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States Can Require Internet Tax Collection, Supreme Court Rules

• sdhgaiojfsa 8y ago
  This is good news for the country, even if it's bad for my wallet. The prior state of affairs was absurd. Online retailers already have major advantages in terms of convenience and inventory. Getting a N% discount vs. brick and mortar by not charging taxes was completely unnecessary.
  • ransom1538 8y ago
    Yes. But it is too late. AMZN has already wiped out all local retail. AMZN not enforcing local taxes was a huge win - in the early days.
    • Spivak 8y ago
      Yeah, but the irony is that Amazon can't compete with its own marketplace a lot of times now that they're collecting tax. The prime markup with tax is almost always more expensive than the 3rd-party seller without.
      • LyndsySimon 8y ago
        In most cases, I much prefer to buy the Prime product at a small markup. I'm confident that it'll get there faster and that Amazon will stand behind it if there's something wrong. I hate dealing with individual sellers on Amazon, and I really don't think I'm alone in that.
  • WillPostForFood 8y ago
    It’s good for big business and bad for small businesses because compliance will be tough, and harder to compete and price.
    • mtgx 8y ago
      And this is why everyone should be supporting a federal VAT instead. If I'm not mistaken, Amazon had a similar argument a few years ago.
      • RightMillennial 8y ago
        I'd be all for a federal VAT over federal income tax. But that wouldn't remove any of the state or local sales taxes.
      • djschnei 8y ago
        A VAT would NEVER be a replacement, it would only be an addition. No thank you.
  • mullingitover 8y ago
    Exposing consumers to more regressive sales taxes is in no way good for the country. What would be good for the country is to abolish sales taxes entirely.
    • magduf 8y ago
      Exactly; sales taxes generally just hurt the poor and middle class. A good case could be made for consumption taxes on luxury items, but taxing things like food and inexpensive consumer items (like non-luxury clothing) simply hurts poorer people while not significantly affecting wealthier ones.
      • Spivak 8y ago
        Food is already exempt from sales tax. Take Ohio as a rough average for the country, here's the list of exemptions. https://www.tax.ohio.gov/faq/tabid/6315/Default.aspx?QuestionID=433&AFMID=11354 https://www.tax.ohio.gov/faq/tabid/6315/Default.aspx?Questio... The problem with consumption taxes is it just starts a debate over what is considered necessary/unnecessary. I think you would be better off exempting people rather than classes of items.
        • TheCoelacanth 8y ago
          > Food is already exempt from sales tax. From some sales taxes. That is far from universal.
        • magduf 8y ago
          >Food is already exempt from sales tax. Wrong. Come here to Virginia and try it. Or any Southern state for that matter. Note: In Virginia, groceries are taxed, but at a lower rate than the normal sales tax.
        • astura 8y ago
          No, not everywhere.
    • Spivak 8y ago
  • jcborro 8y ago
    The unintended consequence may be to drive business offshore. The de minimis import duty was quadrupled to $800 a few years ago (meaning no duty while US retailers pay duty buying in bulk and incorporate into the US price) and this could be yet another advantage handed to sellers outside the country.
• ghaff 8y ago
  I find it hard to argue with from a fairness perspective. Clearly, retail is in a much different place from when Quill was decided. My concern is more in how a mom & pop online shop operating independently complies as a practical matter, which means not only collecting the right amount for different types of items but presumably remitting and filing with a huge number of different tax jurisdictions.
  • omfg 8y ago
    We’ve been looking at tech solutions for calculation / remittance. So far only found Avalara. I’d be surprised if PayPal, Stripe, and others won’t step into this now that it’ll be fairly profitable.
    • ghaff 8y ago
      Yeah, it seems like something the payment processors have to handle automagically in some manner. Otherwise, small online merchants are going to have no practical choice other than 1.) Selling through e.g. Amazon or 2.) Just ignoring the law.
    • jeffmould 8y ago
      Stripe already recommends Avalara and a couple others: https://stripe.com/docs/orders/tax-integration https://stripe.com/docs/orders/tax-integration
      • ghaff 8y ago
        That seems to only address calculating the tax however. Presumably the business is still expected to remit the tax collected to each tax jurisdiction as required plus whatever necessary paperwork.
        • jeffmould 8y ago
          Most of these services handle the filings and paperwork for you as well.
      • 8y ago
• gigatexal 8y ago
  Amazon and other retailers’ stocks are down to session lows after the news. Makes sense.
  • DanCarvajal 8y ago
    Really Amazon already collected sales taxes but now it extends to Amazon marketplace sellers.
  • seanmcdirmid 8y ago
    Amazon has been collecting sales tax for quite a while now.
• rahimnathwani 8y ago
  The situation for retailers shipping to states where they have no physical presence reminds me of the situation of foreign retailers with significant online sales to customers in the EU. In each case, the seller (who has no physical or other presence in X) is required to collect tax from the buyer (a resident of X) and remit it to the tax authorities in X. The tax is owed by a resident of X, to the tax authorities in X. But the tax authorities in X want someone outside X to collect it on their behalf. EDIT: According to Wikipedia, some states charge sellers sales tax, and others do it the way I assumed (tax is charged to buyers, but collected by sellers).
  • xur17 8y ago
    And as a seller you are required to register with every state, and collect + pay taxes quarterly in every state. Quite onerous for smaller sellers.
  • dtech 8y ago
    That is the price of doing business with customers of the EU, similar to how you must comply to EU regulations if you want to sell physical goods. In return, you get access to the EU market and can deal with a single ruleset for the whole EU instead of each country individually. Also, this is only for consumers, to business customers you can reverse-charge the VAT so they have to handle it.
    • rahimnathwani 8y ago
      Anything can be construed as 'the price of doing business'. If the EU instead required every retailer with at least one customer in the EU to get a tattoo of the EU flag, in return for getting access to the market, would you also consider that just 'the price of doing business'? My objections to this are: - If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it. - There are ~200 countries in the world. Should any company who wants to sell over the internet need to know about the sales tax or VAT registration thresholds in each of those countries? If so, this gives a huge advantage to large retailers over small ones.
• deleted 8y ago
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• anoncoward111 8y ago
  More compliance and regulation for us to deal with. How about you just tax property? It doesn't move. And also, how about the state stops spending money?
