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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...
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.
Interstate commerce generated in, and resulting in goods being delivered to, the state in question. If your only objection is that it's called a sales tax, they can call it a use tax instead.
And in many (over 50%) situations, eBay & Amazon are merely bulletin boards where buyers and small independent sellers get together. Lots of eBay sellers have their entire inventory in the hall closet. Are they the ones who are supposed to handle calculating state and local sales taxes and getting that money to thousands of taxing jurisdictions? How about we apply sales taxes to people selling used couches and washing machines via local classifieds or craigslist?
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...
In Communist Russia no tax to stand in line for you.
In Capitalist USA new online tax for you.
Time for an IoT party. Go full Taxachusetts. Let the states tax tea. Enjoy some tax free coffee.
Domestic spying is now "Benign Information Gathering"
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.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Are they the ones who are supposed to handle calculating state and local sales taxes and getting that money to thousands of taxing jurisdictions?
I'm not a judge, but if they're collecting the money, I would call them the sellers, and I would say, yes, it's their responsibility to collect and pay sales taxes as appropriate.
But, that's irrelevant. Organizations or individuals who are selling in different tax districts need to collect and pay taxes in those districts.
I don't respond to AC's.
A win-win for the United States of America
Sorry, but the inconvenience of doing a little more work isn't a valid excuse for not paying your taxes. Lack of preparation on your part does not excuse being a deadbeat.
Keeping track of where you shipped your products amongst 10,000 taxing entities then submitting the proper form and payment to each one sounds like a bunch of work to me.
If anything, it is generated from the seller's side. Move everything to Nevada, problem solved.
...
You are buying it from them, where they are located. Anything else seems retarded.
...
So, do German companies need to collect taxes for Idaho sales? How about Australian companies? Indonesian?
For that matter, should every US company handle sales taxes/VAT/whatever if they sell something to an Indonesian/German/whatever?
"I do not agree with what you say, but I will defend to the death your right to say it"
people pay taxes on their income, then they are taxed again when they spend it, and those that have something for sale are taxed too, i think the whole tax system needs to be thrown out because the government is is corrupt and uses taxes like a criminal racket
Politics is Treachery, Religion is Brainwashing
No. Wrong. Sales taxes are based on the VALUE OF THE SALE, without any regard to whether the person selling the item was smart enough to make a profit. You're thinking of INCOME taxes, which don't take a piece of the transaction's earnings if it's a loss.
Don't disappoint your bird dog. Go to the range.
From here, does Amazon actively help search for, turn in and prosecute every little online seller? Breaking tax laws usually results in disproportionately harsh penalties. If you are a few months late on a state's sales tax, a nice deputy of the law will lock your doors.
At the same time, if you sell everything through Amazon, they will ensure compliance with the 1000's to 10,000's of state sales tax rules and quirks. In some cases, even within the same zip code, you have to know what side of a road someone is on to know the correct state sales tax rules to apply.
So, eBay is responsible for making sure that it knows that a town in Texas is having a Labor Day no-sales-tax-on-clothes-likely-to-be-bought-for-school event that lets clothing retail customers (and the retailers serving them) off the hook on specific types of merchandise on particular days? Is eBay supposed to be who tells a seller from Boston who's piecemealing out a case of Old Spice that Texas taxes deodorant at 6%, but if it's a deodorant-antiperspirant, the sales tax on that one line item is 0%?
Don't disappoint your bird dog. Go to the range.
There are already services that will let you purchase goods through US companies and ship them internationally via a mail forwarder in Oregon, to avoid paying the sales tax. Depending on the jurisdiction, this could be a decent discount. What"s stopping a bunch of these companies from popping up? There's likely a lot of things where this would save money, as long as you don't care about shipping speed.
That's between eBay and the "seller". I don't know or care how they work it out. Ebay is a massive company with billions in assets. I'm sure they can figure it out. I work for a small brick-and-mortar and ecommerce business and we worked it out pretty easily.
I don't respond to AC's.
For the big companies, it's another expense, a stupid waste of money, but they can afford it. It will be business as usual with the extra overhead (beyond the actual taxes) being passed on to the consumer. No big deal for big players.
