States Can Require Internet Tax Collection, Supreme Court Rules • Hacker News Board

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#101

Post by Spivak » Thu, Jun 21, 2018, 3:37 PM UTC

mullingitover wrote: post #19

sdhgaiojfsa wrote: post #2

This is good news for the country, even if it's bad for my wallet. The prior state of affairs was absurd. Online retailers already have major advantages in terms of convenience and inventory. Getting a N% discount vs. brick and mortar by not charging taxes was completely unnecessary.

Exposing consumers to more regressive sales taxes is in no way good for the country. What would be good for the country is to abolish sales taxes entirely.

Cleaning up a loophole that evens the playing ground for different types of businesses is a good thing. If you have a problem with sales tax or taxation in general that's a different issue.

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#102

Post by jakejohnson » Thu, Jun 21, 2018, 3:37 PM UTC

TheCoreh wrote: post #26

rossdavidh wrote: post #20

I have a hunch that this will, in the end, be a massive win for large retailers vs. small ones. The task of figuring out how to calculate tax for all states is more or less the same amount of work regardless of size, which means for someone like Amazon it's more or less trivial, but for a mom-and-pop store it's a major hassle.

Payment processing services will most likely provide a solution to do this automatically. Charging credit cards is already pretty complicated, and they abstract it away already, so it would make sense for them to provide this as an additional service.

Payment processing services could certainly build out their own solution to collect and remit sales tax, but a lot of merchants sell on a variety of platforms and channels. For instance, a merchant might sell on Amazon and their own eCommerce site powered by Shopify. They might also have an ERP system as a "single source of truth" to record all of their transactions. Each of these platforms collect sales tax differently, possibly providing automatic calculations or simply leaving it to you to provide your own rates. This can get complicated very quickly and a payment processing service only has insight into the data you're passing over to them.

That's why companies like TaxJar and Avalara are focused on sales tax -- to integrate with every shopping cart, payment processor, marketplace, accounting, order management / ERP platform out there to combine all of your transaction data and determine how much sales tax you need to remit in every state.

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#103

Post by seibelj » Thu, Jun 21, 2018, 3:37 PM UTC

briandear wrote: post #79

seibelj wrote: post #22

Software engineers and entrepreneurs are extremely clever, numerous solutions will arise to integrate with all of the major ecommerce platforms to automate this. This won't be much of a burden on business. As long as regulations are clearly defined (unlike GDPR) the industry will deal. Uncertainty is always the biggest risk.

You have no idea what you are talking about. Won’t be much burden on business? If you have physical shipping addresses, it is a bit easier, but what if you sell virtual goods/services? Billing address? But that doesn’t actually have anything to do where the person is actually buying the product. If I go to a masseuse in California but my credit card has a Texas billing address, I am still charged California taxes. So…

If the purchaser has an address in an area with taxes, you then pay it. If they do some weird VPN workaround and billing address in the Cayman Islands, then you don't pay the taxes. It's self compliance. We sent men on the moon in 1969, this isn't rocket science to calculate a tax bill.

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#104

Post by nulagrithom » Thu, Jun 21, 2018, 3:37 PM UTC

magduf wrote: post #42

zchrykng wrote: post #18

Someone needs to develop a service to make calculating and paying the sales tax easier. Something like plugin an address and it spits out the tax percentage and where to remit the payment to. Ideally the states would get together and create a centralized service so companies don't have to be mailing checks to every single county government that has a sales tax.

The problem with this is: how do you know what the tax rate is for the product you're selling? For instance, if you're in New Jersey and you're selling a clothing item like a pair of socks, then there's no tax. But if you're selling a fur coat, then there's full sales tax. There's different tax rates for different products, and it varies wildly across almost 10,000 different jurisdictions in the US.

I wonder if this extends to county/city taxes? That would open up even more ridiculous complexity.

Locally, there's a poorly structured (ie not machine-readable) spreadsheet of municipal taxes that tell you, based on _what side of the street_ you're on, whether you fall under the "mosquito district tax" that requires a small percentage more sales tax to pay for the annual spraying of mosquitoes.

Without simplifying the tax codes, I'm not sure full compliance over the web is even possible...

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#105

Post by dalbasal » Thu, Jun 21, 2018, 3:40 PM UTC

rossdavidh wrote: post #20

I have a hunch that this will, in the end, be a massive win for large retailers vs. small ones. The task of figuring out how to calculate tax for all states is more or less the same amount of work regardless of size, which means for someone like Amazon it's more or less trivial, but for a mom-and-pop store it's a major hassle.

Not sure how much there's left to disadvantage. Regulation, as a rule of thumb, benefits larger businesses.

These days, the structural advantages larger businesses have are huge. Many of them are on feedback loops.