  • deleted 8y ago
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  • URSpider94 8y ago
    Thankfully, we have computers! Any online sales program worth paying for includes automatic sales tax collection by jurisdiction. Note, this ruling doesn’t mean that all businesses will immediately be taxed. The law over which this suit was filed requires collection if your annual business in the state is $100,000 or >200 sales, which means you’re already doing a sizeable business.
    • supertrope 8y ago
      Compliance is far more complex than a simple look up table. Rates vary by state, county, city, school district, mass transit zone, water district. And each of these political subdivisions and the sales tax they assess changes with every ballot issue! There's a lot of faxing, forms to fill, etc. So most of the value is the vendor doing the legwork in keeping up with details and fixing corner cases. And leveraging their pre-existing trust network and economy of scale.
      • MBCook 8y ago
        Don’t forget type of product, if it’s a sales tax holiday, phase of the moon...
      • lolsal 8y ago
        Also they vary by time - taxes can be added/removed/changed on any particular item.
    • Retric 8y ago
      A computer program can't tell what category your product falls under. Does a smock qualify as an Apron and thus it's free from sales tax? What if I print 'kiss the cook' on a smock? Sales tax has a single set of rules that if you are in a specific physical location, but it becomes 50,000+ wildly inconsistent rule sets when you look nationwide.
• nlh 8y ago
  Fascinating mix of justices on this one: > The vote was 5 to 4. Justice Anthony M. Kennedy wrote the majority opinion and was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch. I can't imagine we're gonna see RBG agreeing with the Alito/Gorsuch/Thomas clan too often.
  • anoncoward111 8y ago
    If there's one thing that career DC-ites can agree on, it's that citizens and (most) corporations need to pay their pound of flesh to the government.
    • deleted 8y ago
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  • Retric 8y ago
    So how exactly is this a constitutional question where a new court can have a different opinion? Quill now harms states to a degree far greater than could have been anticipated earlier. That hardly seems like it changes the Constitution.
    • gascan 8y ago
      The Constitution uses a fair amount of fuzzy language. "Undue burden", "excessive bail", "cruel & unusual punishment", "unreasonable search & seizure", etc. Thus our perception of what is undue, excessive, cruel, or unreasonable can change, without the Constitution changing a word.
      • Retric 8y ago
        That's relevant to specific sections not the entire thing. I really don't see any applicable fuzzy language involved. As far as I can see it's purely a political question and they simply chose ahead of time to change their minds independent of any arguments given. That's a huge perversion of the entire idea of the supreme court.
• zchrykng 8y ago
  Someone needs to develop a service to make calculating and paying the sales tax easier. Something like plugin an address and it spits out the tax percentage and where to remit the payment to. Ideally the states would get together and create a centralized service so companies don't have to be mailing checks to every single county government that has a sales tax.
  • deleted 8y ago
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  • donatj 8y ago
    A number of these exist. Where I used to work we used Avalara.
  • Agathos 8y ago
    I'm pretty sure that product exists. I've heard of AvaTax; there may be others. I typed "avatax vs" in Google and it autocompleted "taxjar", so there's another I guess. Yes it would be nice if the states made it easier.
  • magduf 8y ago
    The problem with this is: how do you know what the tax rate is for the product you're selling? For instance, if you're in New Jersey and you're selling a clothing item like a pair of socks, then there's no tax. But if you're selling a fur coat, then there's full sales tax. There's different tax rates for different products, and it varies wildly across almost 10,000 different jurisdictions in the US.
    • nulagrithom 8y ago
      I wonder if this extends to county/city taxes? That would open up even more ridiculous complexity. Locally, there's a poorly structured (ie not machine-readable) spreadsheet of municipal taxes that tell you, based on _what side of the street_ you're on, whether you fall under the "mosquito district tax" that requires a small percentage more sales tax to pay for the annual spraying of mosquitoes. Without simplifying the tax codes, I'm not sure full compliance over the web is even possible...
• rossdavidh 8y ago
  I have a hunch that this will, in the end, be a massive win for large retailers vs. small ones. The task of figuring out how to calculate tax for all states is more or less the same amount of work regardless of size, which means for someone like Amazon it's more or less trivial, but for a mom-and-pop store it's a major hassle.
  • c12 8y ago
    That is an interesting take on it. I was thinking it would be more of a level playing field for small physical retailers if the larger online stores had to charge the same retail tax. My thoughts were that if you bought something from a store it would be x% more expensive with sales tax than purchasing off of amazon and having it delivered without needing to pay sales tax. This way both have to charge the same sales tax and the difference in price will simply be down to the costs relating to owning a store.
    • the_watcher 8y ago
      Amazon already collects sales taxes based on the state the order is delivered to, despite not being legally required to until now. They've already baked the compliance costs into their prices. Smaller retailers who weren't doing this will suffer, as they now need to raise prices.
    • chc 8y ago
      You seem to be conflating online vs. physical with large vs. small. There are small online merchants and large physical retailers — for example, Walmart is significantly bigger than, say, the online bakery Vegaron.
  • TheCoreh 8y ago
    Payment processing services will most likely provide a solution to do this automatically. Charging credit cards is already pretty complicated, and they abstract it away already, so it would make sense for them to provide this as an additional service.
    • 8y ago
• seibelj 8y ago
  Software engineers and entrepreneurs are extremely clever, numerous solutions will arise to integrate with all of the major ecommerce platforms to automate this. This won't be much of a burden on business. As long as regulations are clearly defined (unlike GDPR) the industry will deal. Uncertainty is always the biggest risk.
  • curun1r 8y ago
    That depends on whether this decision gets extended to the municipal-level taxes. That's where things get really complex. The geo-boundaries on the areas where taxes are enforced aren't limited to simple city boundaries. Street number or side of the street (odd/even addresses) can matter. And taxes can vary depending not just on location, but also the items purchased. It's a nightmare scenario for internet businesses. Brick-and-mortar stores deal with this by just supporting taxation for a one specific location. If internet stores are required to support all locations, it will be a huge disadvantage.
    • Analemma_ 8y ago
      > If internet stores are required to support all locations, it will be a huge disadvantage. Who said anything about internet stores being required to support all locations? Nothing is stopping an e-commerce outfit from restricting sales to a particular state, or county, or city, and simplifying their tax situation considerably. And brick-and-mortar chains with multiple locations already have to deal with these rules. I don't see the "huge disadvantage" you're talking about.