For a little startup doing $1-2 million in online sales, how can they possibly administer the tax rules of so many jurisdictions and then remitting all the money. Every sale will be in a different jurisdiction with its own $100+ of overhead.
Let's say you want to create an open source hardware project and start selling kits. For every single customer, you have to find the tax rules where they're from, collect and hold the taxes, and at the end of the year remit it to their jurisdiction. It makes it impossible for you to even start.
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.
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.
Income tax is much fairer - the rich pay a higher rate.
The only sales that should be taxed are tobacco and other smokes, and motor fuels (to pay for roads and bridges etc)
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.
The decision requiring taxation of internet sales is just another step in the direction of the coming complexity collapse. You just cannot keep doing good-sounding things that layer on more and more complexity without knowing that sooner or later things must start to unravel.
E Proelio Veritas.
You subscribe to a service that takes the 9-digit zipcode and the Dept of Commerce product classification and returns the appropriate tax amount. Such services are available as single-transaction web pages up to 1,000,000 transaction/hour back end services. At the end of the quarter the service provides you with a list of what counties and how much tax to remit (sales taxes, including state sales tax where applicable, are typically collected at the county level and redistributed). It is part of doing business if you are selling stuff.
I see no reason why an online "entrepreneur" should not have to pay sales tax the same as a gal who sets up a food truck that drives around a county selling hotdogs.
why should i as an individual care what your stateâ(TM)s taxes are? Whereâ(TM)s my right not to sell into your silly state? Can i have a program that will calculate if i want to sell to you?
I believe that in the recent supreme court ruling, they point to a necessity to have limitations put in place specifically for small businesses such that they don't need to collect tax as long as they are only doing a small amount of business. This is precisely for the reasons that you point out.
However, this has at least two major problems. The first is that if you set this as a specific dollar amount, it will not track with inflation and given enough time it will result in a box of paper clips requiring taxes being collected. Of course the law can always be amended in the future to adjust the limits, but these eventually soak up a good deal of Congress's time (perhaps not a bad thing) as they're constantly arguing over and adjusting the thresholds for these types of laws.
The second is that much like many forms of welfare payments where a person stops receiving the payment if they get a job and start supporting themselves. There's not a lot of incentive to get a job that will pay $400 a month if it means your welfare check will be $400 less. Similarly, you incentivize a business to stop doing business when it approaches that threshold as long as the cost to do more business suddenly becomes prohibitively expensive past a certain point.
I'm not convinced that this is an unsolvable problem though. Imagine a system that performed all of the tax calculations for a business (based on where the customers lives or is shipping products to) and itemizes everything nicely for them. Every month, they send one check to the federal government (or whomever is running the service) that can aggregate the payments from every other business and send a single payment to the various state, county, and city governments that have laws concerning sales taxes. It's not just a pain for hundreds of thousands of businesses to process dozens of different payments to various states, but also for states to have to accept hundreds of thousands of very small payments for which the accounting of and the transaction fees associated with will quickly destroy.
What mechanism do you propose to make it practical for a business with less than a million dollars of annual turnover to calculate and remit the correct sales or use tax for every city in the world?
Large firms also suffer from labor shortages
I disagree. A lot of people go into this sort of self-employment because several employers in a row have "gone with another candidate."
I work for a small brick-and-mortar and ecommerce business and we worked it out pretty easily.
You "worked out" collecting, tracking, reporting on and remitting sales and use taxes to over 10,000 different jurisdictions all around the country? You've got all of their biweekly, monthly, quarterly, and annual reporting and remittance schedules tracked, know which ones require you to cut checks or file electronically through each of their separate portals? How many hours a day does that take, out of curiosity? And how do you discover when one incorporated town in Mississippi has suddenly decided that one particular product has just shifted from being a food item with no tax to a luxury item at a special rate? How are you dealing with the people who claim to be sales tax exempt in each of those cities, counties, and states - do you have a way to verify the authenticity of their claims and the paperwork they present? Do you get copies of their photo IDs as some of those jurisdictions require? Man, you are REALLY ahead of the game, here.
Don't disappoint your bird dog. Go to the range.
