State sales tax on internet purchases is back on the table

[Montecfo]

Physical presence should be necessary. With no physical presence, the sales are in interstate commerce, which only Congress can regulate. States attempting to tax interstate sellers are making a land grab.

An interstate seller with no physical presence is not using any services in that state, so why should it be taxed there?

Hopefully, the Supremes affirm existing federal law.

[Senator]

I report and pay sales/use tax on my internet purchases. In MN, it's the law, especially for businesses. I paid $495 to the state for my 2017 purchases. I track whether the purchase included sales tax or not.

Even if you are an individual, you still have to pay use tax of 6.875%. I suspect many other states have a similar law.

Quote:

Minnesota sales or use tax is due when you buy taxable items online or in another state and use them in Minnesota. If the seller does not collect Minnesota sales tax, you owe use tax. Each calendar year, individuals can buy up to $770 worth of taxable items for personal use without paying use tax. If your purchases for the year total more than $770, you must pay use tax on the entire amount. Internet and Out-of-State Purchases

[braumeister]

Quote:

Originally Posted by Montecfo An interstate seller with no physical presence is not using any services in that state, so why should it be taxed there?

By that reasoning, shouldn't the buyer pay the applicable sales tax of the seller's location? Frankly, I've never understood why this break was ever allowed.

I remember buying a car in New York a long time ago, but intending to immediately drive it to Colorado to register it. The NY dealer did me a favor and wrote my Colorado address on the bill of sale so I wouldn't have to pay NY sales tax.

When I got to Colorado, the DMV said they didn't care where I paid sales tax as long as I paid it. So I paid the much lower CO sales tax and everyone was happy. I'm not sure what the NY dealer did was actually legal, but I was pinching pennies back then.

[jazz4cash]

Quote:

Originally Posted by braumeister By that reasoning, shouldn't the buyer pay the applicable sales tax of the seller's location? Frankly, I've never understood why this break was ever allowed. I remember buying a car in New York a long time ago, but intending to immediately drive it to Colorado to register it. The NY dealer did me a favor and wrote my Colorado address on the bill of sale so I wouldn't have to pay NY sales tax. When I got to Colorado, the DMV said they didn't care where I paid sales tax as long as I paid it. So I paid the much lower CO sales tax and everyone was happy. I'm not sure what the NY dealer did was actually legal, but I was pinching pennies back then.

I think that's pretty standard on autos except the state that you register in will insist on getting paid so I don't get the part about Colorado DMV not caring where you paid.

[Walt34]

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Originally Posted by sengsational 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.

That's my argument against it too. I've slowed my purchasing, but I've bought a lot of photography gear from a family-owned store in NYC that has one (maybe two) stores there. To make them calculate sales taxes for all the different states and counties and then send each one the sales tax is absurd, and I agree would place an unreasonable burden on them.

Quote:

Originally Posted by braumeister I remember buying a car in New York a long time ago, but intending to immediately drive it to Colorado to register it. The NY dealer did me a favor and wrote my Colorado address on the bill of sale so I wouldn't have to pay NY sales tax. When I got to Colorado, the DMV said they didn't care where I paid sales tax as long as I paid it. So I paid the much lower CO sales tax and everyone was happy. I'm not sure what the NY dealer did was actually legal, but I was pinching pennies back then.

Whether it was legal depends on NY law at the time, it probably was legal. When we bought the Honda Accord a few years ago we bought it from a dealer in MD and we live in WV. We did not pay MD sales tax but we did pay it in WV when we registered the car.

[pb4uski]

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Originally Posted by Montecfo .... Hopefully, the Supremes affirm existing federal law.

I'm highly confident that they will affirm existing federal law.... whether their decision will coincide with your view of existing federal law is a totally different question.

[Montecfo]

Quote:

Originally Posted by pb4uski I'm highly confident that they will affirm existing federal law.... whether their decision will coincide with your view of existing federal law is a totally different question.

Cute.

[Brat]

Quote:

Originally Posted by sengsational 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.

My former neighbor on Bainbridge Island was one of the founders of Avalara, Scott McFarlane.