      • curun1r 8y ago
        There's a huge difference between being required to support each of your locations and being required to support each of your customer's locations. Each Walmart is able to sell to nearby customers. Asking internet retailers to collect local taxes would be like requiring Walmart to get home addresses for each of their customers and collect taxes according to that address instead of the store's address.
  • 8y ago
• hoveringcto 8y ago
  This is great news for Amazon. They already collect sales tax on everything they sell in most states (47 I think?). Now that smaller sellers (marketplace sellers, eBay, etc.) also have to collect tax, that hurts the ~8% discount built in, so why even shop around?
  • 13years 8y ago
    In addition this adds a new administrative burden to small sellers that isn't free
  • pishpash 8y ago
    How does f'ing the third-party sellers help Amazon? You know they make money from them, too right? If anything Amazon and eBay have offloaded inventory and sometimes logistics risk onto third parties and they're happy to just extract rent. They're not interested in going back to be a first-party warehouse of everything.
  • wolco 8y ago
    The problem with Amazon is that shipping can take months for non-prime users. In most cases you are better off buying from walmart if they carry the item. Sent from someone outside of the US
    • Retric 8y ago
      US sales tax is not relevant if you're not in the US.
  • throwawaylalala 8y ago
    Most of Amazons sales are through third parties, most of them dont collect.
    • hoveringcto 8y ago
      It is about 50/50.
  • irrational 8y ago
• JustSomeNobody 8y ago
  If you're going to take the onus away from the _purchaser_ to file correctly for his state and put it on the retailer, then there should be a uniform, very simplified way to correctly do that in place first.
• himom 8y ago
  First, random trade wars, raising prices for all those clueless, provincial consumers whom don’t realize what made Walmart prices cheap. Next, cuts to MedicAid for tax breaks for the very rich that are literally blood money by killing people, throwing them off health insurance and sentencing them to bankruptcy. Then their genius band of self-destructive nincompoops hurls some more arbitrary taxes onto the people whom can least afford it, i.e., anyone not rich. Is this the same, worn political cycle of “sabotage the country while blaming the other side for doing” it gambit as usual? smh
  • URSpider94 8y ago
    This “genius band of self-destructive nincompoops” is the Supreme Court, including Ruth Bader Ginsburg.” Your narrative doesn’t quite hold together.
• zdw 8y ago
  I tend to view the avoidance of paying local taxes as one of the internet's original legislation workarounds (1). The entire wholesale (you buy for resale, pay taxes when that happens) vs retail (you sell to the end user) division was abused to allow the historical "nobody pays taxes on the internet, so buy there and avoid them" logic many people used. It would have been interesting to see how differently retail sales would have grown, especially Amazon, if they were required to wrangle with local sales tax in all the places they sold into. Additionally, most locations have a Use Tax that's identical to local sales tax, so it's transferring the legal burden onto the buyer. Almost nobody does this. 1: It's not a new or internet-specific tactic either - many car dealerships advertise "No City Sales Tax!" and are barely on the other side of the city limits.
  • kevin_thibedeau 8y ago
    This wasn't invented by the internet. Interstate mail order sales delivered by railroad in the 19th century were always tax free. E-commerce inherited that system.
    • braythwayt 8y ago
      Then there was this thing called mail-order. Comic books seemed to rely on advertising mail-order novelty items as their revenue model.
• pishpash 8y ago
  This is potentially much broader though -- say you buy a domain on some registrar, do you pay taxes on that now? Every such place then needs your address, too. And going down this road, p2p barter on the internet of any kind might be subject to a tax regime soon.
  • jahewson 8y ago
    You don’t need people’s address to charge them sales tax. The business is responsible for paying the sales tax - not the customer. e.g. If I buy a sandwich I do not give my name and address to the deli.
    • rbritton 8y ago
      You need the address to charge them the _correct_ sales tax. In Washington State, the rate is based on the address where the product is delivered, so in the case of your example sandwich, that's the address of the deli.
    • hacym 8y ago
      Because you’re in the physical location, so you have to abide by that tax law. You’d need at least the zip code of someone to charge appropriate taxes for where that person physically is.
    • rstupek 8y ago
      I would need your address to know whether and how much tax to charge you
• joezydeco 8y ago
  So while the states and small businesses are busy patting themselves on their backs, Amazon will quietly build distribution points in every zip code and prepare for 1 hour shipping everywhere.
• dsfyu404ed 8y ago
  One of the nice benefits of the US system of government is that the ability to relatively easily pick and choose where to live, where to work, where to do business, etc forces the states to compete with each other to some degree. This ruling runs counter to that because using online retailers to avoid local taxes is a very low effort way to avoid local taxes or avoid funding a local government you disagree with and this ruling paves the way for states to prevent that. I have no problem with sales tax. I have a problem with states getting a cut of transactions that did not result in transfer of money to an entity within their borders. Sales taxes generally follow the location where the money was received, not where the goods were used. If I buy something at a brick and mortar store then I'm subject to the sales tax where that store is located. Why should the state of buyer be getting a cut of the transaction when the state of the merchant is the one that is responsible for the environment in which that commerce happened? If I live in MA and drive to NH and buy fireworks then MA has no claim to tax the transaction because it's obviously the environment of NH that made that commerce possible at all (you can't buy fireworks in MA). What if I live in CA and want to buy some special paint or cleaning product not for sale in CA so I drive to NV to buy it? What if I want to buy a widget and my home state taxes it and some other state subsidizes it (not necessarily at the retail level, the tax/subsidy could be anywhere in the supply chain) so much that I drive to the other state. In that case my home state still has no claim to tax the transaction since it happened out of state. What if the price is so much better elsewhere I'll be willing to pay shipping from half was across the country? How does the fact that the a 3rd party (shipping company) is responsible for getting the goods to their address change the situation? Does the fact that the transaction originates online affect anything? I have no problem paying state sales tax as long as it goes toward the state of the merchant. The state of the merchant is responsible for creating the environment that facilitated the commerce. They should be the ones getting a cut. Edit: I genuinely would like to know what the reasoning of those who disagree with me is. I see no good that can come from allowing states to exert authority on businesses outside their jurisdiction.
