Supreme Court decision on sales taxes

Anyone notice the supreme court decision on the collection of sales taxes for online sales?

Just wondering how others will consider dealing with sales tax collection as more and more states pass legislation, like South Dakota, that requires the collection and remittance of sales taxes for online sales if the retailer has ONE sale in the state. Some states have dollar thresholds that you have to exceed before you need to collect/remit, but I expect many states to lower these thresholds based on this decision by the Scotus.

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Wait til you get to States like Florida. There’s a base tax for the state and different surcharges for each county and they change for on year to year.

At least you just pay the State of FL and they dish it out to the counties. I read one interesting idea where States Sales Tax should be paid to the IRS who could then dish it out to the States making it much easier for small business.

Roberts rightly said this was something Congress should address, and I imagine they will. The problem is going to be pressure from the money hungry states. If they don’t do something, I imagine many small to medium sized companies are going to restructure and move their businesses offshore.

We could get our meds and Amazon from Canada! :slight_smile: “Amazon Prime International”

SD is one of the relatively few states with no state income tax. FL is another. I think that is partly true because tourism is a big part of both state economies, and sales tax gets to collect revenue from out-of-state tourists.

I don’t foresee many small sized companies moving offshore due to this. Unless they can re-incorporate offshore and from a location that doesn’t want VAT or something, while running the business from where they are located. (Similar to how many corporations are registered someplace like Delaware regardless of where located.)

But it may push more companies into using a web service to get current sales tax rates if they were previously trying to update rates manually due to limited rate exposure.

Right now the topic is hot on Amazon groups and forums, since quite a few states want to go after individual sellers. Some states already tried to coerce Amazon into giving the names of sellers who sold to their citizens.

Where it becomes interesting, is where Chinese sellers are concerned. Their immense majority simply could not care less about US state sales taxes. They don’t even have their inventory in the US. A great deal of sellers from abroad are in the same case. From what I understand, states force sellers to pay taxes by imposing a lean on them. But that is not possible for Foreign sellers.

If you read the actual opinion instead of simply ingesting the news outlets’ take on the opinion, you’ll get a clearer understanding of the circumstances.

United States Supreme Court Opinion on South Dakota v. Wayfair, Inc.

I have to side with the dissenting opinions of CHIEF JUSTICE ROBERTS, with whom JUSTICE BREYER, JUSTICE SOTOMAYOR, and JUSTICE KAGAN join in dissent. As a country, we certainly need to visit this as a revenue issue for the states, but not at the Supreme Court level in hopes that - as stated in the dissent opinion - “the third time’s a charm”. This attitude should not be guidance in Supreme Court decisions.

There are already 3 bills before the House and Senate that confront the issues truly behind the South Dakota v. Wayfair. They also take on the issues of International commerce at the personal level. Let’s allow the financial brain trust to work through this, not our court system.

And THIS is why I have a CFO who’s also a JD.

yes so bad more tax to dump it.

in Puerto Rico are sales tex is 11.50

Also, regardless of what this looks like in its final form if it comes into being, the WHEN is going to be the important element of this. Based on history, even if the House and Senate agree and pass the pending Bills, I wouldn’t expect to see an implementation with the next 24 - 30 months.

I use a Paddle to handle transactions and they deal with the rats nest of taxation for me.

Normally moving offshore requires a certain amount of investment that’s also beyond the reach of most companies (what credit card companies have done), but something like this could make for new ventures targeting smaller companies.

It seems off to me that ‘regulating interstate commerce’ amounts to every state demanding their own processes if you have one customer there.

Maybe this is a new opportunity for the various Indian reservations?

[quote=393401:@Sam Rowlands]I use a Paddle to handle transactions and they deal with the rats nest of taxation for me.

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Me too. No hassle at all.

Nothing is a hassle as long as you pay someone else to do it.

We’ve had this for a while in terms of VAT in Europe.
Before VATMOSS as it’s called, I could sell direct to anyone.

After the legislation changed, if I sold by download to someone in Germany (just for example… there are a long list of countries) and didn’t
a/ register for VAT in Germany
b/ send the VAT to Germany
I could get sued.

So in order to provide Germany the VAT it is most surely NOT entitled to ,
I had to change to using a 3rd party such as Paddle instead of just using something like Paypal or my own debit/credit card processsing.

Result?
No VAT hassle, but now I both have to pay Paddle for their services AND Germany gets the VAT.
(After which of course, theres the UK taxes on the ‘profit’.)

And all because (allegedly) Amazon didn’t want to pay taxes, and (allegedly) still doesn’t.

Previously, you had to pay a PayPal fee too and of course your local taxes. Nothing changed (unless you didn’t declare your PayPal income in the past when using PayPal).

I happily pay the small Paddle fee. I only have to deal with one invoice/month. I spend about 5 minutes every 3 months to do my TAX declares. IMO it is a no brainer to use a 3th party to deal with all the payments.

Paddle, FastSpring, … they all are worth it.

In NZ buying from Amazon now includes NZ sales tax (GST) and all on-line purchases are being targeted. There is a plus side to this - our income tax rates will be reduced.

Famous in NZ :slight_smile:

I don’t believe Congress will intervene and pass anything substantial. They had their chance and that’s what everyone hoped would happen, but that means they would have to pass the thresholds that would apply in every state before sales tax nexus would apply.

Ain’t going to happen!

The Scotus could have done this in their opinion but they didn’t. Instead, they said it is up to each state. I know their is pending legislation in some states to set the thresholds and beef up enforcement.

Here is a quote from the Kentucky code regarding the collection and remittance of sales taxes:

Any retailer soliciting orders for tangible personal property or digital property from residents of this state on a continuous, regular, or systematic basis in which the solicitation of the order, placement of the order by the customer or the payment for the order utilizes the services of any financial institution, telecommunication system, radio or television station, cable television service, print media, or other facility or service located in this state

However, they haven’t been super aggressive on enforcement, but I think that will change because of this ruling.

Interesting article on how congress has had 26 years to address the online sales tax issue and hasn’t.

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[quote=393466:@John Fatte]Interesting article on how congress has had 26 years to address the online sales tax issue and hasn’t.

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That was interesting, but it was also prior to this big question of ‘what next’ we have right now.