In the case of resale of used goods, I thought the tax was already paid when the product was sold new.
CAPITAL GAINS taxes, not INCOME taxes.
It depends on how you came by the item, and how you sell it.
Don't disappoint your bird dog. Go to the range.
Does your "small brick-and-mortar and ecommerce business" ship internationally? If so, what goods are taxable when sold to a customer in (say) Condom-en-Armagnac, Gers, France?
It's not that simple. It's about 12,000 tax jurisdiction (many of them overlapping), each with different tax rates and items which are and aren't taxed. So the end result is a huge database of 12,000 * 3 possible overlaps (city, county, state) * millions of items = on the order of a hundred billion possible tax combinations. (It's not a true combination permutation because of the geographic limitations of the overlaps, and no they don't always align with zip codes.)
While there are a lot of services which collect and provide tax rate information for every jurisdiction, Taxcloud is the only one which will indemnify the merchant against errors. With the other services, if they screw up and give the merchant wrong info, the merchant has to pay for any shortfall in taxes collected. (Some of the pay services will indemnify, but only for a limited amount.)
Taxcloud is set up by the states, and will indemnify the merchant in certain states. The Federal government really needs to step up and require all tax jurisdictions to participate and indemnify merchants against errors in the Taxcloud database. That way Taxcloud ends up as a central repository. A tax jurisdiction reports its taxes to Taxcloud, and a merchant looks up the taxes on Taxcloud. If Taxcloud has a wrong tax rate, then it's the fault of the taxing jurisdiction (reported the wrong rate to Taxcloud) and the merchant is indemnified. If Taxcloud has the correct rate but the merchant read it wrong, then it's the merchant who's at fault and they're liable for uncollected taxes.
By all rights, compilation of tax jurisdiction rates is an industry which shouldn't exist. The whole point of government is to eliminate wasteful redundancies like this. But they've failed to set up a central tax rate database, which has resulted in a lot of unnecessary duplicated work in the private sector by companies establishing their own rate databases. That's why they're calling on Congress to clean up this mess. It's like if the IRS published different tax forms on paper only in different areas of the country, and relied on private companies to collect all those different forms and make them available to all taxpayers across the country. It's just simpler, more reliable, and cheaper if the IRS makes all the forms available directly.
Seriously, the only way to do this is to have a single easy rate, such as 10%, applied to any retail that moves over a border , and have the shipping company collect it. Then 9% ( or 9.5 ) is turned over to the feds who then gives 8-9.5% to the end state. At that point, the end state has to decide how to split it out. This is a simple approach that is manageable by retailers and shipping companies.
I prefer the "u" in honour as it seems to be missing these days.
Simple software already exists for computing sales tax due in each zipcode. What everyone is afraid of is not collecting the tax, but the complexity of submitting the renevue to each state. States will be forced to come up with a simplified signup scheme, now that all these fistfuls of money are about to be thrust upon them. Because it means getting proffered money faster, simple signup will be magically accomplished in a twinkling.
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.
If they want to charge tax on the internet. Then just come up with a single standard tax across all 50 states(say 2%). Having to figure out 2000+ sets of complicated rules is just crazy. Make it payable to the states so no one has to figure out any local tax BS.
https://www.fsf.org/associate/support_freedom
In the case of resale of used goods, I thought the tax was already paid when the product was sold new.
Think again. Buy a used car from a dealership, pay sales tax. Buy a used car from a private party, pay a use tax. Buy a piece of used furniture from an antique store, pay sales tax. Buy anything at a Salvation Army or Goodwill store, pay sales tax.
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.
I would propose an online clearinghouse funded by the taxing districts that after you give it the information it needs 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.
No, we don't ship internationally. It's too complicated.
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.
We all know were that will lead: A corp will just start, on paper, splitting out various "companies" that always to JUST under whatever amount is set. Companies like Apple already do this, and sell various products to other Apple companies on paper only, but ship to different places and never transit to those places. Eventually some creative off-shore startups will make this very cookie-cutter for "small businesses" to use.
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.
Eh. Yeah, the government could make it easier. But, in the meantime, what we have is what we have, and if a company wants to benefit of being able to sell to people outside of their immediate area, they should pay whatever the cost is of doing business. We do it. We're a tiny company. It's not a big deal [shrug].
