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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

#341

Post by jakejohnson »

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.

When using a sales tax API, the merchant configures their product catalog by assigning products to specific tax categories or tax codes based on the sales tax provider. Some tax categories are extremely granular to accommodate the scenario you mentioned. The logic on whether or not the product is taxable in a specific state based on a certain threshold is done completely within the API when passing over tax codes for each line item.

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

#342

Post by omfg »

test6554 wrote: post #325
rbritton wrote: post #270

Something like ten years ago now, Washington State changed their sales tax requirements in a way that required the seller to look up the four-digit rate code of the buyer, both for determining the rate to charge and later for remitting to the state. The quarterly file they provide with this information is ~150000 rows. Prior to that date, you just reported for the jurisdiction in which the business was registered. Be…

It sounds like Avalara costs $50 per year for small businesses, but scales up for larger companies. So compliance is trivial if it truly works.

Unfortunately they don’t have transparent pricing. So it’s a bit of a mystery. We were in the middle of getting a quote but then found TaxJar thanks to this thread and are going to try that. I prefer the pricing being up front.

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

#343

Post by PurpleBoxDragon »

jedberg wrote: post #293
Cerium wrote: post #276

Earlier quoted context omitted.

If the business isn't paying the tax, then I'm sure the people paying the tax can pay the tax themselves. No need to add a middleman.

They tried that for 10 years and it didn't work. Very few people pay use tax like they should. But it wasn't cost effective to enforce every individual offender. So now they're trying something different.

Thus forcing the businesses to pay or be punished. The business likely has the option of not passing the cost along to the consumer, but in the end they are the one being forced to pay the state.

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

#344

Post by omfg »

arbuge wrote: post #337
gnopgnip wrote: post #306

Earlier quoted context omitted.

There is a threshold in the South Dakota bill for $100k in sales in the state. Small online sellers are not affected

That's just the exemption SD chose to apply, and which they could change at any time. Other states may choose to not have such an exemption. You are also now open to tax audits from all other states, since you may need to prove you are below any exemption limit. It's a bad deal for small business no matter how you slice it. I think that if your revenue is below ~$100m annually, the future is beginning to look bleak.…

That’s a bit of a leap. It looks like fully automated compliance from the existing services. From collection to remittance is about 3-5k a year. With more competition it will likely become cheaper.

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

#345

Post by test6554 »

ghaff wrote: post #3

I find it hard to argue with from a fairness perspective. Clearly, retail is in a much different place from when Quill was decided. My concern is more in how a mom & pop online shop operating independently complies as a practical matter, which means not only collecting the right amount for different types of items but presumably remitting and filing with a huge number of different tax jurisdictions.

Avalara provides this service to mom and pops for $50 per year.

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

#346

Post by tzs »

zzzmarcus wrote: post #317
tzs wrote: post #171

Earlier quoted context omitted.

Besides Avalara, I'm aware of taxjar.com, taxify.co, taxamo.com. Avalara and Taxamo don't list prices on their sites as far as I managed to find. Googling turns up comments saying that Avalara is expensive. TaxJar and Taxify do list prices. For a small business (up to 1k transactions/month) is $17/month if you pay for a year up front ($19/month on month-to-month). A transaction is either giving them an order and havi…

Avalara's pricing is here: https://www.avalara.com/trustfile/en/pricing.html

That looks like their tax filing product for ecommerce. The prices look pretty good, actually, at least compared to other others. A single filing seems to be about the same price as the others, but they have good discounts if you are filing in a lot of states which looks like Avalara might be a winner if you are dealing with many states.

I don't see any pricing for their services for their services for determining how much tax you need to collect for a given transaction.

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

#347

Post by delinka »

eric_h wrote: post #332
panda888888 wrote: post #292

Earlier quoted context omitted.

Yep. The most annoying part is that tax jurisdictions don't correspond to ZIP codes. If they did, this would be so much easier.

As someone who grew up in a house who's mailing address and zip code were for a different town and county from the actual physical location of the house (it was just past the border) - I can't even begin to imagine how to actually do this completely correctly.

Apple has asked me several times in the past for online purchases. I enter a ZIP code, they do some lookup and ask me to choose the county I live in from a list of three. I choose, and based on that they calculate tax.

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

#348

Post by jedberg »

forapurpose wrote: post #339
jedberg wrote: post #261

Earlier quoted context omitted.

No it doesn't. The business isn't paying the tax. They are only collecting it on behalf of the taxing agency.

> The business isn't paying the tax I despise Norquist, but I believe the words above are not true in a consequential sense. The law may say 'the state taxes the consumer', but who is meaningfully affected? The business handles the mechanics of collecting and paying the tax. And whose pocket the tax really comes out of depends on the elasticity of demand, IIRC my economics. That is, it depends on how much the busines…

The sales tax is collected after the transaction, so price elasticity has nothing to do with it.

What you wrote applies to other things like an increase in rent or property tax, which has to be built into the cost of the product. But it doesn’t apply to sales tax.

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

#349

Post by dumbfoundded »

eric_h wrote: post #332
panda888888 wrote: post #292

Earlier quoted context omitted.

Yep. The most annoying part is that tax jurisdictions don't correspond to ZIP codes. If they did, this would be so much easier.

As someone who grew up in a house who's mailing address and zip code were for a different town and county from the actual physical location of the house (it was just past the border) - I can't even begin to imagine how to actually do this completely correctly.

Honestly, the state doesn't expect anyone to get this completely right except the largest companies. If you make a good faith effort to comply with laws, in the vast majority of cases, you're fine.

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

#350

Post by Spivak »

mullingitover wrote: post #239
Spivak wrote: post #215

Earlier quoted context omitted.

I mean even if we lived under a monarchy we would still be one country, the two things aren't really related. That is the worst possible reason to enact a law. It should be obvious why making people's lives worse purposefully for political posturing is a bad idea, and you run the risk of your plan backfiring and having to live forever in the now-worse world.

This isn't enacting a law, though. This is changing the interpretation of the constitution. Prior to this, the interpretation was that the framers' intent was for citizens to be governed by the laws of their own state, now it's not. Let the chips fall where they may.

I don't think the distinction between legislative and common law is really meaningful in this case. A judge making a decision in a case like this is bringing a new law into existence.

Suppose I the owner of a small retailer based out of Oregon but have a location in Ohio. Should I be exempt from collecting sales tax simply because my company is registered and HQ'd in Oregon? The previous ruling was no, Ohio has the right to require my company to collect sales tax for sales in Ohio, but the ruling required that my company have a physical presence in the state. All that happened today was that the requirement to be physically present was dropped.

I mean the law is fairly narrowly scoped and certainly doesn't give states a blank check to write laws for citizens of other states.

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