sales tax.
Like that will happen, why would the states want to make it easy?
Because Congress can force them to make it easy if they want to be able to collect the sales tax.
Congress could have done that at any time in the past decades and did not bother.
While we need taxes to maintain government, we also need those taxes to be fair.
All I ask is for true, open, sensible, audited taxes that are fair.
So, then, who should be taxed? The seller, and/or the buyer?
Self-importance and self-indulgence is the root of ALL evil.
Are you saying a small business can't take a location and product and return a sales tax rate? Jeez, and here I thought small businesses liked markets to compete in.
"Old man yells at systemd"