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State sales tax on internet purchases is back on the table
Old 01-14-2018, 10:58 AM   #1
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State sales tax on internet purchases is back on the table

Given the popularity of the "Last thing ordered at Amazon" and other threads about online shopping, this will be of interest to forum members. The US Supreme Court has agreed to take up the subject of state sales tax on online purchases.

This was last visited in 1992, and SCOTUS ruled that states could only tax internet purchases if the seller had a physical presence in that state. South Dakota passed a law requiring out of state vendors to collect tax on some purchases by state residents, then brought suit against some large companies for refusing to do so. The case, South Dakota v. Wayfair, Inc. has made it's way through the court system and on Jan 12, the US Supreme Court agreed to hear it.

A ruling in favor of the States wanting to collect could make our cost of living a bit higher, affect the competitiveness of e-commerce businesses, and give a boost to local brick and mortar retailers.

Background on South_Dakota_v._Wayfair https://en.wikipedia.org/wiki/South_...._Wayfair,_Inc.
https://www.bloomberg.com/news/artic...for-high-court

Article on US Supreme Court decision https://www.reuters.com/article/us-u...-idUSKBN1F12JG
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Old 01-14-2018, 11:49 AM   #2
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This happened here in California with Amazon. I'm a big Amazon user because, at first, it saved me the sales tax even though I was 'supposed' to declare on my state income tax. When Amazon was forced to charge tax, I thought maybe the party was over. However, what I discovered is that Amazon decided to make some lemonaide out of this lemon and started building large warehouses and distribution centers in the state. These places are HUGE! I assume they employ a lot of people as well. Most recent facility was just opened near where I live, at the Sacramento International Airport. (Jokingly called the Sacramento Intergalactic Spaceport in mockery because the only international flights are to Mexico) It's the largest building at the airport now by far.
Since Amazon has made a significant presence in the state, I've been able to take advantage of some of the other features they offer. One is their 'Pantry'. I can order groceries (not taxed in California BTW) delivered to the house and set up recurring purchases through 'Subscribe and Save'. This knocks 5% off the price if I have 5 or more items. Shipping is free of course. Ever go to the grocery store and have a favorite item that they no longer stock? Isn't that a pain?! I hated that! Hasn't happened to me yet on Amazon. I order several items that my local grocer USED to stock but no longer does. My mail man HATES that I buy 6 12 packs of Propel Black Cherry beverage a month as they are quite heavy. But they are significantly cheaper than any store, including COSTCO, and are delivered right to my front porch. I don't need to even load 'em in the cart, the checkout, the car and into the house from the car. Ha! We eat gluten free and there's a huge presence for these products on Amazon as well. I probably do 80% of our household shopping now on Amazon and using their credit card gives me still another 5%.
All things considered, the sales tax aspect has been mitigated by their range of products, fast shipping, most times either overnight but never more than 2 days and that includes Sundays, the convenience, the time I save shopping at brick-n-mortar stores, the wear and tear on my car, etc..
The Amazon return policy is the best, better than COSTCO because I don't have to drive down there to return anything. Just go to the Amazon site, and within minutes I've printed the free return label. In most cases, I have my refund back on my credit card account when the shipping label is scanned by UPS at pick-up.
I'll still use COSTCO for meats and large ticket items like TV's because those are easier to return / replace as well as their extended warranty on electronics if you use their credit card.
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Old 01-14-2018, 11:53 AM   #3
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Since Amazon has a lot of warehouses in my state, I already pay sales tax on many online purchases. I don't mind a bit, because it's generally going to be much less than the cost of the gas I would have to burn to drive to a B&M store for the same purchase.
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Old 01-14-2018, 11:59 AM   #4
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While we have enjoyed the benefit of no sales taxes on internet purchases for many years, I have no problem with forcing internet retailers to charge sales tax and remit on all purchases... it is a fair step towards leveling the playing field with local brick and mortar vendors and benefits my state and local governments reducing pressure to increase tax rates.

Amazon started assessing state sales taxes in my state last year.
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Old 01-14-2018, 12:25 PM   #5
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Of course, purchasers buying from out of state are supposed to remit to their state the sales tax they would have paid in-state, but it's one of those laws most people ignore.

Forcing all sellers to collect and remit the tax of 50 states (taxing cities too?) will create a costly compliance matter for every vendor, the cost of which will ultimately be shifted to and borne by purchasers.
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Old 01-14-2018, 12:33 PM   #6
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A couple months ago I ordered a small item to be delivered to a friend in a sales tax state. There was never any sales tax charged although I expected it to be charged. I may have ordered it through a 3rd party with no physical presence in the sales tax state.

