SCOTUS rules states can collect sales tax on Internet purchases

[MichaelB]

Well, I just saw this on SCOTUSblog

Quote:

(1) States can charge out-of-state retailers sales tax, at least in some circumstances, even if they don’t have a store or warehouse in the state, clearing the way to allow sales taxes on internet purchases (opinion in South Dakota here);

We need details, but it sure looks like end of the days of no sales tax on internet purchases may be in sight.

Edit to add - from the WSJ (paywall) https://www.wsj.com/articles/us-supr...d=hp_lead_pos2

Quote:

The court, in a 5-4 decision written by Justice Anthony Kennedy, ruled that states can require internet merchants to collect the taxes even if the merchant has no physical presence in the state.

[JoeWras]

No sales tax? I always pay my online purchases on my state return.

[REWahoo]

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Originally Posted by JoeWras I always pay my online purchases on my state return.

I have done so on every state return I've ever fled filed.

[samclem]

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Originally Posted by JoeWras No sales tax? I always pay my online purchases on my state return.

Me, too, but I'll admit I don't keep good records of every online purchase. I estimate the amount and pay tax on that (which, I would guess, is more than most people do, FWIW).
If all online merchants collect state sales taxes, it will make things less complicated for me. If we get into a situation where some do it and some don't, that will be messy.

[samclem]

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Originally Posted by REWahoo I have done so on every state return I've ever fled filed.

Texas---Hmmmph!

[JoeWras]

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Originally Posted by samclem Me, too, but I'll admit I don't keep good records of every online purchase. I estimate the amount and pay tax on that (which, I would guess, is more than most people do, FWIW). If all online merchants collect state sales taxes, it will make things less complicated for me. If we get into a situation where some do it and some don't, that will be messy.

I estimate too. I make so few non-Amazon (who collects for my state) that it is easy to estimate.

Of course, most of my friends are proud to tell me how stupid I am. These are fine, upstanding people. Why they think avoiding sales tax is so awesome astounds me. And many of them work for state government!!!

[RonBoyd]

It goes even deeper than that:

https://www.cordcuttersnews.com/the-...-transactions/

Quote:

The idea of online taxes for a long time was limited to companies who had a physical presence in that state. Recently that has been expanding with States pushing to get sales taxes on sales even when the company does not have a physical presence in that area. Recently that has broadened to taxes on services like Hulu, Netflix, and Amazon Prime.

[GrayHare]

I'm curious about provisions for small online retailers. If there are none, this is a boon for the companies big enough (economy of scale) to handle possibly 50 different state remission approaches.

[REWahoo]

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Originally Posted by GrayHare I'm curious about provisions for small online retailers. If there are none, this is a boon for the companies big enough (economy of scale) to handle possibly 50 different state remission approaches.

What it may be a boon for is online retail tax software companies like these:

https://www.accuratetax.com/
https://www.zip2tax.com/

[Aerides]

If only it were 50... there are something like 16000 different sales jurisdictions in the US (not just states, but some counties and cities).

And online sellers need to register, and then file (on different schedules with different jurisdictions). Some of these require you to file every period even if you have zero to collect. Oh, and of course, state DoR's have crappy websites already, very manual and old-school setups to begin with.

So, let's say you have a small website and do a few hundred a month in sales - there's no way you can do that yourself. Just filing for my state once a quarter is about an hours work.

Unless there is some centralized nationwide portal that does this for a VERY small fee (there isn't), it shuts down the viability of many small online retailers being able to continue. Or continue, and pay fees, and pass that onto the consumer.

[Texas Proud]

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Originally Posted by REWahoo I have done so on every state return I've ever fled filed.

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Originally Posted by samclem Texas---Hmmmph!

But there IS a form for that... even for Texas....





https://legal-forms.laws.com/texas/s...use-tax-return

[Texas Proud]

Quote:

Originally Posted by GrayHare I'm curious about provisions for small online retailers. If there are none, this is a boon for the companies big enough (economy of scale) to handle possibly 50 different state remission approaches.

