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I was looking into FBA and also print on demand before. Kinda crazy the whole Nexus thing. Plus with FBA, I don't believe they let you pick which warehouses and

by Keverw 9y ago

I was looking into FBA and also print on demand before. Kinda crazy the whole Nexus thing. Plus with FBA, I don't believe they let you pick which warehouses and some areas do it on the county level instead of state registration level. I kinda wish the states would work together to make a one-stop shop for businesses kinda similar to how it works in Europe. or if the states don't get things together, even have the feds step in and create their own sales tax that preempts the state's taxes. Then the feds pay the states a portion based on population and take a cut for providing the service to the states. I also think if you have a nexus, doesn't states then expect you to do foreign business filings and income taxes - not just sales tax? Like in the printing example, the company has centers in about 2 or 3 states + then also filings for my state. So a single website that sells shirts and mugs on demand dropshipping now has 4 states to deal with, with multiples of different filings. Then some states have a gross receipts tax that goes after out of state businesses just for shipping an item even though they don't have a Nexus. They call it a tax for the privileges of doing business with residents in those states instead of a sales tax to get around the supreme court ruling. Stuff like this discourages small business. I wish you were just allowed to pick one single state to deal with and everything just magically happens. I think if the states worked together and lowered the barriers they'd make so much more money. Encourage more startups and less legal headaches for bootstrapped businesses. Kinda like how vat works in Europe for online businesses, you pay the taxes to your home corporation state and they figure out what is owed to the other states and pay them for you.

gamblor956 9y ago
All state-level taxes require nexus, even gross receipts taxes. I don't know who told you otherwise but they were misinformed. Gross receipts nexus is higher than sales taxes, because it claims know income. Having a Nexus for one type of tax does not make you liable for other taxes, i.e., sales tax Nexus doesn't necessarily subject you to income taxes in that state.
- Keverw 9y ago
  Ohio went after out of state companies for example Newegg and Crutchfield. The Ohio supreme court ruled it was legal and didn't violate the federal supreme court ruling on sales tax in Quill Corp. v North Dakota. They call their gross receipts a "commercial activity tax". I think they are a bit biased since the state supreme court ruled in the state's favor. I rather the federal supreme court rule instead. I guess according to them if you sell $500,000 worth of products to residents in Ohio, you now have a nexus. Even without any warehouses, contractors, employees, etc in Ohio. https://www.pillsburylaw.com/en/news-and-insights/ohio-supreme-court-finds-quill-does-not-apply-to-the-commercial.html https://www.pillsburylaw.com/en/news-and-insights/ohio-supre... and http://www.courtnewsohio.gov/cases/2016/SCO/1117/150386.asp http://www.courtnewsohio.gov/cases/2016/SCO/1117/150386.asp
- ryanwaggoner 9y ago
  Yes but the definition of “nexus” is changing. Increasingly states are switching to “economic nexus” based on where the “value” from the sale is derived. Aka, customer address. And they’re levying sales AND income taxes based on that. I’m curious about interstate enforcement and whether this will even hold up in court in the long run.
  - gamblor956 9y ago
    Levying a sales tax based on address may hold up in court. Levying income taxes based on sales to customers in a state will not absent physical nexus or sufficient in-state activity as to create a de facto nexus. This isn't just a principle of federal tax law, it's a basic principle of tax law everywhere.
    - ryanwaggoner 9y ago
      Not for lack of trying: http://www.bkd.com/articles/2014/new-york-enacts-major-corporate-income-tax-changes-for-out-of-state-businesses.htm http://www.bkd.com/articles/2014/new-york-enacts-major-corpo...
throaway012018a 9y ago
Are you suggesting that when a seller uses FBA (Fulfillment by Amazon), then purchases made in a state where Amazon has a presence/warehouse will then be subject to sales taxes ? Currently I fulfill my own orders and sales taxes only apply to CA, the state where my business is based, and WA. I can not disable WA which surprised me.
- Keverw 9y ago
  Yeah, the states where you store inventory is enough for them to say you have a Nexus and have to collect sales tax in that state. Then some states also have a tangible personal property tax that applies to even inventory that usually the county collects and enforces, such as Arkansas, Kentucky, and some other states. Some states with TPP taxes apply only to goods your company uses(such as Office furniture, paintings on the wall, computers, etc stuff you aren't selling but using), but some even apply it to inventory for reselling. Which not sure if FBA opens you up to TPP taxes too as I haven't got that far into it, but I'm thinking there's a probably a chance counties will want that too if they knew you stored stuff in a warehouse within their county. I just think it is insane. I know we need taxes to pay for services, but so many different tax types and at different levels. Just wish they'd made things more consistent and easier to do. I really support just a single flat income tax at the fed level(where states, counties, and cities get a cut from based on some criteria but the taxpayer wouldn't have to personally worry about that. They'd only have 1 agency to deal with and pay.), and repeal all other taxes other than real estate property and the new flat income tax.

