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SCOTUS rules states can require online sellers to collect sales tax

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Senior Contributor

SCOTUS rules states can require online sellers to collect sales tax

http://thehill.com/policy/finance/393441-supreme-court-rules-for-south-dakota-in-online-sales-tax-ca...

 

In a recent thread, we were discussing how apple/google/etc track our activities and we all know how our Net usage is tracked to "customize" ad placement (didn't say we like or want this "perk"). My concern is that now that states can force universal sales tax collection, you can bet it won't be far off before our credit card statements are scanned to ensure we get a bill for all out of state purchases - big brother is real. 

Message 1 of 8
7 REPLIES 7
Senior Contributor

Re: SCOTUS rules states can require online sellers to collect sales tax

Well, you're already supposed to declare any out of state purchases, most states have a line on the state income tax form to declare that and pay the tax. I support this, taxes should be applied equally, online sites that have a brick and mortar store in your state must collect sales tax while the Wayfairs and Deep Discount DVD get off Scot free.


Fico 08: 734/716/734 TU/EX/EQ
Message 2 of 8
Senior Contributor

Re: SCOTUS rules states can require online sellers to collect sales tax

We could debate this, but I'm not going to get into it with a guy wearing a sheriff star (heh).

 

I have mixed feelings, especially for small business or small eBay sellers that will have to comply with 10,000 "taxing jurisdictions" or pay for a service to do it for them. The SD law was enacted to force the issue to SCOTUS and that law says $100,000 in gross sales or 200 transactions - those numbers are too low in my opinion based on the an18-year small business that did much of it online. Also note that a LOT of Amazon and eBay sellers are overseas, they'll still be exempt. 

Message 3 of 8
Valued Contributor

Re: SCOTUS rules states can require online sellers to collect sales tax

Talk about stifling the economy, alwasy one step forward two steps back. No wonder a lot of people cannot seem to get ahead. 

Granted, people would have to pay the tax anyways. But this loophole allowed many to bypass being nickel and dimed to death. 






Message 4 of 8
Moderator Emeritus

Re: SCOTUS rules states can require online sellers to collect sales tax


@pipeguy wrote:

We could debate this, but I'm not going to get into it with a guy wearing a sheriff star (heh).

 

I have mixed feelings, especially for small business or small eBay sellers that will have to comply with 10,000 "taxing jurisdictions" or pay for a service to do it for them. The SD law was enacted to force the issue to SCOTUS and that law says $100,000 in gross sales or 200 transactions - those numbers are too low in my opinion based on the an18-year small business that did much of it online. Also note that a LOT of Amazon and eBay sellers are overseas, they'll still be exempt. 


It's 4k / year updated weekly for a service used at one online retailer I know.

 

Probably does need to be some higher exclusion point or that price needs to come down (it probably will), but this is a technical problem which has long since been solved... and if we really do go down that route, it'd be trivial to simply implement a Federal national sales tax at like 12% or whatever and get rid of the income tax altogether.

 

That I'm totally on board for, for so many reasons.

 

I'm utterly in favor of this one personally, needed to happen and the citizens weren't getting it done.




        
Message 5 of 8
Senior Contributor

Re: SCOTUS rules states can require online sellers to collect sales tax


@pipeguy wrote:

We could debate this, but I'm not going to get into it with a guy wearing a sheriff star (heh).

 

I have mixed feelings, especially for small business or small eBay sellers that will have to comply with 10,000 "taxing jurisdictions" or pay for a service to do it for them. The SD law was enacted to force the issue to SCOTUS and that law says $100,000 in gross sales or 200 transactions - those numbers are too low in my opinion based on the an18-year small business that did much of it online. Also note that a LOT of Amazon and eBay sellers are overseas, they'll still be exempt. 


The Mods are the ones wearing a sheriff star, Community Leaders can't even make a citizens's arrest. Smiley LOL

 

I think the $100k/200 transactions is a good threshold, that will exempt most sole proprietors/small guys who sell on eBay, Amazon, etc. I occasionally sell on eBay & Amazon, but less than 100 transactions per year.

