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Read the story... "...South Dakota, whose law requires retailers with more than $100,000 in sales or 200 transactions annually in the state to pay a 4.5 percen

Read the story... "...South Dakota, whose law requires retailers with more than $100,000 in sales or 200 transactions annually in the state to pay a 4.5 percent tax on purchases" "..Kennedy’s majority opinion strongly suggested the measure was constitutional, in part because it has the $100,000 threshold and doesn’t try to impose retroactive taxation." A clear bar is set for what is covered here and what is a burden.

mlindner 8y ago
$100,000 in sales is a very low bar. That's equivalent to a business with a single employee, the owner, and they're probably not making a livable wage yet.
- nemo44x 8y ago
  I think that's the point. It's supplemental income for someone - not a real business.
- tgb 8y ago
  That's not their entire sales, that's their entire sales to people in South Dakota.
  - Obi_Juan_Kenobi 8y ago
    If you do business nationally, with a million in revenue, $100k for South Dakota might not seem too bad, but $100k for California or Texas starts to feel really claustrophobic. It's an interesting precedent.
    - markdown 8y ago
      It's $100k or 200 transactions. 200 transactions is just 17 customers with a monthly subscription.
- ajross 8y ago
  $100k of South Dakota revenue is either an almost exclusively local single-owner business or a much larger internet shop. But regardless, that kind of number is a full time job. If you're selling over the internet and making a full time job out of it, you can handle computing sales tax for SD residents. Yes, it's burdensome. Yes, it would be good to have a simpler federal framework for this. No, it's not the end of the world. "No tax on the internet" sort of made sense in 1997 when it was a new and exciting market and we wanted to see what would happen. Now, it's just a giant subsidy for Amazon. We can put that money to better uses.
  - ballenf 8y ago
    I think you've got it kind of backwards. The absence of tax collection is what allowed Amazon to become Amazon and this change is now a barrier to a new entity challenging Amazon. Amazon voluntarily started collecting taxes nationwide without a blip to its bottom line. The new law will in fact put Amazon's first-party goods in parity with 3rd party sales. Third party sellers could often undercut Amazon's own pricing due to the disparity. This tax change is a huge win for Amazon on many fronts. Any protests they make to the contrary are strategic, imo.
    - Eliezer 8y ago
      The stock market disagrees with you.
    - jjeaff 8y ago
      It's a win for a part of Amazon's business, the part that stocks and sells its own products and is already collecting taxes. It's a loss for the other, larger side that gets paid to stock and ship products from 3rd parties who by and large do not collect tax. This makes it tougher for these small businesses to compete and since Amazon takes 15% of those sales AND makes money off them for fulfillment services.
    - smallnamespace 8y ago
      All this would do is create an opportunity for a SaaS startup or existing payments provider to offer collecting the correct amount of tax for you. I personally worked on this sort of problem for a large company; most of the work is in figuring out what the business logic ought to be; turning it into code is (largely) trivial. Figuring out the logic only needs to be done once, and the payments provider is the natural place for it to live.
- megy 8y ago
  For one state, so 50x that, which is $5m.
alfredallan1 8y ago
This is probably a very simple question, buy will someone please clarify: $100K in sales - does that mean: 1) $100K worth of (3rd party, for an ecommerce platform) product sold via the platform, or 2) $100K revenue accruing to the platform, as the commission earned on sales of whatever amount.
tallanvor 8y ago
Here's the problem with that $100k/200 transaction law. Small businesses have to do one of three things: 1) Assume that they will hit one of those limits and collect tax from the start. Once they've told the customer that they've been charged tax, they will have to file anyway. I don't see anything that says the first $100k/200 transactions are exempt from the requirement. And if you hit the limits this year, you'll have to collect taxes no matter what from my reading of the bill. 2) Keep track of how much has been sold to South Dakota residents and stop selling if they hit the limits. 3) Give up and tell South Dakota residents that they're out of luck and that a state with less than 900k residents isn't worth putting up with the filing hassles. If I'm not sure if my business will take off, I'm probably not interesting in paying taxjar or someone else $5000/year just in their filing fees (to make sure I'm covered), so I'm most likely to go with option 3 and start by limiting sales to my home state, those with no sales tax, and those that aren't going to try and make me collect the sales tax for them.
- verelo 8y ago
  This ultimately comes down to the fact that each state in the US behaves like an individual country in many ways, especially when we talk about taxation. It doesn’t jive well with the current lay of the Internet, and it will be interesting to see the reaction here. In Australia a single GST was introduced (long ago, July 1 2000) and it’s a big simplification for online transactions. The catch: everyone would need to agree to a number.
  - nsnick 8y ago
    "jibe well"
    - verelo 8y ago
      Thanks, too long back to correct it now :(

mlindner 8y ago

$100,000 in sales is a very low bar. That's equivalent to a business with a single employee, the owner, and they're probably not making a livable wage yet.

