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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...
Is it me or does this sound like buzzwords intended hide tax avoidance.
It sounds to me that some want the benefits and access to society without making any contributions.
If it's not OK for online stores to collect sales tax when doing business in a jurisdiction why is it OK for brick and mortar? Local shops are at a disadvantage since they have to contribute to the infrastructure that makes online commerce feasible while the online merchants consider it "unfair" to make any contributions.
DRM? No thanks, I'll just get it somewhere else...
and I don't buy a lot that isn't food, shelter, healthcare or my kid's education. Now, we still manage to add sales tax on a lot of that (hooray for regressive taxation) but it's usually less and tax deductible on my federal return.
What I'm saying is, go for it. Tax me. It'd be nice if I wasn't looking to a third rate pizza joint to fix pot holes. But while you're at it how about some new _Progressive_ taxes? Our country's best years (economic growth wise) were when marginal rates were in the 90% for income over $22/mil/year (inflation adjusted). How about if I'm gonna pay my dues the uber rich do too. They benefit more than me anyway.
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Even more so if you start needing to account for how different states and municipalities apply taxes differently. One state might apply sales tax to clothing, but not food items and another the exact opposite. Some cities may levy additional sales taxes in general or on specific products to fund the local government or some particular project. Throw in occasional tax moratoriums that crop up from time to time and it's an absolute mess.
If we're going to start asking for out of state businesses to collect taxes, the government needs to construct a system to help facilitate this as the burden it places on any business, even large ones is unnecessarily prohibitive. It's impractical, or perhaps even impossible, for someone like Amazon to get it right. At present the onus to report and pay this tax (assuming the state has a use tax, which most do in some form or another) is on the individuals who are making out of state purchases, but this is as much of a pain and half of the reason someone likely purchased online was lower cost, in part due to taxes.
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 understand that this is not small undertaking and that there are plenty of details wherein devils may lie, but I think it might correct a certain amount of dysfunction in local governments. People who have the ability to do much of their shopping online at out of state locations won't feel as badly as voting to raise local sales taxes that aren't going to affect them as much as it does poorer people who aren't shopping online at the same rate. When the ability to avoid those taxes is removed, I suspect that they'll be more careful in their choices to enact new taxes.
It's impractical, or perhaps even impossible, for someone like Amazon to get it right
Why do you say this? You think that the largest retailer on the planet can sell (tens of? hundreds of ?) millions of different items, but can't keep track of a few thousand tax codes? That doesn't seem to make any sense.
I don't respond to AC's.
At the moment, I agree, it is impossible. All those items they track are forced to comply with a very strict, standardized API to interact with the Amazon Marketplace. The "tax code" across the US is nothing like this. Each town can have a sales tax. Each county can have a sales tax. Each state has a sales tax. Many publish their tax rates in PDF format, and they all vary widely in how they present data inside those PDFs. Those PDFs are on various websites, and a corporation can't just go to any non-official site and grab an excel file or PDF...it HAS to come from some official government force to comply with their fiduciary responsibility.
Amazon accomplished this, but not for everything on their site. How does one enforce a seller who is black-label drop shipment seller out of China? Normally, it is the responsibility of whomever holds the sales tax license for the company; but those are usually only issued for companies with a physical presence. Are Amazon, Ebay, Etsy, etc required to keep track of these 10,000 different tax areas, add whatever is needed to each auction, and then remit those taxes in another companies name? Is that even legal, to submit collected sales tax in another companies name? Is it legal in every city, county, and state nation-wide? The Federal government cannot impose any rules, requirements, or regulations involving local taxes on local jurisdictions; a claim could be made via the Interstate Commerce Act but this is REALLY stretching it and might result in 10,000 lawsuits on Constitutional grounds.
This is going to be a huge mess, and I suspect the end result will be that online retailers will just "blacklist" various addresses because their local tax information isn't being reported via some industry-accepted API. Even that might be challenged by small towns..."You can go to our localtown.state website and download our latest home brewed PDF where we hand-wrote our tax percentages!" If states want this tax, it's up to the states to provide a common API for companies to be able to access. No published API, no non-nexus taxes.
I fully expect this to end up in the WTO courts, since it involves various other countries and is a huge burden and a radical shift in tax code without proper, formal notice per various international treaties. Libertarians and isolationist are going to freak out, or should be.