Sales Tax on Internet OK per Court

[blueash]

In one of its last opinions for the term the Supreme Court of the US, SCOTUS, today issued its opinion regarding the ability of states to collect sales tax from internet sellers who do not have a physical operation within the taxing state. A previous case had resulted in a rule that the state could only compel the business to collect the tax if it was located in the state. This of course created an incentive for buyers to obtain products from out of state sellers to bypass the tax. Yes, Florida has a form you are required to fill in if you bought out of state and pay the tax on your own. No one does it.

So South Dakota passed a law requiring internet sellers to collect and remit with several conditions that were designed to lessen the burden on sellers. Only those with sales over a threshold must collect, they only collect a uniform statewide tax, not the local county and city tax and South Dakota will provide for free the software to determine what is and is not taxable.

By a 5-4 vote this law was upheld as constitutional. As usual Kennedy was the deciding vote but an unusual group. All 9 justices felt the old rule was wrong and should be overturned. 5 felt the court should do it, as of course they created the rule in the 90's, while 4 felt Congress should clean up the mess.

A good summary is HERE (https://taxfoundation.org/supreme-court-decides-wayfair-online-sales-tax-case/)

If you are planning a significant internet purchase and hope to avoid sales tax you should act quickly.

[rjm1cc]

Looks like a little though was given to the paper work needed for small business. But business will have to register with the 50 states and get a license to collect sales tax before they sell in the state. Probably file a monthly or quarterly sales tax return. Have to determine if the item they are selling is taxable in the state, maybe subject to income taxes depending on how the state views registration. This will be very labor intense. I think congress has to do something like set up one registering and collecting group for the country, have the same set of taxability rules for internet sales for all states and have the same tax rate. Business would report sales and tax by state.

If you sell on eBay be sure to list he states you are registered to sell in and the amount of tax due. Remember shipping is taxable in some states but not others.

[Northerner52]

How can states reach to out of state businesses?

[Fredman]

What a mess this is going to be for internet sellers. They will have to raise prices to cover additional administrative costs.

[Dan9871]

What a mess this is going to be for internet sellers. They will have to raise prices to cover additional administrative costs.

Over 60% of all internet sales are being done by the big internet sellers like Amazon and big box stores and they are already collecting state sales taxes on the products they sell online.

For those sellers who aren't already collecting out of state sales tax, like third party Amazon sellers and independent sellers, it will end up being just another option on software they already use to manage their sales and taxes.

In fact independent online sellers are already collecting sales tax on in-state shipments they make, and many internet sales platforms provide a service to handle in-state sales taxes already.

So I wouldn't doubt that big third party sales platforms, like Amazon and eBay, will add a sales tax collection service for sellers who use them and completely remove the administrative burden for them.

So I doubt that administrative costs will be a big problem for internet sellers.

Of course the sales tax on the items they sell will make their products more expensive, but I doubt the admin stuff will.

[retiredguy123]

Over 60% of all internet sales are being done by the big internet sellers like Amazon and big box stores and they are already collecting state sales taxes on the products they sell online.

For those sellers who aren't already collecting out of state sales tax, like third party Amazon sellers and independent sellers, it will end up being just another option on software they already use to manage their sales and taxes.

In fact independent online sellers are already collecting sales tax on in-state shipments they make, and many internet sales platforms provide a service to handle in-state sales taxes already.

So I wouldn't doubt that big third party sales platforms, like Amazon and eBay, will add a sales tax collection service for sellers who use them and completely remove the administrative burden for them.

So I doubt that administrative costs will be a big problem for internet sellers.

Of course the sales tax on the items they sell will make their products more expensive, but I doubt the admin stuff will.
I agree. Administrative costs are a non-issue.

[EPutnam1863]

How can states reach to out of state businesses?

Back in 1999 this was not a problem. We were living in Virginia and made an online purchase from a furniture company in North Carolina. We were not aware we would have to pay sales tax because it was not done in the other states we lived in.