 

I have to admit to occasionally skirting sales tax by buying online. Here in Arizona we have a convoluted sales tax scheme. The state sales tax is 5.6%, reasonable IMHO. But then the counties and cities can add their own sales tax. My county has only a 1/2% (.05%) sales tax, again reasonable, and when I buy something online from a seller that collects sales tax (BestBuy.com, Walmart.com) and have it shipped to my home address which is outside any city limits I get charged 6.1% sales tax. But the two small cities near me have a 3.5% sales tax, so if I buy something within the city limits I pay 9.6% tax, and that is too darn high! In February I decided to upgrade to a 65" 4k TV and decided on a Sony model that cost $1100. If I bought it from Best Buy or Walmart in the city I would have paid over $105 in sales tax. Smiley Surprised Um, no thanks, I bought it from an online retailer with free shipping and no AZ sales tax. But with the SCOTUS ruling that will go away, that online retailer was Abt.com and they're a pretty big outfit and already collect sales tax in IL, IN, MI & WI. But then at least they would only collect 6.1% for delivery to my home address.

 

I blame it on the greed of the cities, if you're going to push your tax rate that high I and others will make a point of buying as little as possible within your city limits. And maybe when they start getting tax revenue from more online retailers they'll see the light and lower their absurd sales tax rate.


Fico 08: 734/716/734 TU/EX/EQ
Message 6 of 8
Senior Contributor

Re: SCOTUS rules states can require online sellers to collect sales tax

I have to admit occasionally skirting sales taxes by buying online. Arizona has a convoluted sales tax system. The state sales tax is 5.6%, reasonable in my opinion. But the counties & cities can add their own sales tax on top of that. My county adds a .05% (half cent) sales tax, again reasonable in my opinion. So when I buy online from a site that collects sales tax (BestBuy.com, Walmart.com, etc.) and have it shipped to my home address it's 6.1% as my home is outside any city limits. But the nearest city has a 3.5% sales tax, so anything I buy there gets taxed 9.6%, too d*mn high in my opinion, so I avoid any large purchases there. In February I decided to upgrade to a 65" 4k TV, and went with a Sony model that cost $1100. If I bought it at Walmart or Best Buy in the city I would have paid over $105 in sale tax! Um, no thanks - I bought it from Abt.com based in IL that collects sales tax in a few midwest states but not AZ, and offers free shipping.

 

Sure, if I can get around sales tax on on a large purchase like most other folks I'll take advantage of it. But that's where the current system is unfair to the brick & mortar stores that support the local economy. But in my opinion it's also the greed of the city for having such a high sales tax it encourages skipping the local store for online. Perhaps now with all large online retailers having to collect sales tax the additional tax revenue to the local governments will get them to re-think their tax rates.


Fico 08: 734/716/734 TU/EX/EQ
Message 7 of 8
Senior Contributor

Re: SCOTUS rules states can require online sellers to collect sales tax

I won't speak of any "inside information or discussions" but there will be a federal fix of sorts to establish somewhat universal rules. a) exclusion for casual sellers (eBay etc) and small business ($$ amount, not so sure of transactions as 100 x $10 is not the same as 10 X $100 as far as the number of transactions). 

 

SD specifically wrote their law with the intent of getting it to SCOTUS, they set levels of $100,000 or 200 transactions, but that is only for SD. Some states currently have similar laws concerning online sales but most do NOT and will have to pass new laws to fit the ruling. Without a "universal" exemption this will be all over the place and keep in mind it is gross sales not net sales or actual profit. Without wading into politics, no state or locality is going to reduce taxes based on this golden goose, I'll leave it at that.

 

WSJ article (paywall) https://www.wsj.com/articles/us-supreme-court-rules-states-can-require-online-merchants-to-collect-s...

 

Nevertheless, the decision suggested states may face some limits on their collection powers. Justice Kennedy favorably noted provisions of the South Dakota law exempting small retailers and forgoing any effort to collect taxes retroactively on prior sales. The state imposes collection duties only on remote sellers that do more than $100,000 in business or at least 200 transactions a year within South Dakota.

“Many states will pick up on those details and incorporate them into their own regulatory regimes,” said Eric Citron, an attorney who represented South Dakota. He said he expected nearly every state with a sales tax to move legislation or regulations to enforce collections. “Complete compliance will become the norm within the next year or two,” he said.

Message 8 of 8
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