https://www.nbcnews.com/politics/sup...-sales-n873416
Time to buy some film (I hope it's not too late).
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https://www.nbcnews.com/politics/sup...-sales-n873416
Time to buy some film (I hope it's not too late).
Not the end of the world. I already pay sales tax on many Internet purchases.
Years back my accountant insisted I pay retroactive Use Tax which is similar.
I have bigger issues to bitch about.
Wise ruling by the Supreme Court.
States have been losing gigabucks in lost tax revenue to online sellers.
Things have changed a lot since 1992 when that "physical presence" rule was passed.
- Leigh
And it may help local stores compete
So if we sell a print or gear how does the sales tax get paid?
Will everyone who uses eBay, CraigsList or this site have to get a State ReSale number for where they live and for where the buyer lives?
No and no
Tax documents are already mailed to eBay and PayPal users who exceed a certain amount of sales/transactions.
You see plenty of larger users charging tax within their state already. Will not be hard to implement a global tax addition to eBay sales (on the buyers end).
Small-timers will continue be no different than local yard sale vendors. Your tax burden is your problem to figure out (and is mostly ignored).
Don't forget that increase in complexity = increase in compliance costs = less taxes used for actual public good.
Fortunately, this probably won't affect small sellers... yet.
Nothing wrong with questioning what gets taxed, how much it is taxed, what the tax is used for and how it is distributed, etc.
Here in Calif. you just declare on your resale filing when something is shipped out of state. As it is, it is now mandatory to file sales taxes for in state transactions via web because it's so darn complicated already, with every county and even every different city potentially having a somewhat different sales tax rate, and even variations of rate within the same jurisdiction for different kinds of items, with all kinds of potential exceptions just like on income taxes.
It would therefore be a logistical nightmare to have to constantly update the many thousands of different requirements across the country. That's one reason it's never been implemented at the small seller end. Darn near impossible. But out-of-state sellers with any tangible business presence in Calif (like Amazon)
are required to charge the specific Calif rates when shipping here. But policing everything else is a whole other story; and there's been a long-running squabble between CA and NY over the issue. But there are far more blatant ways the playing field has been kept from being level than mere sales taxes, as significant as they can be. I'll stop at that, or I'll be crossing a red line past photographic output per se.
Our company was in NJ. We had no properties outside NJ. We had one employee who lived in MN. All of our sales reps were independent contractors. We never could control who they saw and when, unless we were on a sales trip with them.
We had one warehouse in NJ, we had no satellite sites that we shipped from.
We only sold to camera stores, luggage stores and photo labs.
The state of WA decided that we were subject to a tax of 0.005% on all shipments that we made into the state of WA as our independent sales rep lived in WA state and because we periodically made trips to WA to visit and train our Rep and our dealers!
Our attorneys told us it would cost us far more to fight this tax then to pay it. So we finally paid the tax quarterly plus the interest and penalties they added on for not paying the tax for the previous 5 years before they decided that we owed the tax. Our competitors were never charged the tax. Only the companies represented by our rep were charged the tax! We even switched to a rep from OR that called on our dealers and the state still charged us the tax!
In the end it didn’t make much of a difference as we were able to deduct those payments from our local state tax.
The threshold, IIRC from reading the NPR story earlier today, is $100,000 per year per state or greater than 200 transactions per year per state. If a seller is below those limits, the current ruling doesn't apply.
It's actually not quite as bad a ruling as I at first thought. Basically, the argument is that, without nexus, taxing everyone for out of state sales imposed an undue burden on the seller. The specific case that came before SCOTUS was for a state where these limits were in effect and the state provided a program for sellers where they could sign up to the program, the state told them how to tax the sales, took the money, was responsible for disbursing it to local entities, and indemnified the seller against any potential errors in taxation or distribution. The SCOTUS held, basically, that with the state providing that level of service and it only applying to businesses above that size/scale, it did not constitute an undue burden. SCOTUS didn't say that taxing all out of state sales was reasonable, only that taxing out of state sales when the destination state made it really easy and the rule only applied to companies operating at scale was reasonable.
One would expect that if a state tries to tax every little hobby-mom Etsy seller we'll see the case going back to SCOTUS so they can say "no, in fact THAT is an undue burden".
Yeah I woke up to this little gem this morning, after getting only two hours’ sleep from staying up to coat plates last night to get them out to people.
My first thought: When the hell am I going to find time to keep track of the ~50,000 tax codes across the country? How much *more* sleep am I going to lose out to being a tax collector for locations I derive no benefit from?
