SCOTUS rules states can collect sales tax on Internet purchases

[MichaelB]

Well, I just saw this on SCOTUSblog

(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-sup...llect-sales-taxes-1529591376?mod=hp_lead_pos2

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]

I always pay my online purchases on my state return.

I have done so on every state return I've ever [-]fled[/-] filed.

 

[samclem]

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]

I have done so on every state return I've ever [-]fled[/-] filed.

Texas---Hmmmph!

 

[JoeWras]

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...to-collect-taxes-on-more-online-transactions/

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]

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]

I have done so on every state return I've ever [-]fled[/-] filed.

Texas---Hmmmph!

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





https://legal-forms.laws.com/texas/sales-tax/form-01-156-texas-use-tax-return

 

[Texas Proud]

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]

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]

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]

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]

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]

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]

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]

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.

 

[Bestwifeever]

Prediction: Amazon and Walmart will soon or already have whole departments tracking the smaller etailers’ compliance with this (they will place orders with the budding competition and turn them in if no sales tax is charged).

 

[ERD50]

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.

Not that it matters, but I'm not sure "fair" works here.

If I buy from an on-line place, and they don't have a presence in my community, they aren't using the fire dept, or police dept, or other social services that my local taxes pay for. So why should they have to go through the hassle of collecting (and I like that term better than "charging") a tax for the thousands of places they sell to? I'm subject to about a half-dozen (that I know of) different taxing bodies, and I think 3 actually are applied to most of my sales tax (State, Local, and transportation body). And it varies whether I drive to one local town or another. Which one is 'fair' to collect? My particular village doesn't have a local sales tax (and very little retail), so most of my local buying involves paying the local sales tax of the town I buy in, so the online place will pay my town's zero rate, even though in reality, I pay the local rate of the nearby towns?

Fair - hah!

I think it's sufficient for them to pay their property taxes in the area the have buildings, payroll taxes on their employees, and maybe OK to say they need to collect sales tax for their address of record? That would be just one number to use for all their sales. Not complicated.

And the on-line places do use local shipping, so those companies are paying taxes, including payroll taxes on their employees.

Just seems like a very complicated way to go about it.

-ERD50

 

[Just_Steve]

Oh well, it was a good ride while it lasted.

 

[samclem]

With this SCOTUS decision, Congress needs to pass some appropriate legislation or this could be a disaster for small online businesses.

I think we'll find the federal government lacks the authority to tell states how to run their tax collection systems. They could try an end run (e.g. block some federal money unless states comply with a policy/set of standards). More promising would be a set of common procedures/data formats, etc agreed to by the states. States have an interest in getting the dough, making a common standard will help them get it.

 

[joeea]

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 Supreme Court has still left it up to the states/municipalities to decide sales tax rules for internet sales - they aren't required to do anything in particular.

But I don't know of any states that exempt small online retailers (do any?). It appears that those small guys will now take on the burden of collecting/paying the sales tax for pretty much every state and municipality or pay for the service to do so. I'm guessing the big guys who run the "platforms" for smaller retailers will be happy to offer them such a service (at a price of course).

Clearly won't impact the bigger internet retailers, but will hurt the small ones.

I'm not sure if this is "fair" or not, but I do know it will cost virtually all of us "more". I guess I should be happy that I live close to the New Hampshire border.