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

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

#111

Post by jakejohnson » Thu, Jun 21, 2018, 3:48 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…

Yes, there are affordable sales tax APIs available for calculating sales tax. Usually massive lookup tables are at the zip / postal code level and don't provide enough granular detail by jurisdiction to accurately collect sales tax. They also don't contain logic around product exemptions, customer exemptions, shipping taxability, sales tax holidays, etc. I recommend using an API if you want to avoid under-collecting or over-collecting sales tax.

However, this is a HUGE change. Instead of registering for a sales tax permit and remitting tax for one state, smaller merchants will have to do this in many states if they meet a certain threshold. They will likely have to use sales tax compliance software to aggregate all of their transaction data across multiple platforms (Amazon, eBay, Walmart, etc) and their shopping cart, then report / remit accordingly.

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

#112

Post by TangoTrotFox » Thu, Jun 21, 2018, 3:49 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.

On top of this there are also conditional taxations and tiers. For instance you pay $x in tax if you've moved $y in product $z in jurisdiction q unless condition c applies. This seems pretty nasty for any business that doesn't have full time legal and accounting teams.

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

#113

Post by cm2012 » Thu, Jun 21, 2018, 3:49 PM UTC

WiseWeasel wrote: post #83

nolta wrote: post #69

Earlier quoted context omitted.

The South Dakota tax only applies if you sell more than $100k or send more than 200 shipments, which factored into the decision: Respondents argue that “the physical presence rule has permitted start-ups and small businesses to use the Internet as a means to grow their companies and access a national market, without exposing them to the daunting complexity and business-development obstacles of nationwide sales tax…

That's still difficult to comply with. Imagine 50 different laws like that, each with their own tiers, and consider the difficulty accounting for them all and staying in compliance. That's not even getting into municipal taxes.

Shopify/BigCommerce/Authorize.net/eBay/Amazon, etc. will handle it for you. Everyone uses SaaS software at some point in the process nowadays.

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

#114

Post by reaperducer » Thu, Jun 21, 2018, 3:50 PM UTC

Someone1234 wrote: post #88

nolta wrote: post #69

Earlier quoted context omitted.

The South Dakota tax only applies if you sell more than $100k or send more than 200 shipments, which factored into the decision: Respondents argue that “the physical presence rule has permitted start-ups and small businesses to use the Internet as a means to grow their companies and access a national market, without exposing them to the daunting complexity and business-development obstacles of nationwide sales tax…

That sounds harder and more expensive for the business than simply having a standard system to collect and pay the sales tax.

Paying sales taxes online for the one state where I have a business that does retail sales takes between 10 and 30 minutes, depending on how complex that quarter's sales were.

Multiply by 50 states, and it's up to 25 hours a month of work.

For those of you who have never done this, sales taxes are a lot more complicated than they seem. In the three states where I've had retail businesses, different types of products have different sales taxes and each has to be reported individually.

It gets exponentially more complicated if your state also has use, consumption, or other retail taxes; and if it requires you to report purchases your company made out of state.

If I had a popular company, even with small sales, I could easily see this becoming a week-long headache I offload onto my accountant, who will then charge me extra.

So not only do I have to raise prices to include the sales tax for various states, I have to factor in the extra accounting expense.

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

#115

Post by [deleted] » Thu, Jun 21, 2018, 3:50 PM UTC

URSpider94 wrote: post #53

anoncoward111 wrote: post #13

More compliance and regulation for us to deal with. How about you just tax property? It doesn't move. And also, how about the state stops spending money?

Thankfully, we have computers! Any online sales program worth paying for includes automatic sales tax collection by jurisdiction. Note, this ruling doesn’t mean that all businesses will immediately be taxed. The law over which this suit was filed requires collection if your annual business in the state is $100,000 or >200 sales, which means you’re already doing a sizeable business.

[deleted]

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

#116

Post by mullingitover » Thu, Jun 21, 2018, 3:52 PM UTC

Spivak wrote: post #101

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.

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.

States not having jurisdiction outside of their borders isn't exactly a loophole. If California wants to punish people for buying from Oregon, a state free from sales taxes, it should use its existing use tax and take it up with its own citizens. This ruling is saying that California can tell Oregon businesses what to do.

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

#117

Post by macintux » Thu, Jun 21, 2018, 3:52 PM UTC

ghaff wrote: post #24

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…

>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 Many states do this. I imagine that relatively few individuals (as opposed to businesses) actually comply.

I assumed all of them do it, but maybe not. I’ve been complying with this in Indiana for years, but I agree that I’m almost certainly unusual in that regard.

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

#118

Post by lovich » Thu, Jun 21, 2018, 3:53 PM UTC

mgkimsal wrote: post #82

lovich wrote: post #55

Earlier quoted context omitted.

That's how large retailers do it already. I worked at a company that created software for calculating sales and use tax for large retailers. It was an incredible headache and I doubt any retailer would do it themselves since they can also point to the vendor as the liable party when a mistake is made, and those mistakes will be made. We even had areas where we could not find the correct tax because the government in…

And... I've conflicting info from different states as to when the sales tax should be calculated. I'm dealing with a project right now that is both "pay now" and "delivery and services paid for later". At least one state said they'd prefer us to calculate the tax both at 'time of sale' and after money is collected after the service is provided/delivered, and because the rate may have changed (between months, for exam…

And there was that standardized sales tax system that the states were going to adopt but only ~15 did if I recall correctly. I can't remember the name but I do remember that each state then added their own idiosyncrasies to the "standard" and they inserted incorrect data we had to catch.

Or the 100s of thousands of literal exceptions such as "windows 98 physically shipped to a customer once in California on CD so you need to calculate the tax on it as a physical good forever, even when it's sold and received over the internet"

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

#119

Post by jakejohnson » Thu, Jun 21, 2018, 3:53 PM UTC

cm2012 wrote: post #113

WiseWeasel wrote: post #83

Earlier quoted context omitted.

That's still difficult to comply with. Imagine 50 different laws like that, each with their own tiers, and consider the difficulty accounting for them all and staying in compliance. That's not even getting into municipal taxes.

Shopify/BigCommerce/Authorize.net/eBay/Amazon, etc. will handle it for you. Everyone uses SaaS software at some point in the process nowadays.

Yes, those platforms may handle sales tax calculations automatically for you for their specific platform. That's only the very first step. Merchants will then need to report and remit their sales tax to each state. If those platforms plan to handle the entire process, trust me they have a ton of work ahead of them if they decide to handle it in-house.

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

#120

Post by hocuspocus » Thu, Jun 21, 2018, 3:53 PM UTC

rahimnathwani wrote: post #68

dtech wrote: post #44

Earlier quoted context omitted.

That is the price of doing business with customers of the EU, similar to how you must comply to EU regulations if you want to sell physical goods. In return, you get access to the EU market and can deal with a single ruleset for the whole EU instead of each country individually. Also, this is only for consumers, to business customers you can reverse-charge the VAT so they have to handle it.

Anything can be construed as 'the price of doing business'. If the EU instead required every retailer with at least one customer in the EU to get a tattoo of the EU flag, in return for getting access to the market, would you also consider that just 'the price of doing business'? My objections to this are: - If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities…

> If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it.

That's the case, no? When I order stuff from AliExpress, the seller's only responsibility is to declare the item value honestly, it's then up to the carrier and local customs to charge VAT, import duties and fees.