That $100k limit is the North Dakota law. A greedy state like CA or MA would have no problem sucking up every possible dollar below that threshold for the several years it would take for a challenge to make its way through the courts (if you don’t think that happens now with other obviously unconstitutional law, think again).
There will be talk of “a precedent” being set. What that means is that the lawmakers are now thinking of the possibilities of billions of dollars going to state coffers without considering the ramifications of the economic loss of those billions of dollars staying in comsumers’ pocket and being directly injected into the economy. THAT’s what precedent means.
If you didn’t already realize that the government think of us as no more than tax crops, then maybe you will realize it now.
Illinois for one has Use Tax laws where the buyer is legally responsible for paying sales tax. Not the seller.
http://www.revenue.state.il.us/Indiv...Qs-Use-Tax.htm
I advocate USA VAT as a way to eliminate loopholes and enhance compliance.
AI will Police it all soon.
Buy now!
So now we have an opportunity for an enterprising person to collect state and local sales tax rules and rates and create a database with software that will match buyer's address and the product(s) purchased to the appropriate rates and tell the seller how much to charge and where to remit. CCH used to have something like this, but on paper. eBay should do this as a service to sellers. Whether they will is an interesting question. I'm sure that Amazon will do it and make the service available to their sellers.
In spite of all the wailing, this is a problem that has to be solved only once.
Depending on your viewpoint Dan, this is actually an ongoing problem with no end in sight. Taxes always go up, they never go down.
200 transactions seems small. For the equivalent $100k threshold, that is an average of $500 per item. How many small-time sellers are selling $500 items? $50 average (2,000 transaction threshold) seems much more reasonable but well I'm not the one making the rules.
Folks, posts clarifying the factual details and operational implications of the Supreme Court ruling are fine, but this is not the place to debate taxation policy or politics.
EDIT: Oren posted while I was writing and I think he'd want me to delete it.
Sal, those are your words, not mine. The benefit between buyer and seller is mutual and doesn't need to be stated -- it's not a one-way street. Nor does the transaction, at a fundamental level, need to involve a third party.
But it's a red herring. I don't think you're *really* advocating for what is essentially an interstate tariff. Fundamentally, the drafters of the Constitution understood how detrimental interstate tariffs would be to the nation's economic growth (and raise in the standard of living and all the other benefits). It was a compromise to get the states to sign on to the formation of a strong central government. This decision entirely ignores that history.
If you've followed my venture (which I'm guessing you haven't), you would know that I basically only cover my material costs. I don't need to earn a living off this, which keeps the cost down. I want to make dry plates available to the community *for* the benefit of the community. If it were to become too much of a burden to keep making plates (right now it isn't), then I would simply halt the venture. But that would be unfortunate.
By the way, in New Hampshire, there is no sales tax (except on prepared food, go figure) or use tax.
To Oren's point above .. the implications are that as time goes along I spend less time sleeping and more time dealing with red tape, or I just stop selling plates because it becomes too much of a pain in the ass to make them available to the community.
No, it's not. You misunderstand what taxes are then. An interstate tariff would be if I (as an Ohio resident) could buy a camera without any additional fees if that camera were made and sold in Ohio but, if that camera were made or sold in another state and shipped to me, I'd have to pay an additional fee on the camera. This situation is very different. If I buy a camera made and sold in Ohio, I pay Ohio sales tax. If I buy a camera made and sold in another state but delivered to Ohio, I still pay Ohio sales tax.
Interstate tariff: different fee schedule depending on where camera comes from
State sales tax: identical fee schedule regardless of where camera comes from
Please be respectful. We are all adults here. I've been paying my fair share taxes for decades, just like any other law abiding citizen should, and understand them very well.
What you are missing is the burden it places on the seller. The law ruled on by USSC required the out-of-state business to collect the taxes for ND, then send in a check (essentially). For now it's limited to min $100k income, but that will surely be tested by state governments eager for more tax dollars. The other aspect is enforcement: How is North Dakota justified enforcing their state tax law outside of their jurisdiction (the other original debating point regarding taxation of interstate commerce). It would have been *much* better to have drafted as a Use Tax, except they wanted to specifically challenge the restrictions on taxing interstate commerce.Quote:
An interstate tariff would be if I (as an Ohio resident) could buy a camera without any additional fees if that camera were made and sold in Ohio but, if that camera were made or sold in another state and shipped to me, I'd have to pay an additional fee on the camera. This situation is very different. If I buy a camera made and sold in Ohio, I pay Ohio sales tax. If I buy a camera made and sold in another state but delivered to Ohio, I still pay Ohio sales tax.