I do agree that charging sales tax for all sales made in or delivered to the state will start leveling the playing field. It will be interesting to see what SCOTUS does.
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Old 01-14-2018, 12:33 PM   #7
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I don't think folks should be able to dodge sales taxes by not reporting them. OTOH, I don't want the SC making up a required compliance by the vendors through some tortured construing of the Constitution. But between this & the limited SALT deductions, I think I'll start investigating which states have neither income nor sales taxes.
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Old 01-14-2018, 12:40 PM   #8
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Quote:
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Of course, purchasers buying from out of state are supposed to remit to their state the sales tax they would have paid in-state, but it's one of those laws most people ignore.

Forcing all sellers to collect and remit the tax of 50 states (taxing cities too?) will create a costly compliance matter for every vendor, the cost of which will ultimately be shifted to and borne by purchasers.
A vendor isn't forced to collect and remit tax.... but if to want to do business and sell in a particular jurisdiction then along with that comes an obligation to collect and remit sales taxes.... brick and mortar stores seem to be able to do it as do many online vendors who do business nationwide and do it voluntarily.

At the extreme, an online vendor could simply decline sales to customers in zip codes with sales taxes... a business decision that they need to make.
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Old 01-14-2018, 12:50 PM   #9
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Individuals aren't forced to pay income taxes either, yet for some reason most do. :-)

Limiting small business sales is more likely to make them unable to compete with large businesses, which is the opposite of levelling the playing field.

Big businesses have economy of scale that permits them to track and remit sales taxes to many states. Small businesses do not have that luxury.
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Old 01-14-2018, 12:57 PM   #10
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I don't think folks should be able to dodge sales taxes by not reporting them. OTOH, I don't want the SC making up a required compliance by the vendors through some tortured construing of the Constitution. But between this & the limited SALT deductions, I think I'll start investigating which states have neither income nor sales taxes.
Let me help you with that list:
- Alaska
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Old 01-14-2018, 01:02 PM   #11
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Then that is a decision that your "small' business will have to make... am I willing to accept collecting and remitting sales taxes in exchange for expanding sales nationally... if so, then go, otherwise don't expand. Besides, if sales taxes were required to be collected nationally I suspect that it would spawn expanded software services to ease the burden based on zip code and product codes.

I don't like the idea of shifting that burden on individuals... it doesn't work and is more onerous than putting the burden on vendors.
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Old 01-14-2018, 01:03 PM   #12
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Let me help you with that list:
- Alaska
New Hampshire too.. but both are very cold.
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Old 01-14-2018, 01:07 PM   #13
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We have to pay tax at Amazon for anything shipped to Washington, so we just have expensive stuff shipped to our friends in Oregon, just a few miles across the border. They will never take us alive.
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Old 01-14-2018, 01:14 PM   #14
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Calculating sales tax is horrifically complex. In my former life, the company I worked for paid a hefty subscription to a company who's sole purpose was to keep-up with sales taxes and make sure our system calculated these taxes correctly.

It's not just 52 rates. It can also depend on what county, and municipality. Different types of goods and services have different rates. Each state has written it's laws differently, and to accurately comply with all of those laws is quite a burden.

As mentioned above, it hits the little guy much harder than the big guy.

You know how they have "simplified Chinese"? Maybe they should come up with something similar in the sales tax arena for the little guy.
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Old 01-14-2018, 01:17 PM   #15
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A few weeks before Amazon built a warehouse on the state I'm in, I went ahead and stocked up on stuff before getting hit with sales tax the following year.

Now, I've already been assimilated and not that much sticker shock.
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Old 01-14-2018, 01:34 PM   #16
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New Hampshire too.. but both are very cold.
Yeah, but NH does have an Interest & Dividends tax, which is based on the income from those sources, so it's a bit of wordplay to say they don't have any Income tax. It is a lot lower than a lot of other states though.
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Old 01-14-2018, 02:04 PM   #17
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When we first moved to the boonies the Arizona Post Office was 15 miles away, but the New Mexico PO was a mere 5 miles away. Than AZ started charging online tax, but NM didn't until this year. NM sales tax is still cheaper than AZ. As it is USPS sends AZ packages to our NM PO anyway.
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Old 01-14-2018, 02:09 PM   #18
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New Hampshire too.. but both are very cold.
Also Oregon, Delaware, and Montana
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Old 01-14-2018, 02:13 PM   #19
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Calculating sales tax is horrifically complex.
...
It's not just 52 rates. It can also depend on what county, and municipality.
At our last house, our ZIP code was spread over parts of two counties, each having a different tax rate. So when I ordered things online, there was often an extra step after putting in my ZIP, to specify which county I lived in. Nothing is ever as easy as it first appears.
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Old 01-14-2018, 02:24 PM   #20
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You know how they have "simplified Chinese"? Maybe they should come up with something similar in the sales tax arena for the little guy.
They're trying - or at least they say they are, with Streamlined Sales Tax initiative Streamlined sales tax

It shouldn't be that difficult, but state governance is a funny thing. A decision by SCOTUS allowing the states to collect sales tax might be just the motivation this initiative needs to move ahead.
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