by Keverw 9y ago

gamblor956 9y ago

All state-level taxes require nexus, even gross receipts taxes. I don't know who told you otherwise but they were misinformed. Gross receipts nexus is higher than sales taxes, because it claims know income. Having a Nexus for one type of tax does not make you liable for other taxes, i.e., sales tax Nexus doesn't necessarily subject you to income taxes in that state.

Keverw 9y ago
Ohio went after out of state companies for example Newegg and Crutchfield. The Ohio supreme court ruled it was legal and didn't violate the federal supreme court ruling on sales tax in Quill Corp. v North Dakota. They call their gross receipts a "commercial activity tax". I think they are a bit biased since the state supreme court ruled in the state's favor. I rather the federal supreme court rule instead. I guess according to them if you sell $500,000 worth of products to residents in Ohio, you now have a nexus. Even without any warehouses, contractors, employees, etc in Ohio. https://www.pillsburylaw.com/en/news-and-insights/ohio-supreme-court-finds-quill-does-not-apply-to-the-commercial.html https://www.pillsburylaw.com/en/news-and-insights/ohio-supre... and http://www.courtnewsohio.gov/cases/2016/SCO/1117/150386.asp http://www.courtnewsohio.gov/cases/2016/SCO/1117/150386.asp
ryanwaggoner 9y ago
Yes but the definition of “nexus” is changing. Increasingly states are switching to “economic nexus” based on where the “value” from the sale is derived. Aka, customer address. And they’re levying sales AND income taxes based on that. I’m curious about interstate enforcement and whether this will even hold up in court in the long run.
- gamblor956 9y ago
  Levying a sales tax based on address may hold up in court. Levying income taxes based on sales to customers in a state will not absent physical nexus or sufficient in-state activity as to create a de facto nexus. This isn't just a principle of federal tax law, it's a basic principle of tax law everywhere.
  - ryanwaggoner 9y ago
    Not for lack of trying: http://www.bkd.com/articles/2014/new-york-enacts-major-corporate-income-tax-changes-for-out-of-state-businesses.htm http://www.bkd.com/articles/2014/new-york-enacts-major-corpo...

throaway012018a 9y ago

Are you suggesting that when a seller uses FBA (Fulfillment by Amazon), then purchases made in a state where Amazon has a presence/warehouse will then be subject to sales taxes ? Currently I fulfill my own orders and sales taxes only apply to CA, the state where my business is based, and WA. I can not disable WA which surprised me.

Keverw 9y ago
Yeah, the states where you store inventory is enough for them to say you have a Nexus and have to collect sales tax in that state. Then some states also have a tangible personal property tax that applies to even inventory that usually the county collects and enforces, such as Arkansas, Kentucky, and some other states. Some states with TPP taxes apply only to goods your company uses(such as Office furniture, paintings on the wall, computers, etc stuff you aren't selling but using), but some even apply it to inventory for reselling. Which not sure if FBA opens you up to TPP taxes too as I haven't got that far into it, but I'm thinking there's a probably a chance counties will want that too if they knew you stored stuff in a warehouse within their county. I just think it is insane. I know we need taxes to pay for services, but so many different tax types and at different levels. Just wish they'd made things more consistent and easier to do. I really support just a single flat income tax at the fed level(where states, counties, and cities get a cut from based on some criteria but the taxpayer wouldn't have to personally worry about that. They'd only have 1 agency to deal with and pay.), and repeal all other taxes other than real estate property and the new flat income tax.