  • irrational 8y ago
    In what way? I choose to live in Oregon. Oregon doesn't have a sales tax. So the Supreme court ruling has no bearing on me. There is nothing stopping anyone from moving to one of the states that don't have a sales tax.
• greghendershott 8y ago
  It's already non-easy to figure out what customers want, make it, make sure they know you have it, and get them to buy it. On top of that, lately it seems more challenging not to be an oligopoly if you have customers in Europe and/or the US. I suppose this represents an opportunity for startups to help other startups to manage compliance and payment.
• xoail 8y ago
  Sales tax has one of the most complicated structures. Recently ADP built logic to tax according to counties and sub-zones (not just states and cities) to save millions on taxes for its customers. I doubt small start-ups can afford their software. It will be great if Stripe can come up with an API to simplify this. Or else, its clearly a win for large retailers and not as much for small ecommerce stores.
  • psetq 8y ago
    Automated Tax Calculations in the Orders API: https://stripe.com/docs/orders/tax-integration https://stripe.com/docs/orders/tax-integration
• deleted 8y ago
  [deleted]
• gregrata 8y ago
  Isn't this at some level taxation without representation? If I don't like how some other state is taxing, I can't alter that behaviour by voting. At least in my current state I might have a chance to do so.
  • gregrata 8y ago
    (and yeah, I get this already happens if, for example, I visit the state. Just seems to be different in this case)
  • opsroller 8y ago
    So buy from a retailer in your state.
  • DINKDINK 8y ago
    >Isn't this at some level taxation without representation? I'm not a fan of the ruling but I would expect the answer to your question would be: "No because you aren't forced to buy the product from a retailer in that state"
    • Kerrick 8y ago
      From the perspective of "the retailer is being taxed," then this _is_ taxation (of the retailer) without representation. But of course, almost every retailer passes sales taxes right along to the consumer, so "the retailer is beng taxed" is only true in a theoretical sense.
      • thebluehawk 8y ago
        And if the retailer really doesn't like it, they can just not sell to customers in the state. But we know that's not going to happen. Like you said, the customer is the one paying the taxes, and the customer is the one who votes to elect those who make the tax laws that affect him.
      • jethro_tell 8y ago
        The retailer isn't being taxed. They may collect the tax, but it's a transaction between the customer and their state.
• nkurz 8y ago
  The actual (quite readable) Supreme Court decision is here: https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf Most of the coverage I've seen downplays it, but it should be noted that the question is not whether tax is owed on these out-of-state internet purchases, but whether the retailer should be required to collect it and submit it to the state. Currently, the purchaser is (in 45 of 50 states) legally required to pay a "use tax", but most Americans (98%?) are blissfully unaware of this requirement, or have simply decided not to pay it. This is pure illegal tax evasion, based on the (correct) assumption that enforcement is lax and risk of punishment is low: https://www.npr.org/sections/money/2013/04/16/177384487/most-people-are-supposed-to-pay-this-tax https://www.npr.org/sections/money/2013/04/16/177384487/most... Rather than attempting to enforce these existing laws against their residents (unpopular and difficult), states believe it will be easier to get compliance from retailers. Until this decision, it was unconstitutional under the Commerce Clause for a state to demand this collection unless the retailer had a "substantial nexus" in the state, generally defined as a physical presence. Post-decision (pending new national laws created by Congress) all retailers are fair game. The particular South Dakota law in question has requirements as to volume of purchase, but this is not a principle of the decision. Beyond the implications for internet retailers, this is an interesting counter-example to the Supreme Court tradition of "stare decisis" (to stand by things already decided). Apparently, everyone on the court agrees that earlier decisions that produced the physical location test were poor precedent. Usually, the court is very reluctant to revisit these decisions, but in this case, the majority justices decided to abandon precedent and explicitly call the earlier decisions mistakes. The dissenting justices, despite conceding that "Bellas Hess was wrongly decided", felt that the court was better off sticking with the flawed precedent than changing things up now. Personally, whether or not this is good constitutional precedent, I think I agree with the dissenters that allowing local jurisdictions to make laws affecting far-away businesses who have no other local presense is going to lead to problems. Beyond just the burden of collecting confusing locally defined taxes, I fear about where else it leads. If a locality can enforce its local tax laws, what other custom crafted local laws can it enforce in return for access to customers? Can it require a business license? Should it be allowed to enforce its local environmental and labor standards as well? Is this a good thing?
  • 8y ago
• tafurnace 8y ago
  It seems kind of silly that the stock prices dropped for online sellers that already collect state sales tax. Is this a knee-jerk reaction or is there more to this ruling that would be cause for this?
• tvanantwerp 8y ago
  A good TL;DR from my co-worker at the Tax Foundation (https://twitter.com/jbhenchman/status/1009808187137150977 https://twitter.com/jbhenchman/status/1009808187137150977): Does your state online sales tax law have: * Safe harbor for sellers who have limited activity * No retroactivity * Adheres to SSUTA * State level admin * Provides software * Provides immunity for errors If so, upheld. If not...
• Meekro 8y ago
  If you run a SaaS company, you're affected too. You probably live in California (which doesn't consider SaaS sales-taxable), but other states do[1] so you'll have to start collecting taxes. [1] https://blog.taxjar.com/saas-sales-tax/ https://blog.taxjar.com/saas-sales-tax/
• Symmetry 8y ago
  So, if a state has a flat sales tax for all purchases then that's pretty easy to implement. But often you tax different categories of product at different rates. And there are fuzzy edges. The advertisements for Fig Netwons famously were "a cookie is just a cookie, but Newtons are fruit and cake." But is that true, legally speaking? And if it's true in one state jurisdiction does that that necessarily translate to another? How you you avoid having to figure out the tax rate for each product you carry in each of the 50 states?
  • swsieber 8y ago
    I would think the same way any national chain does it.
    • Symmetry 8y ago
      That's true but stores have an advantage in that if they mess up it's harder for regulators to notice. But I'd bet the way this actually works is that companies mess up on this all the time and regulators will yell at companies to fix it before they start resorting to fines.