I don't respond to AC's.
Why would a business with less than a million dollars of annual (revenue?) be selling to every city in the world? That doesn't sound viable.
I don't respond to AC's.
I've never seen anybody pay sales tax at a yard sale, and sometimes the items are brand new.
:)
Maybe online businesses should just call themselves huge yard sales.
that doesn't unfairly punish small businesses or make it disproportionately difficult for them to engage in business.
It doesn't. Businesses have to be aware of the tax laws in the areas where they're operating. If you want to open a store, you probably have one tax district. If you want to sell to everybody in the US, you have thousands of tax districts. I don't understand where the idea comes from that this is somehow "unfair".
I don't respond to AC's.
In most countries, if you're making less the $1m/yr it's usually left to the buyer to pay the taxes.
Om, nomnomnom...
Actually, Avatax has been doing this for many years. Yeah, it's not free but it easily handles all these situations.
Saying any variation of "it just can't be done!" is pure 100% organic, dolphin-free bullshit.
No, they know how to figure out and properly pay taxes as defined a week or so ago. The scope just exploded, and it's going to take, time, resources, and focus to now respond to this change in scope.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
There are far too many tiny 1-man "businesses" in the US. These small entities are hard to regulate and monitor for compliance to laws, regulations, and taxes.
Boo fucking hoo. What a nightmare for the 'people in charge' to maintain proper control over these little businesses. What little cubbyhole from some huge shitty company did you type that message out of? Are you a middle manager in a minor division of one of the conglomerate's companies?
And why should we care?
> Why would a business with less than a million dollars of annual (revenue?) be selling to every city in the world? That doesn't sound viable.
There is this cool new thing called the "Internet". You can put your homemade gourmet popcorn, or clipboard app, or photography for sale on the "internet" and people all over the world can buy it.
To know how much sales tax to charge, you now need to read the tax code for each buyer's state, county, city, school district, and utility district. Then mail off checks to each entity, or maybe to the county - sometimes the county divides it up. Well sometimes the state does.
Where is the irony in making business decision based on reality?
And you are now going to assert a special "on the Internet" exception? I thought we were mostly over that stuff.
If you sell 5,000 distinct products to 5,000 jurisdictions, how much time does it take you to run through the 25 million (product, jurisdiction) tuples?
Probably a few man hours. But if you've got 5000 items that you sell to 5000 jurisdictions, the time should be negligible. It's certainly not impossible.
I'm confused. Through what process does one blow through these 25 million combinations in "a few man hours"? Please help the rest of us figure it out so that the rest of us can stop whining about it.
And, why not just use a sales tax service, like TaxCloud to take care of it all for you for $10/month?
Because TaxCloud hasn't been doing enough to make the existence of its service known to the public.
Huh?
A business whose officials do not know that TaxCloud exists cannot use TaxCloud. Through what means has TaxCloud been informing businesses that it exists?
Why would a business with less than a million dollars of annual (revenue?) be selling to every city in the world? That doesn't sound viable.
The way I phrase the answer to this question to be most useful depends on your answer to the following question: To how many distinct cities does your business ship over the course of a year?
The reality after this ruling is that shipping domestically to another U.S. state has become almost as overly complicated as shipping internationally. Thus, if it was too complicated to ship internationally before this ruling, it is likely to have become too complicated to ship interstate after this ruling, and for analogous reasons.
I've never seen anybody pay sales tax at a yard sale, and sometimes the items are brand new. Maybe online businesses should just call themselves huge yard sales. :)
What you've observed is probably casual violation of tax code. Depending on the state, yard sales may or may not be subject to sales tax. Proceeds from yard sales are generally not taxable because the items are usually sold at a loss.
Dude, if you can't figure it out, then you shouldn't be in business. It's not the government's job to hold your hand and show you how to run your business. That's not how it works in the US, at least.
I don't respond to AC's.
It's not that complicated. We've been shipping all over the US and collecting and remitting sales tax correctly for years. It's a simple plug-in on our e-commerce site. International is more complicated, and more problem-prone, so we don't do it. International sales have more complicated tax and customs and shipping rules, and opens us to more fraud. It's a simple business decision. You're welcome to make your own!