Interstate tariff: different fee schedule depending on where camera comes from
State sales tax: identical fee schedule regardless of where camera comes from
Keep in mind that I am already taxed on sales. I will pay to the state and to the federal government. So this isn't a complaint about losing free money. Nothing's free, even in New Hampshire.
This is not a big burden for a company like Amazon or Overstock.com. Not at all. The burden will fall on the very small cottage industries and side businesses which are far more common than you probably think, and which won't have the resources themselves to track all the new tax laws we will undoubtedly see in the coming years. As Dan said, certainly software will be written to handle it, but that is still a burden.
Again, you need to read the actual decision. One of the key factors of the decision was that the state in play had a service that made it easy for out of state sellers to pay state sales tax and indemnifies them against errors in the paying or distribution of the collected tax. The decision also protects cottage businesses by noting the threshold as a key decision point. The wording of the decision indicates that, absent that and some other seller... safeguards... I guess... they would not have found in favor of the state. So the burden is no larger than paying sales tax for in-state sales.
I am one of the cottage businesses you're worried about. As far back as 2007 my payment processor would flag sales that required sales tax based on the address and add the tax to the total. For as long as I've been in business, some piece of software has always tracked if tax was necessary, what the tax rate was on that day, how much tax to assess, and spit out a report quarterly on how much tax I'd collected and who to send the check to. The SCOTUS decision will change nothing in that process for me other than the software will tell me to send out one check for each state in which I have a customer. I can handle that.
It's understandable that people have strong concerns about how this ruling may affect them. But evidently this means that even a discussion about implementation details becomes a debate about rights and wrongs of policy. The Forum is not an appropriate venue for such a debate.
EDIT: I've merged with the new thread started by MikeH.
I'm posting this in the "business" section, and, hopefully we can keep opinions on taxes, etc., out of it so Oren doesn't need to lock it. :-)
For those of you that need to collect sales tax:
From what I'm reading in the Tax forums that I subscribe to, and the Wall Street Journal, and other sources, here's what seem to be the new rules. I make no guarantees, and I will post corrections and updates as I see them. If you have better info, please post.
• Not being said, but the old rules on nexus must still apply. If you have employees, operations, etc. in a state, you must collect sales tax for that state.
• The Justices spoke very favorably of South Dakota's law (which is the law that was challenged & upheld.) Many people think that something close to South Dakota's law will become the standard. North Dakota passed a law identical (?) to their neighboring state, effective the day after the Supreme Court ruling was issued. So, that's today.
• The South Dakota law says you must collect sales tax if either of the following 2 events happen (I'm assuming this is an annual test... I do not know what happens if you pass the test for a while, then drop below the limits.):
• Sales into South Dakota exceed $100,000, or,
• You have more than 200 shipments into South Dakota.
• There are 16 states with laws similar to South Dakota's. If I find a list, I will post it here. Many states will need to pass enabling legislation before it becomes effective in their state.
If you PM me with questions, I will most likely respond to them here.
Just got an email from eNay begging for help...
One thing I forgot to mention: South Dakota's law was specifically not retroactive, in that it did not require new registrants to go back and collect on transactions prior to the law. I have no idea whether the effective date of this law is when it was passed, or yesterday.
Congress will step in with legislation. The Constitution charges them with regulating interstate commerce. Let's hope they do their job.
What happens with states that do not collect any sales taxes? (e.g. Oregon)
Some states, such as Florida, dont have any such small business exemption. They also make compliance difficult and time consuming. I know because I once collected and paid sales tax in that state. First you have to get a sales tax number. Then you have to file a return (monthly or quarterly depending on the business) whether you sold anything or not. If you fail to file, you are fined.
The state sales tax laws are not set up for the convenience of the seller, and I see no reason the states would change things for people like me who sell w few prints on the Internet. I certainly don’t make enough to hire an accountant who could be sure I complied with all the different state regulations.
I am experiencing consternation: The commerce clause of the constitution requires congress to regulate inter-state commerce. I don't see how North or South Dakota has any business trying to regulate internet commerce from a location outside their respective states. . . .yet SCOTUS says they can. Seems like things just get more complicated every time you turn around.
How can someone attempting to moperate in good faith figure out the appropriatye tax to collect for every jurisdiction? Here at home, If I buy something at one convenience store in the country, only state tax applies. However, if I go into town there is both a state and local sales tax . . .and if I go into the city, they add a Metro Transit increment to be collected as sales tax. This decision may only affect state sales taxes just now, but just wait till some little speed-trap village somewhere decides they can collect something from every on-line transaction that happens out in their county.