  • devmunchies 8y ago
    Thats why companies like Avalara exist and are doing well. https://www.crunchbase.com/organization/avalara https://www.crunchbase.com/organization/avalara (not affiliated in any way)
• cmurf 8y ago
  The ruling gives states the power to collect state taxes, but will states require out of state retailers to also collect and remit sales tax for each county, special tax districts, and cities? It does not level the playing field if a non-local business must collect and remit sales taxes for thousands of jurisdictions while a local business must only collect and remit sales tax for their jurisdiction. It actually flips it completely around, burdening online business more than local business. As a small business owner, the sales tax remittance is super annoying, it's so byzantine. They often refuse to let small businesses use automated submittal unless you have enough volume, and if you don't, you have to hand write out the forms and send in a check. Per jurisdiction. Separate forms for state+county, and city. I'd rather see the states take back the taxing authority of cities and counties, and dole out funding from the state sales tax revenue based on population.
• jedberg 8y ago
  > Grover Norquist, president of the anti-tax group Americans for Tax Reform, said in a statement, "Today the Supreme Court said yes -- you can be taxed by politicians you do not elect and who act knowing you are powerless to object." That doesn't follow. The people being taxed are the people living in that state, and their representatives are enacting that tax. As usually Norquist is making up BS to scare people.
  • anonymous5133 8y ago
    It is so significant of a claim that brings the question...does norquist know how sales/use tax even works?
    • jedberg 8y ago
      I'm sure he does. He just likes to abuse his position as a "tax expert" to say outrageous things and people believe him. He's very good at it.
      • anonymous5133 8y ago
        He likes to throw gasoline on a fire, ill give him that.
    • spaginal 8y ago
      If a state the business doesn’t operate in imposes the requirement to collect sales tax on your business out of state, you do have a multitude of costs and issues as a small business. If the federal government wished to circumvent this with a VAT split amongst the states, that is one thing, both sane and constitutional in the face of this, but this invites a mess. First, if you are required to possess a sales tax license with that state, and potentially municipalities or jurisdictions within the state that require the fees and paperwork yearly, there is one huge cost, both in time and fees. No software will absolve your liability of this if you mess it up or dont pay the fees, you as the business own it. If you are required to file monthly or quarterly statements with the state along with any remittances, there is time and costs there. File late, file incorrectly, fees and interest on top of the tax obligation. Refuse or forget to pay the tax to a jurisdiction in backwater Alaska, time and money to wrestle with tax auditors from another state if they pursue action. How will the states negotiate auditors and tax authorities stepping all over eachother within their jurisdictions. Need to purchase extra services to juggle the spiderweb of compliance, reporting, and remittance issues, there is also more cost, whether in your additional time ($), accountants ($), or third party services ($). Keep in mind, none of these things absolve you of liability if you mess this up. He is absolutely right.
• s2g 8y ago
  > and who act knowing you are powerless to object I still have the power, mostly, to just not buy from other states.
• joeldg 8y ago
  Is it where the item is shipped to? or where you claim residency? Obviously you can open an EarthClassMail box in Oregon with it's zero sales tax and use that and then ship wherever. If it is based on something like geoip, again just set up a proxy in AWS Oregon region. Seems easy to get around.
• hulton 8y ago
  MmMmmmMmmm more taxes. Nothing feels better than the government's firm grasp around the business's scrotum. Tasty. More taxation does not necessarily equal a solution.
• kels 8y ago
  What no one is talking about here is how this would be handled, especially for a small online sellers. There are almost 10,000 tax jurisdictions (https://www.washingtonpost.com/blogs/fact-checker/post/mcconnells-claim-that-there-are-nearly-10000-tax-codes-nationwide/2013/04/26/a6b3bef4-aeaa-11e2-a986-eec837b1888b_blog.html?noredirect=on&utm_term=.c97e1f8f782e https://www.washingtonpost.com/blogs/fact-checker/post/mccon...) and you're not allowed to collect sales tax unless you register for that jurisdiction. There is also a fee collected by most jurisdictions to register and most make you send in periodic reports, even if you didn't collect any taxes for them.
  • tomrod 8y ago
    Sounds like a business opportunity.
    • johns 8y ago
      Avalara just went public and is benefitting from the ruling: https://www.geekwire.com/2018/avalara-stock-soars-following-supreme-court-e-commerce-sales-tax-decision/ https://www.geekwire.com/2018/avalara-stock-soars-following-...
      • ecommerceguy 8y ago
        Tax Jar is another. I dont have a problem paying the fees but as stated above, the filing in all jurisdictions is such a pain it will knock out alot of small sellers online. The seller will have to pay a bond in nearly every state and some cities which can add upto thousands of $$. No clue how the Chinese sellers will handle it, they probably just wont remit. I think eBay and Etsy side hustle sellers especially should be worried. This helps large internet retailers like Amazon. They have the systems in place to charge and remit sales tax for 3rd party merchants, they've just been waiting until this ruling happened.
    • notheguyouthink 8y ago
      Funny, I hear anti-competitive not business opportunity. It's a business opportunity now, but as with many government laws, in the future businesses end up depending on government forcing their markets existence. So then they lobby for the government to keep the system, even if it's out dated or badly thought out. We can't stream line anything, because entrenched businesses don't want anything to change. It makes me sad the world is this way.
• rbritton 8y ago
  Something like ten years ago now, Washington State changed their sales tax requirements in a way that required the seller to look up the four-digit rate code of the buyer, both for determining the rate to charge and later for remitting to the state. The quarterly file they provide with this information is ~150000 rows. Prior to that date, you just reported for the jurisdiction in which the business was registered. Between this and similarly far-reaching laws (e.g., GDPR), it's becoming increasingly burdensome for small players to the point where secondary services like Avalara are effectively required.
  • panda888888 8y ago
    Yep. The most annoying part is that tax jurisdictions don't correspond to ZIP codes. If they did, this would be so much easier.
    • eric_h 8y ago
      As someone who grew up in a house who's mailing address and zip code were for a different town and county from the actual physical location of the house (it was just past the border) - I can't even begin to imagine how to actually do this completely correctly.
      • delinka 8y ago
        Apple has asked me several times in the past for online purchases. I enter a ZIP code, they do some lookup and ask me to choose the county I live in from a list of three. I choose, and based on that they calculate tax.
        • CodeWriter23 8y ago
          That’s great until one has customers living in Los Angeles City vs. Los Angeles County. The city charges its own sales and use tax, I believe it’s an additional 0.25%. And then factor in “Enterprise Zones” where even different portions of cities have different tax rates.