I don't respond to AC's.
What this will do is put independent sellers and entrepreneurs out of business. The largest companies, like Amazon and Wal-Mart, with the infrastructure to cope, won't miss a beat. Everyone else... won't be able to comply. eBay will fall farther behind, if not collapse entirely, because they don't sell anything themselves and aren't configured to be in the business of selling anything themselves.
This is bad for consumers and bad for the economy. And it will lead to large firms with regulatory capture dominating e-commerce. It's one more step in the centralization of the 'net as a deeply controlled profit source for a handful of megacorporations.
STOP . AMERICA . NOW
> We've been doing it successfully (and legally) for years, and we're a tiny company.
If you've been collecting and remitting sales tax for all 50 states, without a nexus and sales tax license in each state, you've been doing it wrong, and illegally. In Texas, for example, collecting sales tax without a license is illegal, and you need a nexus in Texas to get a sales tax license in Texas.
Until this decision it was ILLEGAL for states to collect sales tax from out-out-state sellers. So you've either been doing that while it was illegal, or you've been legally not doing it. You can't have been doing it and doing it legally, while it was illegal to do.
You clearly don't understand the start up cost of a business. No small startup can't afford tens of thousands of separate tax filings, much less the categorization and rate maintenance that go into determining those filings. What you're saying is screw the small businesses, Walmart and Amazon will handle the rest of the economy.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
If you sell 5,000 distinct products to 5,000 jurisdictions, how much time does it take you to translate tax codes and product data into a machine-readable form so that your computer can run through the 25 million (product, jurisdiction) tuples?
Through what means did you "figure it out"? In particular, through what means did you discover TaxCloud?
It appears DogDude's position is "TaxCloud brings tax compliance for domestic interstate commerce below the complexity threshold that a small business can reasonably handle, but foreign commerce remains above that threshold."
https://www.quora.com/How-do-I...
I don't respond to AC's.
That's exactly my position, as I've told you over the course of over a dozen posts.
I don't respond to AC's.
Your property taxes are crazy high because you have no sales tax.
I don't respond to AC's.
From the linked answer: "Type a series of alphanumeric characters via your physical or digital keyboard"
So let me rephrase: What keywords in Google Search led you, and would lead others in a similar situation, to TaxCloud? (Reminder: These search terms have to be written from the starting point of not knowing that TaxCloud exists.) I read the top 20 Google Search results for the query interstate sales tax calculation, and none of them led to TaxCloud. In addition, none of the top 20 results appear to have been updated to reflect this Supreme Court ruling.
A nationwide sales/consumption tax that is generally same for imports would simplify and be more consistent with competitive international commerce practices. Delivery companies like Fed Ex collect and remit. Sales below a small level should be exempt from further local municipal taxes. Local municipal taxes are
And the shipping company gets to decide what the value is? How will it determine the 10%? Open every container, box, envelope, check what's inside, have a bit table to look up the price of literally everything. How much will that cost? You are kidding yourself if you think half a percent will be enough to cover it. Unlikely even the full 10% would be enough to pay for it all.
Businesses have to be aware of the tax laws in the areas where they're operating. If you want to open a store, you probably have one tax district. If you want to sell to everybody in the US, you have thousands of tax districts. I don't understand where the idea comes from that this is somehow "unfair".
No taxation without representation is one of the principles upon which this country was founded.
e.g. It is not lawful to require a citizen of California to pay tax to the state of New York, as they are not a citizen of (and thus have no representative voice in) New York.
This is not the same as paying a sales tax while traveling, as that falls under basic guest rules (aka "While you are here, you follow our laws...")
"You want to know how to help your kids? Leave them the fuck alone." -George Carlin
Sure, just don't sell into states or countries that have taxes. Why should internet companies be exempted from taxes when other companies aren't?
Use tax has always been applied to out-of-state catalog sales! A few states don't have use tax, but most have some sort of requirements.
Well sure, but that is not an excuse to ignore the law. Every non-internet company has had to comply by the rules.
