New Sales Tax Rules

[MikeH]

One obvious problem is some dealers will not know until year's end whether or not they're over the limit.
But states commonly(?) collect sales tax quarterly.

So if you end up over the limit, will you be penalized for not filing?

- Leigh

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.

[j.e.simmons]

Please do help us posted.

[Leigh]

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.

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

[jp]

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.

[MikeH]

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.

[Bob Salomon]

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.

[MikeH]

Bob:

Thanks for that. Makes me wonder what "free" means? :-)

[Willie]

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?

[Bob Salomon]

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?

Wouldn’t you then be defrauding a government entity?

[MikeH]

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. :-)