• Aloha 8y ago
  I see a opening for a SaaS business, that can automate and outsource this, and figure out how much tax is due per transaction, and then make the payments for small businesses - its something online payment processors like stripe, for example could do too.
• mindslight 8y ago
  Yet another tenuous stretching of nexus by lawyers who have little interest in how technology works, but do have every incentive to justify increasing their own scope. This is the equivalent of telling New Hampshire stores that they're responsible for collecting Massachusetts sales tax for people coming over the border to shop. A business collecting taxes for the state they are in, even for orders shipped out of state, would make sense. But the individual states seem unwilling to do this, as it would decrease their own businesses' advantage. And that's the whole point - we should welcome competition in tax rates, wherever it can possibly even be found. Referencing New England was not arbitrary, as the ability to drive two states over to simply have dinner is a condition that holds the state governments to a modicum of honesty.
  • dsfyu404ed 8y ago
    >holds the state governments to a modicum of honesty. Coffee almost came out my nose. Governments in southern New England are only regarded as legitimate because people in MA and CT bury their heads in the sand and RI compares itself to NYC and Chicago (that's not to say that useful or good programs don't exist within these governments). >This is the equivalent of telling New Hampshire stores that they're responsible for collecting Massachusetts sales tax for people coming over the border to shop. I fully agree that state tax should follow the state of the merchant. If a state's cost of doing business (through taxes, cost of living or some other reasons) is so high that businesses that have to pay to ship their good can out compete them then it's that state's problem. If it wants a cut it's going to need to change things so that more business happens in its jurisdiction. Sales taxes are regressive anyway so they should be a race to the bottom.
    • mindslight 8y ago
      Sure, but at least MA/CT sales tax is just above 6%, while CA is pushing 9%. The bigger picture is that if one wants to live close to family and friends in New England, they're still able to move and pay 0% sales and state earned income taxes. Whereas if one wants to live close to family and friends in CA, they're completely over the barrel.
• jatsign 8y ago
  I run a little side project that sells a small software tool for $12/customer (forever, not recurring). It generates about $1200/month. Should I care about this? I use Stripe to collect payments, if it matters.
  • brlewis 8y ago
    If I were a lawyer, I'd be able to tell you with great certainty and precision what all the reasons are why you shouldn't look for an answer to that question here.
    • jatsign 8y ago
      True, but there probably aren't many lawyers who can answer the question either.
      • msbarnett 8y ago
        > True, but there probably aren't many lawyers who can answer the question either. Strange take. On the contrary, there is an entire industry of lawyers who specialize in the ability to answer precisely this kind of question.
        • delinka 8y ago
          Or are at least willing to indemnify you based on their answer should their answer prove incorrect.
  • jakejohnson 8y ago
    SaaS is taxable in some states [1], so if you have nexus in one of those states you'll want to register for a sales tax permit and collect sales tax for that state. When these states introduce thresholds similar to South Dakota, you may be obligated to collect sales tax in additional states. You can use a sales tax API with Stripe [2] to calculate sales tax before processing the payment. From there, you'll have to remit the sales tax to the state manually or use sales tax compliance software like TaxJar or Avalara. [1] https://blog.taxjar.com/saas-sales-tax/ https://blog.taxjar.com/saas-sales-tax/ [2] https://developers.taxjar.com/blog/handling-sales-tax-with-stripe/ https://developers.taxjar.com/blog/handling-sales-tax-with-s...
• bluepeter 8y ago
  Any idea how this will affect SaaS folks with no physical products?
  • jakejohnson 8y ago
    Some states consider SaaS [1] and digital products [2] taxable. Refer to the blog posts below: [1] https://blog.taxjar.com/saas-sales-tax/ https://blog.taxjar.com/saas-sales-tax/ [2] https://blog.taxjar.com/sales-tax-digital-products/ https://blog.taxjar.com/sales-tax-digital-products/
• 0x86DD_ 8y ago
  I'm Just wondering how long it will take to happen a data breach with all these tax info. what a headache.
• koolba 8y ago
  How does this work for virtual delivery of products? Do online SaaS companies have to ask for an address now as well?
• miguelrochefort 8y ago
  Why don't we get rid of taxes altogether?
• test6554 8y ago
  Ideally, there would be an API provided by the federal government that would give you a list of tax rates for any address. Where there's always a standard rate for general goods, and then any additional rates for things like school supplies or other stuff.
• Thersites 8y ago
  More friction for everyone, benefiting the entrenched leaders in all online retail spaces, looks like another step towards Balajis Network State, his Startup Society speech is amazing https://www.youtube.com/watch?v=KiLUPvUsdXg https://www.youtube.com/watch?v=KiLUPvUsdXg
• hnburnsy 8y ago
  Anyone ever feel like a vendor is collecting sales tax, but never remitting it to the taxing authority. I remember Vonage was collecting a city\state telecommunication services tax for where I lived but only the city (not the state) actually levied the tax.
• DanielBMarkham 8y ago
  This decision has effectively killed the "internet lemonade stand", where a person with a bit of web knowledge could go online and a day or two later have a store that sold something. Oh sure, you can still do that. But now it's going to all be channeled through gatekeepers that will ensure regulatory compliance. And run their own little walled gardens. Better not tick them off. (This is a nice little website you have here. Are you sure you're happy with that tweet you sent one night after heavy partying seven years ago? Be a shame if somebody made a fuss about that and started harassing your gateway provider) There should also be some interesting macro changes. At some certain price and weight points, it's probably going to be easier to buy overseas and avoid taxes, at least for some residents. I would expect international shipping to tick up a bit.
  • hnburnsy 8y ago
    Yes on international, just bought a one plus phone, came from Hong Kong, not one penny in sales tax. Quite the advantage over the iPhone x where I would have paid close to 100$ in sales tax.
    • pishpash 8y ago
      And soon you'll get hit with a 10% tariff on it, as the phone most likely originated in Shenzhen.
• blairanderson 8y ago
  IF this is as burdensome as it sounds, I think Amazon will create an even-larger competitive advantage for their marketplace and start collecting and remitting taxes for all sellers in all states. Since January 2018, Amazon has started collecting and remitting taxes for all orders / all merchants in the state of Washington and Pennsyvania, and Oklahoma will join in July. They already do it. Why wouldn't they expand that program?
