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States Can Require Internet Tax Collection, Supreme Court Rules

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

#191

Post by rconti »

jeffwilcox wrote: post #40
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.

Congrats to Avalara on their recent IPO, pretty good timing... this is a Seattle-area firm that does local/state/etc. tax calculations. In the end, it's a huge tax on infrastructure.

What's a huge tax on infrastructure? The supreme court ruling? On what infrastructure? Software?

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

#192

Post by reaperducer »

mikeyouse wrote: post #144
reaperducer wrote: post #114

Earlier quoted context omitted.

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…

But if the cutoff really is $200k per state, and you really had 50 states to take care of -- You'd be looking at a minimum of $10M in annual sales. If you're a $10M company, I think one of your accountants could spare the 6 hours per week taking care of it. I've worked with a lot of small businesses so I don't mean to disparage things but this seems like a really obvious law that should be enforced.

But if the cutoff really is $200k per state

That's a pretty big if. The $200k cutoff from the article is South Dakota. I've never had a business in a state that had any cutoff at all. Only sell $1 this quarter? Pay the tax.

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

#193

Post by rconti »

dalbasal wrote: post #105
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.

Well, regulatory compliance is an economy of scale too :)

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

#194

Post by xienze »

RightMillennial wrote: post #172
xienze wrote: post #122

Earlier quoted context omitted.

Technically you're supposed to pay your state's tax, even for a purchase where you were physically in another state. Even if that other state actually charges its own sales tax!

I thought with use taxes you owed the remaining difference in tax. Say I purchase a $100 widget in Kenosha, WI with a sales tax of 5.5%, and I live in MI with a sales and use tax of 6%. I would owe MI the 0.5% difference on the $100 which would be $0.50.

No my understanding is that the state wants their full X% -- the whole point of the use tax is "you paid that guy but you're supposed to pay me." If you paid a higher tax rate in another state do you think your home state would be happy with 0% or even reimburse you the difference?

IIRC you're expected to get the out of state retailer to reimburse you at a later time and then when you're paying your income taxes you include any purchases subject to use tax.

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

#195

Post by jonathanmoore »

nacho2sweet wrote: post #132
djsumdog wrote: post #100

Earlier quoted context omitted.

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…

Programming one of these for a Canadian website for provincial tax to hook into another recurring payment script, that hooked into PayPal was an annoying overhead especially when the company was bootstrapped and had like $0 revenue to even care about at that point. I would hope Stripe or people using online services like Shopify will quickly add support for everyone. But the state by state, county by county, grocery…

The support for this has been there on Shopify for quite some time. With a tool like https://www.taxjar.com/ I was able to easily pay all the state, county and city taxes in a few minutes for my wife's small online shop.

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

#196

Post by rstupek »

jahewson wrote: post #92
pishpash wrote: post #46

This is potentially much broader though -- say you buy a domain on some registrar, do you pay taxes on that now? Every such place then needs your address, too. And going down this road, p2p barter on the internet of any kind might be subject to a tax regime soon.

You don’t need people’s address to charge them sales tax. The business is responsible for paying the sales tax - not the customer. e.g. If I buy a sandwich I do not give my name and address to the deli.

I would need your address to know whether and how much tax to charge you

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

#197

Post by curun1r »

Analemma_ wrote: post #128
curun1r wrote: post #34

Earlier quoted context omitted.

That depends on whether this decision gets extended to the municipal-level taxes. That's where things get really complex. The geo-boundaries on the areas where taxes are enforced aren't limited to simple city boundaries. Street number or side of the street (odd/even addresses) can matter. And taxes can vary depending not just on location, but also the items purchased. It's a nightmare scenario for internet businesses…

> If internet stores are required to support all locations, it will be a huge disadvantage. Who said anything about internet stores being required to support all locations? Nothing is stopping an e-commerce outfit from restricting sales to a particular state, or county, or city, and simplifying their tax situation considerably. And brick-and-mortar chains with multiple locations already have to deal with these rules.…

There's a huge difference between being required to support each of your locations and being required to support each of your customer's locations. Each Walmart is able to sell to nearby customers. Asking internet retailers to collect local taxes would be like requiring Walmart to get home addresses for each of their customers and collect taxes according to that address instead of the store's address.

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

#198

Post by lostapathy »

secabeen wrote: post #169
cpburns2009 wrote: post #148

Earlier quoted context omitted.

An exemption such as this is one of those things that I'd say is not worth supporting unless you're based out of TN, or do enough of sales there to make it worth your while. Sure, I'd implement it if it's required but every special case is just another point of failure.

But if you don't support it, are you liable for collecting more tax than required? How do you "not support" it? Just reject purchases from people in TN during the holiday?

I'm pretty sure that in most states so long as you remit the tax to the state, they are happy to take it, even if you didn't have to collect it. You only really get in trouble if you collect the tax from customers then pocket it.

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

#199

Post by rbritton »

cpburns2009 wrote: post #175
secabeen wrote: post #169

Earlier quoted context omitted.

But if you don't support it, are you liable for collecting more tax than required? How do you "not support" it? Just reject purchases from people in TN during the holiday?

Disclaimer: I am not an accountant. I would figure tax holidays are optional and might even require an application to take advantage of. So you would charge the regular sales tax and remit it to the state. UPDATE: Out of curiosity I looked it up. And it looks like sales tax holidays depend as usual on the state. The MO back to school one is optional if less than 2% of merchandise is affected. But the TN one doesn't l…

Washington State has a line item on the report for over-collected sales tax. I don't know what happens to that number, though.

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

#200

Post by jonknee »

Glyptodon wrote: post #158
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…

200 shipments is nothing, and $100k isn't particularly meaningful revenue, either. I don't know what kind of margins people get, but I'd guess $100k yearly revenue isn't even enough for one person to live decently, let alone afford to handle keeping up with a business.

It's 200 shipments or $100k in North Dakota which would be impressive for any mom and pop eCommerce site that isn't somehow focused on ND. Almost no one lives there.
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