Slashdot Mirror
Tech Giants Urge Congress To 'Protect Entrepreneurs' From Supreme Court Ruling (theverge.com)
U.S. states can now require online retailers to collect local sales taxes, according to a recent Supreme Court ruling that could affect thousands of third-party sellers on top tech sites. An anonymous reader quotes The Verge:
In fact, Amazon, which last year started collecting sales tax in all 45 states that require it by law, may have a substantial amount of work to do to help its Amazon Marketplace sellers stay compliant. Yet we don't know if that burden will fall primarily on Amazon or if it will be the responsibility of the sellers. More than 50 percent of all sales on the site are conducted via third-party sellers, some of which use Amazon for fulfillment but otherwise operate independent small- to medium-sized businesses... Etsy, eBay, and others are in similar boats. According to the US Government Accountability Office, as much as $13 billion in annual sales tax revenue is at stake....
Etsy is concerned about what it sees as "significant complexities in the thousands of state and local sales tax laws" and that by overruling the Quill decision, the Supreme Court has put the ball in Congress' court. "We believe there is now a call to action for Congress to create a simple, fair federal solution for micro-businesses," Silverman added.
The Verge writes that "the case may be litigated for years to come to figure out how to account for the over 10,000 state jurisdictions that govern sales tax across the country. That is, unless congressional legislation supersedes the state court decisions... Even groups that were in favor of the ruling, like the nonpartisan research institute the Information Technology and Innovation Foundation, are imploring Congress to act."
eBay has already mass-emailed many of their users urging them to sign an online petition "to protect entrepreneurs, artisans and small businesses from potentially devastating Internet sales tax legislation." The petition presses state governors, U.S. lawmakers, and president Trump to "support the millions of small businesses and consumers across the country."
Keep reading to see what eBay is urging legislators to do...
Etsy is concerned about what it sees as "significant complexities in the thousands of state and local sales tax laws" and that by overruling the Quill decision, the Supreme Court has put the ball in Congress' court. "We believe there is now a call to action for Congress to create a simple, fair federal solution for micro-businesses," Silverman added.
The Verge writes that "the case may be litigated for years to come to figure out how to account for the over 10,000 state jurisdictions that govern sales tax across the country. That is, unless congressional legislation supersedes the state court decisions... Even groups that were in favor of the ruling, like the nonpartisan research institute the Information Technology and Innovation Foundation, are imploring Congress to act."
eBay has already mass-emailed many of their users urging them to sign an online petition "to protect entrepreneurs, artisans and small businesses from potentially devastating Internet sales tax legislation." The petition presses state governors, U.S. lawmakers, and president Trump to "support the millions of small businesses and consumers across the country."
Keep reading to see what eBay is urging legislators to do...
- Keep the Internet as free from government taxation and regulation as possible.
- Protect entrepreneurs, small businesses and artisans from new taxes, audits or collection burdens because they can least afford the added costs.
- Continue to prohibit states and localities from applying and enforcing sales and use tax laws on small, remote local businesses who have no political or voting connection to the taxing state.
- Reject tax policies that raise prices on consumers who shop online with small businesses for artisan, craft, religious, vintage or other niche products because they should not be paying more taxes.
Do you agree with the Supreme Court -- or with the tech companies who want a new federal solution?
Leave your thoughts in the comments...
From what I've been reading, being liable to pay sales tax is even worse than you think. It's not just a matter of keeping track of the 10,000 or so different jurisdictions. It's much worse than that. Here's a quick overview of the issues as I understand them:
- Every jurisdiction has different rates (a combination of state, country, city, and possible other taxes).
- Different jurisdictions categorize products differently. Pre-prepped food? Food containing flour? Cloths? Work clothes? Every jurisdiction has an accumulation of exceptions and special considerations, and they are all different. So it's not only the tax rates by jurisdiction, it's the cross-product of the tax rates and the categorization of the particular products that you sell.
- You can't just send off a random check, and expect it to get cashed. If you are paying sales tax somewhere, you need to register so that they know who is paying them, and why. Of course, once you are registered, you have to file summary reports of how much you paid, for what sales, etc.. This report is typically due monthly, maybe quarterly in some places - and once you are registered, you have to file every period, even if you had no sales in that area. The specific reporting requirements also vary by jurisdiction.
- Finally, as a registered entity, you may be subject to other taxes and fees in addition to sales tax.
The court decision will have no immediate effect, but it will eventually lead to a completely untenable situation for all but the largest of businesses. This is a situation that only Congress can resolve: it is precisely interstate commerce, and precisely their responsibility to devise a fair and simple interstate solution. For example: set state-level average sales taxes, with zero variation and zero special categories, and require reporting only for periods where products are actually sold. Let the states distribute the taxes internally, however they see fit. Of course, that won't happen, because Congress is incapable of actually doing its job ("Go do nothing somewhere else"). Watch the lobbying dollars flow...
Enjoy life! This is not a dress rehearsal.
Use taxes are calculated and paid by the buyer. Sales taxes are calculated by the seller, paid by the buyer, collected by the seller and remitted to the state. The problem is that brick and mortar companies only need to know the sales tax rules in the community their building is in. An online business now potentially needs to know tax rules for thousands of jurisdictions.
It is onerous.
Imagine a service available for free to any U.S. retailer where they simply feed the shipping address into the service along with a description of the product and it produces a total tax amount, an itemized description of all taxes being applied that can be given to the customer, and information regarding where the collected taxes should be sent. There may be some privacy concerns, but I see no reason why this service couldn't be run locally on a merchant's system and periodically pull updates from a central location.
I've felt for a long time that the various sales taxing authorities should do something like this. Get together and create a nationwide online sales tax clearinghouse where you feed it the necessary information and it calculates the taxes owed. Then the vendor collects the tax and forwards it to the clearinghouse which takes care of distributing it to the various taxing districts. It would be paid for by using a small percentage of the taxes paid to run the system. That makes it simple for the vendor and the taxing districts are responsible for keeping the clearinghouse updated with their changes. The current system is an unfair competitive advantage to online vendors.
These are state sales taxes being applied to interstate commerce. It's the reason why sales taxes have never been applied to out-of-state catalog sales. Your inflammatory rhetoric is just that.
Sorry, almost every state has a USE tax, that is the same amount as the sales tax. Under said laws the purchaser is responsible for paying the USE tax when the sell doesn't collect the sales tax.
Problem is that most people either don't know about it or simply ignore it feeling that they are too small for the state to come after.
It's not just a matter of 6% state sales tax + 2% municipal, but all manner of strange rules and regulations regarding which products are taxable and which are exempt from taxes as well as trying to keep abreast of changes, additions, and eliminations of these rules. Joe's corner store can do it, because Joe's corner store is only located in Exampleville U.S. is only subject to tax laws for one particular state, county, and city. Amazon would need to know them all.
Amazon not only needs to know what all of those tax laws are, but how they map onto the different products that they sell. What might be considered a food item exempt from sales tax in one state may not qualify as a food item exempt from tax in another state, or may be a specific type item with a tax based on quantity instead of price. And it's not just Amazon that needs to figure all of this out, but every retailer. At least until someone can figure out how to offer a service to handle this for retailers so that they're all not duplicating massive amounts of work.
I'm not opposed to instate tax collection on interstate commerce for the reasons I mentioned before, but if we're going to go down that road, we need to have a system in place (and in place before we go down this road) that makes it easy for businesses to deal with it that doesn't unfairly punish small businesses or make it disproportionately difficult for them to engage in business. Doing so effectively eliminates the ability for many entrepreneurial endeavors and consigns people to working for someone else.