• ashelmire 8y ago
  So what if you split your company: 1) A US based warehouse/shipping company. 2) An offshore entity that owns the products and sells them - but the products never leave the US. Company 2 sells the products to consumer, company 1 ships them. Company 2 is, presumably, beyond the enforceable jurisdiction of the states and therefore can't be forced to pay the taxes?
• taurath 8y ago
  What a boon for SaaS payment providers, and what a loss for both smaller and larger shops doing things in-house. We are seeing in action the consolidation and corporatization of the internet, as regulators and laws catch up from the wild west days. This is how every industry goes, but start saying goodbye to startups as they've been for the last 15 years. Already its a better deal for most workers to just work at a bigco (and has been for a while). Of course, this doesn't address whether internet sites should have to deal with state taxes (they probably should), but gosh everything is getting a heck of a lot more complicated.
• windows_tips 8y ago
  >Although the court left open the possibility that other arguments could be pressed against the South Dakota law, Kennedy’s majority opinion strongly suggested the measure was constitutional, in part because it has the $100,000 threshold and... Anyone know where the Constitution talks about this $100,000 threshold? >doesn’t try to impose retroactive taxation. Similar to how it presumably not limiting what arms can be sold makes it 'constitutional'.
  • aerotwelve 8y ago
    I haven't been able to read the opinion yet, as I'm on a phone, but often these types of thresholds or tests come from related cases that have been previously decided. Natural places to start looking in this case would be the Quill Corp. v. North Dakota or National Bellas Hess Inc. v. Illinois Department of Revenue. (If not there, following the footnotes in Kennedy's opinion will likely get you there eventually.)
• c3534l 8y ago
  The federal government was granted the power to regulate interstate commerce. They seem more than happy to regulate matters of in-state commerce, yet when it comes to actually doing a job they have legal authority to do, standards are conspicuously absent to the points where it's quickly becoming a problem for everyone.
• switchstance 8y ago
  Is this for only physical products? What about digital downloads and software services?
  • switchstance 8y ago
    Anyone?
• graeme 8y ago
  Does this affect the sale of services or info products sold online? I run an online business from Canada with American customers and am wondering if I'm affected. All digital products or services.
  • bluepeter 8y ago
    Yes.
• jimnotgym 8y ago
  It's a shame that this wont apply to us here in the 51st state. US companies will continue to drive on UK roads, use UK security and UK law and UK infrastructure to access UK consumers, and will continue to pay less tax than me.
  • DrJokepu 8y ago
    What? US companies have to pay VAT in the UK, just like anybody else.
    • jimnotgym 8y ago
      1) Consumers pay VAT not companies. Companies only collect VAT, unless you mean they are buying goods in the UK. 2) Google use EU cross border services rules to avoid charging VAT in the UK. But since it is b2b it is generally reclaimable so no gain to exchequer either way 3) Uber avoid VAT by classing their drivers as self-employed so they each run a business below the threshold for registration. This is despite being found at fault for this.[0] So there are some very large cases of US companies not charging VAT. [0]: https://goodlawproject.org/uber-case/ https://goodlawproject.org/uber-case/:
• marze 8y ago
  Shouldn’t this require an amendment to the constitution, to eliminate the constitution’s clause forbidding the taxing interstate commerce?
  • dragonwriter 8y ago
    > Shouldn’t this require an amendment to the constitution, to eliminate the constitution’s clause forbidding the taxing interstate commerce? No such clause exists; there is a clause in Art. I, Sec. 9 prohibiting state import and export duties, but a tax on sales applied equally to sales into the state regardless of whether the origin is in or out of state is not an import duty, and therefore not prohibited.
• methehack 8y ago
  So how is this going to work? Imagine you're a small online retailer and people from every state buy your stuff. Does that mean each state can send you a tax bill? Without knowing what you owe? And what if you ignore it? What recourse does the state (that you don't live in or don't own a business in) have? Seems like none or very little. Plus, the administrative burden could be quite large for any given state. And it's a crapshoot from the state's perspective, since the state has no idea which retailers are heavily used in their states. I wonder if the states will work together on collections and figuring that part out... Seems like in the short term small sellers will be ignored by the states and the large sellers will loose. Mid to long term -- who knows... Obviously, I'm guessing. And another thing... The idea that the states are "losing out" on revenue seems like a very simplistic way to look at things to me. First, the states have undoubtably already adjusted their tax structure to get the revenue they want/need. Lots of things affect that and the states adjust all the time. The weather (literally) for instance. It's not like there's an unaccounted for shortfall. Second, the retailers in question are always local to a given state and their online businesses contribute to their home state's revenue. If those businesses have the administrative burden of managing sales tax across fifty states they may contribute less to the given state's revenue. Or -- they raise prices. I think it probably hurts people starting up the most as it effectively creates a lot more regulatory risk. In any case, an economic drag as all bad regulation and regulatory uncertainty is. There's huge uncertainty here as who knows what/if congress will do. "Nothing" is a certitude for a few more months at least. Probably a few more years. Just long enough for it not to be worth creating a business around solving the problem.
• g0dg0d 8y ago
  This is going to drive so much business OUT of states with these taxes.
  • bluepeter 8y ago
    Unlikely. This is similar to an occupancy tax... why not soak out-of-state guests who don't have much choice in the matter, and won't be voting to do away with the tax. A SaaS business is going to refuse to do business w/, say, Proctor & Gamble and pay Ohio sales taxes? No way.
• astdb 8y ago
  How did catalogue/mail-order retailers handle this (presumably in business since before the Internet)?
  • jhall1468 8y ago
    This ruling overturned previous rulings that allowed mail-order businesses to avoid collecting sales tax outside of their state.
• blairanderson 8y ago
  I think Amazon will figure out a way to make things good for the end customer. - They already collect taxes properly for all cities and counties for everything THEY SELL. - They already calculate/collect/remit sales taxes for all orders(including merchant orders) shipped to Washington && Pennsylvania && Ohlahoma. For other states, they can fairly easily take on this burden if it benefits the customer.