There're reasons we will soon see several companies pass the $1trn mark, reasons that aren't economies of scale.

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#106

Post by ghaff » Thu, Jun 21, 2018, 3:44 PM UTC

djsumdog wrote: post #100

rossdavidh wrote: post #20

I have a hunch that this will, in the end, be a massive win for large retailers vs. small ones. The task of figuring out how to calculate tax for all states is more or less the same amount of work regardless of size, which means for someone like Amazon it's more or less trivial, but for a mom-and-pop store it's a major hassle.

Many online payment gateways already offer some kind of sales tax API. Keep in mind in California, sales tax changes per county. In places like Tennessee, the tax rate can change if your item is a grocery or isn't a grocery. There are companies that already sell massive lookup tables or API access to calculate a lot of this stuff. I think for most retailers, this won't be that big a change. Most mom-and-pop online st…

Hopefully you're right and that there will be/are services that make it fairly easy/cheap for anyone of any size to be compliant without a lot of extra work. While there are a lot of edge cases, the reality is that companies using a payment processor will probably be fine even though there's a mistake here and there--which no one will actually know about.

And the reality is that small businesses will mostly just fly under the radar if they want to even if some states don't have a floor for the sales that trigger taxes.

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#107

Post by Spivak » Thu, Jun 21, 2018, 3:44 PM UTC

magduf wrote: post #48

mullingitover wrote: post #19

Earlier quoted context omitted.

Exposing consumers to more regressive sales taxes is in no way good for the country. What would be good for the country is to abolish sales taxes entirely.

Exactly; sales taxes generally just hurt the poor and middle class. A good case could be made for consumption taxes on luxury items, but taxing things like food and inexpensive consumer items (like non-luxury clothing) simply hurts poorer people while not significantly affecting wealthier ones.

Food is already exempt from sales tax. Take Ohio as a rough average for the country, here's the list of exemptions.

https://www.tax.ohio.gov/faq/tabid/6315/Default.aspx?Questio...

The problem with consumption taxes is it just starts a debate over what is considered necessary/unnecessary. I think you would be better off exempting people rather than classes of items.

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#108

Post by anonymous5133 » Thu, Jun 21, 2018, 3:45 PM UTC

magduf wrote: post #42

zchrykng wrote: post #18

Someone needs to develop a service to make calculating and paying the sales tax easier. Something like plugin an address and it spits out the tax percentage and where to remit the payment to. Ideally the states would get together and create a centralized service so companies don't have to be mailing checks to every single county government that has a sales tax.

The problem with this is: how do you know what the tax rate is for the product you're selling? For instance, if you're in New Jersey and you're selling a clothing item like a pair of socks, then there's no tax. But if you're selling a fur coat, then there's full sales tax. There's different tax rates for different products, and it varies wildly across almost 10,000 different jurisdictions in the US.

I work as a sales tax auditor. The answer is, you as the merchant need to know those rules. For smaller retailers they usually just tax everything unless the buyer has given some sort of exemption certificate. For the merchant you can tax exempt items as long as you remit the tax but if you dont tax a taxable item then you become fully liable for the uncollected tax. Thats why these smaller retailers tax everything.

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#109

Post by Spivak » Thu, Jun 21, 2018, 3:46 PM UTC

ransom1538 wrote: post #9

sdhgaiojfsa wrote: post #2

This is good news for the country, even if it's bad for my wallet. The prior state of affairs was absurd. Online retailers already have major advantages in terms of convenience and inventory. Getting a N% discount vs. brick and mortar by not charging taxes was completely unnecessary.

Yes. But it is too late. AMZN has already wiped out all local retail. AMZN not enforcing local taxes was a huge win - in the early days.

Yeah, but the irony is that Amazon can't compete with its own marketplace a lot of times now that they're collecting tax.

The prime markup with tax is almost always more expensive than the 3rd-party seller without.

Re: States Can Require Internet Tax Collection, Supreme Court Rules

#110

Post by mgkimsal » Thu, Jun 21, 2018, 3:47 PM UTC

anonymous5133 wrote: post #98

jxcl wrote: post #10

Earlier quoted context omitted.

In Colorado you're already asked when filing state taxes what the value of the goods you bought online that haven't been taxed yet, so the onus is on the filer to look up receipts from the year for tax purposes. Amazon already collects tax in Colorado, but a few smaller retailers will send you a letter at the end of the year totaling up your untaxed purchases. Since different counties and localities collect different…

It is not hard to get the right rates. All you need to do is have a master file with all zip codes with the corresponding rate to charge. The difficult part is filing out the returns and dealing with potential audits.

ZIP codes don't align with taxing authorities 100%. You also have different types of products that have different rates - no standard "master file with all the zip codes" is going to express all that other stuff.

Yes, it is hard to 'get the right rates' 100% of the time.