Two years after we left Virginia, we received a dunning letter from Virginia, saying we owed sales taxes on the table that we purchased in NC via the Internet. They said it was delivered to us in VA and therefore we had to pay the sales tax. If we had driven to NC to pick up the table, we would not have had to pay the VA sales tax although we would have to pay the NC tax.

[rjm1cc]

Back in 1999 this was not a problem. We were living in Virginia and made an online purchase from a furniture company in North Carolina. We were not aware we would have to pay sales tax because it was not done in the other states we lived in.

Two years after we left Virginia, we received a dunning letter from Virginia, saying we owed sales taxes on the table that we purchased in NC via the Internet. They said it was delivered to us in VA and therefore we had to pay the sales tax. If we had driven to NC to pick up the table, we would not have had to pay the VA sales tax although we would have to pay the NC tax.
You owed a use tax (same as a sales tax) on goods you bring into your home state. A lot of states ask you to report the tax on the state income tax return. So the item you bought was subject to the tax and now the seller is to collect and pay the state and you do not have to file a tax return and pay to the state.

[thetruth]

Any tax any where any time period-EVERYONE WSANTS-NO ONE WANTS TO PAY.

At one time, I worked for a company that wholesaled expensive cameras. The largest dealers were mail order.

We discovered that 80% of the sales were done across state lines. We were told, the reason was to avoid sales tax.
Math is very simple, on a camera that would cost say 8,000 at 7% tax, the tax alone would be $560. I wondered, since a lot of this equipment was purchased for or claimed used by a business. People obviously did but how could our government allow them to write this equipment off without needing to prove the sales tax was paid.
AMAZON-I'm sure none of us shop on Amazon and then buy on EBAY where in the past, we knew we would not pay sales tax. Nightly Business Report 6/21/2018 pointed out that the stock of Wayfair has tanked. Wayfair advertises-we don't charge tax..
.

[Topspinmo]

So, what if i Buy something out of country? Which imo in most cases is cheaper buying directly form the horses mouth.

[Dan9871]

So, what if i Buy something out of country? Which imo in most cases is cheaper buying directly form the horses mouth.

In most cases it only matters if something is shipped to your house, not where it comes from. If that is the case you are responsible to pay the sales tax if the place that you bought it from didn't collect the sales tax for your state.

In practice states rarely go after individuals to collect unpaid sales tax, they just never had the resources to do it.

Small business sometimes buy supplies and office equipment from out of state to avoid a sales tax but they often get caught and end up having to pay the tax plus a penalty.

When we had a small business we bought lots of out of state business equipment on the internet but always paid the local sales tax to the state directly. Our accountant told us quite a few of her clients had been caught trying to avoid sales tax this way and ended up with some hefty penalties... even though she had warned them.

Also, depending on what it is, overseas shipping and customs might negate any savings you might get by by avoiding sales taxes.

[ColdNoMore]

While almost no one likes to pay more than they have to, it's hard to argue against being fair...and making the playing field level. :shrug:

From my perspective I'm hoping this will help...the smaller in-state, privately owned businesses. :thumbup:

[CFrance]

While almost no one likes to pay more than they have to, it's hard to argue against being fair...and making the playing field level. :shrug:

From my perspective I'm hoping this will help...the smaller in-state, privately owned businesses. :thumbup:
I think it is about time. It's bound to help smaller businesses. Lack of sales tax levy has been a disadvantage to brick and mortar businesses, especially small ones. They can't compete with the giant online businesses price-wise. Why would you buy something from a small business if you could get it tax-free online, unless you were really committed to shopping locally?


I think this will have a small impact on us shoppers but a big advantage for local business.

[dave042]

I read English but how can the supreme court translate the Constitution to American now?

Article 1, Section 8, Clause 3 of the U.S. Constitution

No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.

No tax or duty shall be laid on articles exported from any state.

The Commerce Clause is now invalid? Let the Articles of Confederation games begin! The supreme court is now a legislative branch making their own laws as opposed to written law.

supreme court doesn't make mistakes? case Dred Scott v. Sandford, i say to you.