• donbright 8y ago
  I've lived in many a city in "flyover country" and I think it's long overdue. The result of plunging sales tax revenue due to online shopping, for a lot of places, is bridges falling apart, underfunded police agencies, teachers leaving the profession because they don't want to live in poverty, schools without supplies, without music programs, without art programs, let alone STEM programs, colleges shrinking, faculty not being hired, roads going unrepaired, homeless population growing, libraries being gutted, social programs and social service agencies facing layoffs and shortages, and on and on.
  • baus 8y ago
    All because of online shopping? It is difficult to believe some of these aren't the result of changing demographics and/or economic forces beyond online shopping
  • opo 8y ago
    >... is bridges falling apart, underfunded police agencies, teachers leaving the profession because they don't want to live in poverty, schools without supplies, without music programs, without art programs, let alone STEM programs, colleges shrinking, faculty not being hired, roads going unrepaired, homeless population growing, libraries being gutted, social programs and social service agencies facing layoffs and shortages, and on and on. Non one can seriously claim the lack of sales tax revenue from out of state shippers has that big of an impact on state and local revenue. According to the article: >...Broader taxing power will let state and local governments collect an extra $8 billion to $23 billion a year, according to various estimates. As a comparison in 2012: >...Tax revenues increased in all but five states in fiscal year 2012, with some recording noticeable gains. In all, states collected $794.6 billion, a record-high that represents a 13 percent increase from 2010 totals http://www.governing.com/gov-data/state-tax-revenue-data.html http://www.governing.com/gov-data/state-tax-revenue-data.htm... So even using the high estimates of 23 billion, that would be a small fraction of total state/local tax revenue. The extra few percent of revenue from taxing out of state businesses isn't going to solve the huge list of problems you listed (nor is it obvious that the money will be spend on any of those issues). The real question with this ruling is how much it will cost all the Internet retailers to comply with the law.
• foxylad 8y ago
  Will foreign companies who sell internet services to US customers have to collect state sales taxes? This would be a serious nightmare. We already limit our sales to Canada because if we go over a relatively low threshold, we'd have to collect and remit state sales tax for about 12 territories. Having to do the same for 11,000 US jurisdictions would instantly stop foreign entrants into the US market.
• foxylad 8y ago
  This is a huge opportunity for payment services to value-add. Providing automatic sales tax calculation, collection and remittance (including another couple of percent for their trouble) is a no-brainer.
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• PrimHelios 8y ago
  Fucking RIP literally every internet store that doesn't have the ability to register for 10 thousand (literally) different fucking tax jurisdictions.
• nickjj 8y ago
  Unless I'm totally misunderstanding this, doesn't this mean the following: If you sell a few thousand digital goods (let's say video courses or ebooks) to people spread across 30 states in the US over the year, you will be responsible to collect sales tax and do the paperwork to pay each of those 30 states sales tax every quarter (or per year)? When dealing with a low priced item, it's not difficult to accumulate a high number of transactions. Not only are those fees a huge financial burden but I imagine the act of filing all of that is going to kill any motivation to do anything. For me, I'll end up either stop doing what I love (creating educational content to help other developers while making enough $ to live on) or move to a different country with a better tax system.
• SubiculumCode 8y ago
  Maybe the problem is sales tax. Its regressive. Its complicated in the multi-jurisdictional context.
  • techsin101 8y ago
    Exactly
• bcheung 8y ago
  Does this mean companies need to file 50 different state returns? How can any company other than a mega-corporation be expected to handle that level of bureaucracy? Even if their are firms that pop up to handle compliance it's probably going to cost a fortune. This will put a huge strain on small companies forcing many of them out of business.
• doggydogs94 8y ago
  It’s about time for internet sales tax. Just how do local firms stay in business when internet based businesses can undercut them by 5-10% automatically.
• techsin101 8y ago
  There should be no sales tax to begin with, Or income tax or property tax.... Most taxes can be simplified and reduced to a 1 simple wealth tax. If you look at this matters with some attention you realize system works against poor... Only income taxes are progressive. And Rich don't get richer because of their income. Whether you're a trillion dollar company or about to make your first sale to pay rent you owe same amout of sales tax. Wether you live in NYC and pay 3k in rent or live in Alaska you pay same federal income tax. .... Wealth tax is way simpler... It let's govt tax wealth/income on its last form. Like a fraction in reduced form, or equation that's been simplified. Easier to conduct business, easier to start business, easier to pay taxes, easier to be poor. Much much fair to all. Capital tax is not same as wealth tax. In fact if you have wealth tax there is no need for capital tax. I suggest 4% wealth tax and remove pretty much all other taxes. If your wealth is 200 billion, first year you pay 8 billion. If your wealth is $5000 then you pay only.. $200, doesn't matter if you earned 400k. If you didn't accquire assets you spent it and some else have that now so they will pay it...if you bought stuff then your wealth isn't really 5k
  • gnicholas 8y ago
    This disincentives savings and is in many ways the opposite of VAT taxes, which many tax scholars hold out as one of the most efficient ways to raise revenue without distorting desirable economic behavior.
    • techsin101 8y ago
      The incentive to be wealthy is far more greater than 4% tax on wealth could be a disincentive. Beauty of this is you only pay if you are rich, not if you are poor or even if you earn a lot and still have lot of expenses (medical, live in nyc, or have children etc)
      • gnicholas 8y ago
        A perpetual 4% tax on wealth is a great disincentive to saving. It's like compounding interest, but in reverse. I would be curious to know if any politician or scholar has ever proposed relying on a single tax like this? I studied tax in law school and practiced as a tax lawyer for the better part of a decade, and I have never heard it mentioned. I'm not up on all the latest developments since I left law to build a startup, and I'd be curious to know if things are leaning in this direction now.
• nickjj 8y ago
  I don't understand how this can be enforced for selling digital goods online. Right now you can process a credit card transaction with only needing the number, exp date and CVC. You do not need the card holder's billing address. You don't even need the card holder's name. So what's stopping someone from buying your digital item (let's say an ebook or course where you use Stripe / PayPal to handle the transaction) but put in a fake address, or an address they don't live in. I don't think Stripe / PayPal will halt the transaction. Instead they might flag it as questionable but the transaction will still go through. In this case the business owner has no idea where the customer actually lives to tax them properly and the customer has no incentive to put a real address in because they are not getting something delivered to an address.
• mkempe 8y ago
  How does this apply to traditional mail-order catalogues? I thought their no-sales-tax orders were the model for e-commerce.