Avalara just went public a few days ago (IIRC) and they are up 25% just after the announcement...

[samclem]

Quote:

Originally Posted by Aerides Unless there is some centralized nationwide portal that does this for a VERY small fee (there isn't), it shuts down the viability of many small online retailers being able to continue. Or continue, and pay fees, and pass that onto the consumer.

I think there will likely be several soon. Now that there is going to be a wide demand for the service/function, there will be businesses there to fill it. Having some companies that deal with the thousands of taxing authorities and effectively build a way to pay them makes a LOT more sense (and is much more efficient) than having every small online retailer do the same.

[Texas Proud]

Quote:

Originally Posted by Aerides If only it were 50... there are something like 16000 different sales jurisdictions in the US (not just states, but some counties and cities). And online sellers need to register, and then file (on different schedules with different jurisdictions). Some of these require you to file every period even if you have zero to collect. Oh, and of course, state DoR's have crappy websites already, very manual and old-school setups to begin with. So, let's say you have a small website and do a few hundred a month in sales - there's no way you can do that yourself. Just filing for my state once a quarter is about an hours work. Unless there is some centralized nationwide portal that does this for a VERY small fee (there isn't), it shuts down the viability of many small online retailers being able to continue. Or continue, and pay fees, and pass that onto the consumer.

I really doubt that the states are gong to go after the small online retailer that sells a few hundred here and there.... they want the big fish... Amazon... and anybody that uses Amazon as a platform...


It might even be Ebay since they have the ability to collect taxes for their users....

[GrayHare]

Quote:

Originally Posted by Aerides If only it were 50... there are something like 16000 different sales jurisdictions in the US (not just states, but some counties and cities).

I was thinking that too but the news reports describe the SC decision applying to states. There is no mention of other jurisdictions. Of course this may simply reflect a lack of detail in the news reports.

[Mr._Graybeard]

Quote:

Originally Posted by Aerides Unless there is some centralized nationwide portal that does this for a VERY small fee (there isn't), it shuts down the viability of many small online retailers being able to continue. Or continue, and pay fees, and pass that onto the consumer.

Or, the smaller vendors will continue to do what they're doing -- selling without collecting tax -- on the assumption that sales taxing authorities lack the power to go after them.

[Chuckanut]

As much as I don't like it, it's only fair.

In my neck of the woods sales tax is in the area of 10%. So when buying expensive stuff (new TV, mobile phone, appliances, etc.) this is a huge incentive to buy online and 'save' the sales tax, that gives a significant advantage to the out of state companies. (Note: yes, I know people should declare the purchase pay that tax later.) Not so good.

[Go-NoGo]

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Originally Posted by Texas Proud I really doubt that the states are gong to go after the small online retailer that sells a few hundred here and there.... they want the big fish... Amazon... and anybody that uses Amazon as a platform... It might even be Ebay since they have the ability to collect taxes for their users....

and don't forget about Walmart, they have third party sellers as well.

[davebarnes]

Quote:

Originally Posted by GrayHare I'm curious about provisions for small online retailers. If there are none, this is a boon for the companies big enough (economy of scale) to handle possibly 50 different state remission approaches.

The states are not the problem.
Some (many?) states allow local taxation.
Colorado, where I live, is mind boggling.
I have Colorado, Denver, RTD (bus/rail), Stadium, SCD (Zoo, museums).
Colorado does not tax food, but does tax candy. But, a KitKat bar is not candy while a Milky Way is.

[Cobra9777]

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Originally Posted by samclem I think there will likely be several soon. Now that there is going to be a wide demand for the service/function, there will be businesses there to fill it. Having some companies that deal with the thousands of taxing authorities and effectively build a way to pay them makes a LOT more sense (and is much more efficient) than having every small online retailer do the same.

True. But whether they do it themselves or pay another company, it still may be cost prohibitive for small sellers. All the recent proposed legislation I've seen exempts small businesses and also requires states to simplify and standardize their collection processes. With this SCOTUS decision, Congress needs to pass some appropriate legislation or this could be a disaster for small online businesses.