[Dan9871]

No tax or duty shall be laid on articles exported from any state.

.

A sales tax is not a tax on things exported from a state. It's a tax on things bought in the state and is paid by the buyer not the seller. An item is considered bought in the state if you buy it in the state or have it delivered to an address in the state.

Also the seller does not pay the tax, the seller collects the tax from the buyer and sends it to the state. That's what happens when you buy something locally.

If you buy anything out of state, mail order or on line, and the seller doesn't collect the sales tax you are required to pay, you are supposed to send the sales tax to your state, usually with your annual taxes.

The argument was whether a state could compel an out of state seller to collect the taxes due by a purchaser from their state, like in state sellers are. The Supreme Court said the states can do that.

[EPutnam1863]

I think it is about time. It's bound to help smaller businesses. Lack of sales tax levy has been a disadvantage to brick and mortar businesses, especially small ones. They can't compete with the giant online businesses price-wise. Why would you buy something from a small business if you could get it tax-free online, unless you were really committed to shopping locally?


I think this will have a small impact on us shoppers but a big advantage for local business.

Yes, yes, yes! And I hope more of those mom and pop businesses survive.

[ColdNoMore]

I think it is about time. It's bound to help smaller businesses. Lack of sales tax levy has been a disadvantage to brick and mortar businesses, especially small ones. They can't compete with the giant online businesses price-wise. Why would you buy something from a small business if you could get it tax-free online, unless you were really committed to shopping locally?


I think this will have a small impact on us shoppers but a big advantage for local business.

Yes, yes, yes! And I hope more of those mom and pop businesses survive.

Yep...my fingers are crossed. :thumbup:

[jimbo2012]

Our family business in NY has 6 large retail stores it will help no doubt ramp up sales.

They also run a large website, collecting tax is simple there is software in place to take care of over 10,000 different taxing counties, not an issue.

The biggest pain is manually registering with each state.

We expect each state will have a min sales level where tax will be required.
SD already is at $100,000 in annual sales before tax is required.

As far as Amazon, we were a merchant for a while and know they refuse to collect tax in way for the merchant that supply them.
they tell you build it in your price. For those that may not know over half of all their sales are not their products they are sold by others.

The reason we dropped them was they pay very slow and control you like pawns.


.

[airstreamingypsy]

I don't think resales should be taxed. IOW second hand merchandise. It was already taxed when it was sold new, it shouldn't be taxed each time its sold. There are lots of resales on ebay for example.

[thetruth]

In most cases it only matters if something is shipped to your house, not where it comes from. If that is the case you are responsible to pay the sales tax if the place that you bought it from didn't collect the sales tax for your state.

In practice states rarely go after individuals to collect unpaid sales tax, they just never had the resources to do it.

Small business sometimes buy supplies and office equipment from out of state to avoid a sales tax but they often get caught and end up having to pay the tax plus a penalty.

When we had a small business we bought lots of out of state business equipment on the internet but always paid the local sales tax to the state directly. Our accountant told us quite a few of her clients had been caught trying to avoid sales tax this way and ended up with some hefty penalties... even though she had warned them.

Also, depending on what it is, overseas shipping and customs might negate any savings you might get by by avoiding sales taxes.

On EBAY for example you can buy items from CHINA and it is shipped for free. With all the banter about international trade wars, The Chinese government must be subsidizing the shipping cost. I just ordered TWO small tubes of GLUE for seventy nine cents. They shipped freight paid by the company. Truth, I had ordered the same thing previously also from CHINA and paid a bit more ninety-nine cents. It never arrived. An easy contact to EBAY and it was credited. IS IT WORTH THE TROUBLE? PROBABLY NOT BUT THE COST IS ABOUT 1/4 OF WHAT I WOULD PAY HERE AND I WOULD NEED TO DRIVE TO THE STORE TO GET IT..

[theruizs]

So, what if i Buy something out of country? Which imo in most cases is cheaper buying directly form the horses mouth.

Then we’ll likely be paying the new tarrifs passed through to us in the price.