Use tax is not sales tax, in that you do not have to worry about counties and municpallities - interstate commerce rules applies to states, not individual entities inside that state. The rules aren't as complex as you think they are. Before the internet we had many large and small companies that were all required to pay use tax and they managed to do it with far less powerful computer than we have today.
At the moment, Amazon already complies with the rules. The issue people are complaining about are the smaller companies that have been sitting on Amazon's coattails (use tax is collected by Amazon for direct Amazon purchases, but not for Amazon partners).
Again, there are no county or municipal taxes to worry about here. The same rules apply to you if the seller does not collect the use tax, meaning you must voluntarily pay the tax yourself (assuming you are patriotic and law abiding). This applies even if you drive to a different state to purchase a product and then drive back home again with the product.
We've already gone down this road! These rules have applied to mail, phone, and wire orders for a long time before internet commerce came along, depending upon each state's determination of "presence" (which often meant merely advertising on television). The only difference here is that the court decided that the internet was too ubiquitous for claims that an online company had no actual presence, and that each state was allowed to make their own rules to decide whether or not they should collect use tax; exactly like how states already individually decide their rules for mail orders.
Maybe a small business can't handle it, or they need to hire a couple of people to assist. This is no different than any other mail order company, and we've definitely had many small businesses that handle interstate deliveries and were able to comply by the rules. Being on the "internet" should not create special exemptions.
If you buy a product in New York and drive back home to use it in California, you are legally bound to pay the California use tax (not the same as sales tax). If you already paid New York sales tax, the you're allowed to deduct that from the use tax, so it probably evens out somewhat.
Maybe it seems unfair, but there are many laws that may seem unfair as well, and yet they are still laws that need to be followed. Don't like it, then change the laws. Ie, if you earn money in a foreign country, you still need to pay US federal taxes on it no matter how unfair it seems.
We've had over a century to figure this out and yet it hasn't happened yet. Why should it change now? Online purchases should fundamentally be treated just like out-of-state mail or phone purchases. We've managed just find to have 50 slightly different rules so far. (and again, no county or municipal use taxes are applicable here)
Why is this a mess? How is this in any way different from pre-internet catalog sales, where the rules were essentially identical, and rules that still apply today to catalog sales?
There are only 50 jurisdictions. You do not need to pay use taxes to individual counties or cities. This is not sales tax, but use tax, and it is easy to lookup online and learn about.
You didn't like those goal posts so I'll set you up another pair. The IRS has no problem knowing all this shit.
"This shit" is the lifeblood of the IRS. They damn well better know it. They've had centuries of practice doing it. Online retailers have not.
As he (and others) have said, the government needs to provide an API for this shit, and an easy way to file taxes over hundreds of thousands of jurisdictions. Since the IRS "has no problem knowing this shit" it sounds like they would be the ones best positioned to implement such a system. Get them to do it and the whole mess goes away.
We've had over a century to figure this out and yet it hasn't happened yet. Why should it change now?
Because it would massively ease the burden on small businesses, allowing them to operate in more jurisdictions, encouraging competition and entrepreneurship, thereby benefiting consumers and the economy.
Set a flat percentage for all internet sales ---5% should do it-- that way it would make it easier for everyone to file ... right now the states arent seeing any of that money Im sure 5% might not match high tax states but will keep the incentive to buy online
Open an outlet in states without sales tax where people can collect their stuff.
Would be good for states like New Hampshire.
And if states have trouble collecting sales tax maybe they should try income tax instead.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
Add to it that you have to know the tax code of every country too. And be up to date on it. Sweden has three VAT levels depending on purchased object/service.
Also - what decides when which tax is applicable? Moment of purchase, purchasers residency or shipping address? Might be that the tax code there differs too so the purchaser is resident in country A, orders while in country B and gets it delivered when in country C and has to pay three taxes due to tax legislation.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
A fixed sales tax of 25% regardless of where the delivery is done.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
I work for a small business (40 employees) ... and we have a full time accountant and occasially and assistant just to deal with this stuff.... previously this person also handled purchasing of all our materials as well and was just doing the accounting part time it is only getting worse as time goes on.