There is a lot of detail required even to just keep up on the various taxing districts even in Washington - counties, cities who seem to change their rates on a whim. The buyer's home zip code is not determinative as a zip code could include more than one taxing district. It isn't simple to administer.

https://www1.avalara.com/us/en/produ...0115002017%3As

[SecondCor521]

Quote:

Originally Posted by braumeister Also Oregon, Delaware, and Montana

All three have income taxes. The original list was states that had neither income nor sales taxes.

Idaho has both, so don't come live here, because it's super expensive.

[Cobra9777]

Quote:

Originally Posted by MichaelB 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.

+1 ...I think that's the whole point.

Proposed legislation in recent years has always exempted small online businesses... with various definitions of "small," but generally less than $1M sales in the taxing state. It also requires states to simplify their sales tax laws and collection processes prior to requiring interstate sellers to start collecting tax. Of course, none of these proposals have made it through our dysfunctional Congress.

So it seems to me, if the Supreme Court reverses the 1992 decision, it could be a complete disaster for small online businesses until Congress can pass something with small-business exemptions and tax simplification requirements. Here's a comparison of two recent proposals.

[meierlde]

One question is is zip +4 determinative of location. Supposedly it goes down to the individual cluster mailbox. Anyway today calculating sales tax is a service a merchant can buy, input the zip+4 and it tells you. For the Amazon Affiliates that can be one service amazon provides for a slight fee. The main issue might be integration in an online environment which could take some IT work. (Note that the same issues apply to the wal-mart associates program as Wal-Mart already has that capability.) Since it appears it is now a cloud based service, size of the business should not be an issue, just raises costs a bit more than just the sales tax.

[alaska55]

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Originally Posted by braumeister Also Oregon, Delaware, and Montana

So when did Oregon stop having a income Tax. I'll have to check with my sons. Oregon has one of the highest income taxes.

[travelover]

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Originally Posted by alaska55 ......... Oregon has one of the highest income taxes.

Yes, it does. That's why I live across the river from Portland.

[Brat]

Ah but you pay another tax: traffic jams on the I-5 bridge over the Columbia.

Many Clark county residents shop in Portland metro, I have heard that the Costco store just south of the I-205 bridge over the Columbia has the greatest sales per sq foot in the corporation. For political reasons Costco also built a store in Vancouver. Odds are that store's highest sales are in food, pharmacy, glasses and hearing aids (all non-taxed). WA residents are supposed to pay sales tax on purchases in Oregon but few do.

[travelover]

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Originally Posted by Brat Ah but you pay another tax: traffic jams on the I-5 bridge over the Columbia.

I'm retired and avoid the area during rush hours.

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Many Clark county residents shop in Portland metro, I have heard that the Costco store just south of the I-205 bridge over the Columbia has the greatest sales per sq foot in the corporation. For political reasons Costco also built a store in Vancouver. Odds are that store's highest sales are in food, pharmacy, glasses and hearing aids (all non-taxed).

Yup, and the Ikea store does a pretty good business, too.

Quote:

WA residents are supposed to pay sales tax on purchases in Oregon but few do.

[mrfeh]

Didn't read the entire thread, but I would hope folks are paying their state sales tax when they file their taxes, even if the vendor doesn't charge the tax directly...

[Senator]

Quote:

Originally Posted by mrfeh Didn't read the entire thread, but I would hope folks are paying their state sales tax when they file their taxes, even if the vendor doesn't charge the tax directly...

Exactly. That is the law in MN, although I have heard it has a 1% compliance rate.

I did post the MN law in my post above. In MN, we get a $770 exemption, unless you exceed it, then you pay sales/use tax on the entire amount.

I paid $495 for 2017.

[gindie]

Quote:

Originally Posted by mrfeh Didn't read the entire thread, but I would hope folks are paying their state sales tax when they file their taxes, even if the vendor doesn't charge the tax directly...

I do in Ohio and get laughed at by my work colleagues when I tell them!

[Big_Hitter]

we already pay sales tax on amazon purchases

[sengsational]

Quote:

Originally Posted by MichaelB 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.

Thanks for that bit of wisdom.

When "simplified" is 200 pages, that indicates the complexity of the current system. It looks like they didn't want to tackle vending machines or marajua, lol!