Whew!...I'm done just now. Hope that last paragraph isnot considered opinion.
Moot point for me anyway: I have never done that volume of business anywhere. Not sure if that's good or bad.
Ignorance of a law is not an excuse.
Good question. I probably did not word my original post correctly. Sales taxes are usually assessed on the consumer, and collected by the retailer on a "real-time" basis. It's different than income taxes. Usually, these laws have thresholds. Until you hit the threshold, you don't collect tax. Once you hit the threshold, you start from that point on. No going back. The courts have been fairly consistent with not allowing retroactive assessment. Sometimes, there's a "lookback" period. Rules for 2018, for example, may be determined by the 12 month period 10/1/16 - 9/30/17. I have seen NO details of these laws. Eventually I'll see a good recap, and will post it here. The Supreme Court praised the SD law... many states' internet-sales-tax laws are in dire conflict with the philosophy of what the Supreme Court showed. It will be several months before this all gets sorted out.
Please do help us posted.
Hi Mike,
Thank you very much for the commentary.
We're unaccustomed to folks posting here who actually know what they're talking about.
Please keep us informed as to any details you might obtain.
Many of our members sell on the internet, though I doubt any hit the $100,000 threshold.
Thanks again.
- Leigh
I fully expect the ecommerce marketplace/finance services that we love+hate such as Ebay, Paypal, Square, etc.. will figure this out and offer sales tax calculation/collection/processing if you use their service for the transaction. Credit card processors could do likewise but will probably be late to the game. The rules are complicated, but we have the technology and competitive options to make this happen.
Personally, I'm disappointed in the ruling because I don't like to see the sprawl of taxes to every part of our lives, but big online retails already charge me sales tax. As a small business owner, it's a mixed bag. I might get more business because there is no sales tax disincentive to shop local, and I might lose some out of state business growth as I have more Massachusetts customers enjoying the lack of sales tax.
Leigh:
Thanks for the comments. Most of you have far more experience with photography than I have, and I usually "take" much more than I can give here. So this is my way to try and balance the scales.
There has been a very good attempt by some of the states to simplify reporting for out-of-state retailers. I'm a native Southern Californian... spent 3 years with a CPA firm that was called Ernst & Ernst when I was there... then spent 20+ years in big business accounting. I always had a large tax department to turn to who handled sales tax matters. So, I never needed to get into the details. I'm semi-retired, and my practice the last 20+ years has been small, California-only businesses, so I have not followed what is called the "Streamlined Sales Tax" project. (California has not really participated in it.)
There are companies that will handle all of your sales tax filing needs... probably not cheap. The one that I looked at, Avalara.com, doesn't seem to show prices - never a good sign, in my book, and they do not seem to readily discuss whether you NEED to file. One of them, TaxCloud.net says they are free, so, it makes me wonder if the "Streamlined" states (there are 24 of them), let these people take a commission off the top before forwarding payment? (Hard to believe.... maybe there's another answer.)
I've attached a PDF map of the 24 states... the link is here in case you'd rather do that:
http://www.streamlinedsalestax.org/u...s%201-1-17.pdf
There's also a list of "Certified Service Providers" here that will also get you to the Streamlined home page if you are so inclined:
http://www.streamlinedsalestax.org/i...vice-Providers
This still does not answer the question: "Am I on a state's radar screen?" We will know more in several months. I may be forced to read the Supreme Court's decision, because I'm starting to read suggestions that the Court "approved" the simplified method of SD's law, which would mean that, to follow the Court's intentions, many states will need to change their laws before they can avail themselves of using the Court's opinion...
I have one small client that ships out-of-state. He will never hit SD's limits, but I will probably need to learn more about the "Streamlined" project just to be safe.
Mike,
In this thread is a rehash of my company’s experience with the WA state tax people. I paid them quarterly with an Amex card and since the amounts were trivial we elected to do it even though WA used a company to handle CC payments. That company tacked a small % onto our payment. WA did not pay them a commission.
Bob:
Thanks for that. Makes me wonder what "free" means? :-)
If you are looking at hitting the $100,000 mark can you form a new small Corporation and start using it for sales so you say under it with any particular business?
I'm not experienced enough to handle this question. There's usually rules about common ownership that make this kind of stuff difficult, if not impossible. When you sign up for a sales tax permit in California, for example, they want to know everything about you, including your 1st-born child's name. :-)