New Sales Tax Rules

[MikeH]

Why not just qualify it by the previous year’s sales rather than confusing things?

That would be the easiest answer. although there is usually a delay because, say, on January 1, you might not know what your sales were through yesterday (December 31) and you need time to react. I'm trying to avoid my personal opinions here. Let's just say some states are very aggressive in their tax collections and their laws and policies reflect that, while other states are more cooperative. From what I've seen so far, South Dakota would appear to be in the latter group.

To make a long story short, one of the large companies I was controller for was the major employer in a small town where their main source of revenue was an employee head tax. We were close to 1/2 of their tax revenues. They were very easy to deal with... adjustments and corrections normally were made over the phone. One year, they needed to buy an expensive piece of capital equipment, and they could save a lot of money if they bought it in the next few weeks, but they didn't have the cash. When this was brought up to our CFO, the very quick consensus was: "How much do they need? Let's send them an early tax deposit equal to what they need." This thought would never enter my mind for most of the tax agencies that I deal with today.

[Bob Salomon]

That would be the easiest answer. although there is usually a delay because, say, on January 1, you might not know what your sales were through yesterday (December 31) and you need time to react. I'm trying to avoid my personal opinions here. Let's just say some states are very aggressive in their tax collections and their laws and policies reflect that, while other states are more cooperative. From what I've seen so far, South Dakota would appear to be in the latter group.

To make a long story short, one of the large companies I was controller for was the major employer in a small town where their main source of revenue was an employee head tax. We were close to 1/2 of their tax revenues. They were very easy to deal with... adjustments and corrections normally were made over the phone. One year, they needed to buy an expensive piece of capital equipment, and they could save a lot of money if they bought it in the next few weeks, but they didn't have the cash. When this was brought up to our CFO, the very quick consensus was: "How much do they need? Let's send them an early tax deposit equal to what they need." This thought would never enter my mind for most of the tax agencies that I deal with today.

I am just as happy that I was just a technical, sales and marketing guy! My daughter is a JDMBA doing bankruptcies. I let her worry about those type of business decisions.

Just to be sure, my brother is a lobbiest, his daughter is an intellectual property attorney and my son in law is a family law attorney. So I can just worry about photo!

[consummate_fritterer]

Remember, this tax gets added to the purchase price. It does, from an economic theory, make things more difficult depending on where your prices are compared to the competition. But, I'd much rather deal with Jeff @ Badger Graphics, who, IMHO, is probably far more interested in 4x5 film than anyone @ B&H, although, don't get me wrong... I respect B&H.

I understand, but that wasn't my point, Mike. The tax will be added to sellers' sales. If, and I do mean IF, a threshold of 200 sales will cause taxation then many, and I do mean MANY 'small' sellers will either limit their selling or will take a terrible hit on their sale prices. This is a direct hit on their sales margins. From buyers' perspectives, average prices will rise a bit. From a small-time seller's perspective, it can be catastrophic, especially if they've accumulated a ton of inventory which is now (effectively) worth 10 percent less.

[MikeH]

I understand, but that wasn't my point, Mike. The tax will be added to sellers' sales. If, and I do mean IF, a threshold of 200 sales will cause taxation then many, and I do mean MANY small sellers will either limit their selling or will take a terrible hit on their sale prices. This is a direct hit on their sales margins. From buyers' perspectives, average prices will rise a bit. From a small-time seller's perspective, it can be catastrophic, especially if they've accumulated a ton of inventory which is now (effectively) worth 10 percent less.

There's more than one way to look at this, but I understand your point. This is not going to be easy for small businesses. Do you think most small businesses will not be able to pass most of this on?... in other words, the business will eat most of this? I only have one small client that this impacts, and it will not affect him, so I really have not feel for what will happen. But, I'm afraid you are far more likely to be right, than wrong.

And, on top of this, small business's administrative costs will go up.

[Tin Can]

New businesses don’t have a last year.

If you are small biz and not retailing with at least 30% markup you should quit.

States will audit, almost free money for them. We want compliance.

Cheat or ignore tax and you will regret it.

I ignored. I paid with a lein against my home despite having a repayment agreement in place. Surprise!

Get an honest accountant. They do save you money.

Done it all the wrong way and right way. The State always wins.

Peace

Why not just qualify it by the previous year’s sales rather the confusing things?

[consummate_fritterer]

There's more than one way to look at this, but I understand your point. This is not going to be easy for small businesses. Do you think most small businesses will not be able to pass most of this on?... in other words, the business will eat most of this? I only have one small client that this impacts, and it will not affect him, so I really have not feel for what will happen. But, I'm afraid you are far more likely to be right, than wrong.

And, on top of this, small business's administrative costs will go up.

This will most definitely affect small-time sellers. How could it not? I'm not talking about 'businesses'. I'm talking about very little guys just trying to raise a few dollars in order to survive.

[DrTang]

I just checked the price of 4x5 film locally..it is about 10 bucks more per box of 50 than B&H

B&H has free shipping and thus I save 10 bucks a box - which is a lot for me..specially if I buy two boxes and some other film..it might be a 40-50 dollar savings..but,

with the new tax system ..I will be buying local as it about evens up the price differential

so..I guess in my case..the new law is doing about what it set out to - level the playing field

[Drew Wiley]

Collecting out-of-state sales taxes could potentially be ruinous to relatively small web dealers who handle quite a bit of cumulative transaction volume. This could very well require extra staffing and expensive re-programming. I saw close-up what a nightmare was caused by a simple 1/4 % add-on recyclying fee for paint cans and treated lumber in this state. It amounted to almost $40,000 avg per dealer to implement - crippling for a nursery selling treated containers or for any small mom n' pop paint store. I doubt many photographers fall into this kind of category. Studios would charge local rates because clients come in. And if licensing fees for stock photos are taxable, I assume that the tax headache will fall mostly on intervening stock agencies. But there are just all kinds of potential questions that will take time to iron out. I presume a certain grace period will be allowed by the Court to outwork practical details. A family member of mine just argued and won an analogous SCOTUS case, and the ruling itself is just the tip of the iceberg, with much re-interpretation to follow down the line, state by state. Here in CA, the Board that controls resale permits is good at communicating updates.

[MikeH]

Badger Graphic is $2 less than B&H.

[Drew Wiley]

The law only levels one aspect of the playing field, but as I hinted, tilts it even worse in other ways. I know the game inside out, having successfully competed for decades against out-of-state dealers who neither collected sales taxes like we had to, and often used very deceptive modes of advertising and
eventually web baiting, or else were such big corporations that they routinely thumbed their nose at zoning and labor laws which visible mid-sized privately-held companies are expected to obey. But where there's a will, there's a way. If all you can offer is a generic commodity, and someone else can offer that
same things cheaper, the odds are against you. Hopefully, most of us don't offer generic images, but our own way of seeing things which people will either
gravitate toward or not, of which sales tax is a negligible component. Turn it the other way around - we pay tax on supplies we didn't used to - well, on a
resale permit basis, that kind of thing has already been stated in print for some of us all along, and little will change. My resale permit for paper, matboard, picture frames etc can simply be recorded with out-of-state suppliers just like it is here.