It's quite onerous for us to sell into other states as we have to get all sorts of tax information setup with each individual state. It wouldn't be nearly so bad if the state's had flat rates for taxes etc.. but there are laws you have to read up on for each state and even in some cases municipalities.
It is different because they don't have to do it.
Mail order companies only collect sales tax for intrastate sales, not interstate sales. Exactly how internet sales were... Until now.
you realize that's over 2.5x higher than the highest state in the USA?
The only way sales taxes will ever be that high is with the elimination of income tax.
Yes, but that's a tax rate we see here in Europe.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
Ok, dude.
I don't respond to AC's.
No, by law mail order companies are required to collect use tax for interstate sales depending upon each particular state.
My issue is not that the tax is good or bad, but that it's fundamentally unfair for online companies to be exempt from such rules when other companies that ship to other states are not exempt.
Getting rid of that sales tax seems like the opposite of what eBay would want. A small business -- especially a very small business -- would have a hard time justifying selling out of state, unless they went through an intermediary who would calculate the sales tax. A company like eBay would be well suited for this.
Maybe they don't want to do it.
After all, it would mean the calculating sales tax of several dollars or several dimes or several cents, and then cutting a quarterly check to, say, the state of Missouri and some large and some dinky municipalities in St. Louis County and/or the Kansas City metro area counties, plus the county itself. The cost of sending the funds with supporting documentation might be many times the amount of the tax. Not for the county or state payments -- there would likely be quite a chunk of change for them, dwarfing the cost of making the payment -- but there might be only a handful of taxable transactions for some of the dinkier municipalities. And low-population counties. There are some with fewer people than a medium-sized StL municipality.
There might be ways to reduce that cost -- perhaps the counties can or always handle the money for some or all municipalities.
Is there a tax accountant or tax lawyer in the house?
There's no time like the present. Well, the past used to be.
I think we all know it's just a matter of time. Politicians hate not getting their piece of the money pie. They'll say think of the Children, or some such BS. I have a feeling they'll have to make it easy and do away with all the other taxes, such as city, county, district, etc. Make it easy to pay and go away instead of what we have to do now. I used to own a business and it was a frickin' PIA. Every quarter it's a crisis. Sales, payroll, social security, unemployment... and it seems like it just keeps on going and going. Things people who associate themselves with the left have no idea about because they never see nor hear about them. Until they try to open a business and find out what reality is all about. I know a guy that just tried to open a T-shirt business. Seemed like a home run. Yes, not so fast buster. He can't believe how much he's had to pay out.
Dealing with the state and county isn't easy. They are unforgiving money grabbing vampires. I've had trouble getting them to admit I've even paid taxes before, even with a check. Just pay them again it seems, with penalty of course.
Knowing the people I know in the sales tax division, I wouldn't be surprised if they were drinking champaign and wooping it up on Friday anticipating what they'll be getting soon. Money is probably already spent.
'brick and mortar' is such OLD and TIRED jargon. Could you please teleport back to 2003 and stay there?
Why do you need to file in locations you've never paid taxes in? Why should you be able to sell anywhere with impunity? Maybe national web stores are not a sustainable small business model.
Cheap storage VM.
Why should you be able to sell anywhere with impunity? Maybe national web stores are not a sustainable small business model.
Exactly.
I don't respond to AC's.
>Imagine a service available for free
I imagine there will be services available for a (substantial) fee. Which is kinda the problem policy-wise; that's the last thing a start-up needs.
It would be much simpler to come up with standard online sales tax.
Right now interstates online sales aren't taxed. So instead of saying you need to comply with local taxes they should come up with some average. Make it a set state % and municipal % for online sales, no matter where the buyer is. I say ignore the types of services and tax all online sales - no need to track that either.
Or, the other simplification would be to require it only if you move more than $X worth of sales. So the little guy doesn't get bent over, but the big guys pitch in.
I refuse to sign
If Vertex Inc was public, I would buy their stock.
Also, sounds like a business opportunity. Charge 8% higher, and give 8% to some escrow company who pays all the tax for you.
Mail order companies only collect sales tax for states in which they have a physical presence.
https://www.nolo.com/legal-encyclopedia/sales-tax-internet-29919.html