nemo44x 8y ago
I think that's the point. It's supplemental income for someone - not a real business.
tgb 8y ago
That's not their entire sales, that's their entire sales to people in South Dakota.
- Obi_Juan_Kenobi 8y ago
  If you do business nationally, with a million in revenue, $100k for South Dakota might not seem too bad, but $100k for California or Texas starts to feel really claustrophobic. It's an interesting precedent.
  - markdown 8y ago
    It's $100k or 200 transactions. 200 transactions is just 17 customers with a monthly subscription.
ajross 8y ago
$100k of South Dakota revenue is either an almost exclusively local single-owner business or a much larger internet shop. But regardless, that kind of number is a full time job. If you're selling over the internet and making a full time job out of it, you can handle computing sales tax for SD residents. Yes, it's burdensome. Yes, it would be good to have a simpler federal framework for this. No, it's not the end of the world. "No tax on the internet" sort of made sense in 1997 when it was a new and exciting market and we wanted to see what would happen. Now, it's just a giant subsidy for Amazon. We can put that money to better uses.
- ballenf 8y ago
  I think you've got it kind of backwards. The absence of tax collection is what allowed Amazon to become Amazon and this change is now a barrier to a new entity challenging Amazon. Amazon voluntarily started collecting taxes nationwide without a blip to its bottom line. The new law will in fact put Amazon's first-party goods in parity with 3rd party sales. Third party sellers could often undercut Amazon's own pricing due to the disparity. This tax change is a huge win for Amazon on many fronts. Any protests they make to the contrary are strategic, imo.
  - Eliezer 8y ago
    The stock market disagrees with you.
  - jjeaff 8y ago
    It's a win for a part of Amazon's business, the part that stocks and sells its own products and is already collecting taxes. It's a loss for the other, larger side that gets paid to stock and ship products from 3rd parties who by and large do not collect tax. This makes it tougher for these small businesses to compete and since Amazon takes 15% of those sales AND makes money off them for fulfillment services.
  - smallnamespace 8y ago
    All this would do is create an opportunity for a SaaS startup or existing payments provider to offer collecting the correct amount of tax for you. I personally worked on this sort of problem for a large company; most of the work is in figuring out what the business logic ought to be; turning it into code is (largely) trivial. Figuring out the logic only needs to be done once, and the payments provider is the natural place for it to live.
megy 8y ago
For one state, so 50x that, which is $5m.

alfredallan1 8y ago

This is probably a very simple question, buy will someone please clarify: $100K in sales - does that mean: 1) $100K worth of (3rd party, for an ecommerce platform) product sold via the platform, or 2) $100K revenue accruing to the platform, as the commission earned on sales of whatever amount.

tallanvor 8y ago

Here's the problem with that $100k/200 transaction law. Small businesses have to do one of three things: 1) Assume that they will hit one of those limits and collect tax from the start. Once they've told the customer that they've been charged tax, they will have to file anyway. I don't see anything that says the first $100k/200 transactions are exempt from the requirement. And if you hit the limits this year, you'll have to collect taxes no matter what from my reading of the bill. 2) Keep track of how much has been sold to South Dakota residents and stop selling if they hit the limits. 3) Give up and tell South Dakota residents that they're out of luck and that a state with less than 900k residents isn't worth putting up with the filing hassles. If I'm not sure if my business will take off, I'm probably not interesting in paying taxjar or someone else $5000/year just in their filing fees (to make sure I'm covered), so I'm most likely to go with option 3 and start by limiting sales to my home state, those with no sales tax, and those that aren't going to try and make me collect the sales tax for them.

verelo 8y ago
This ultimately comes down to the fact that each state in the US behaves like an individual country in many ways, especially when we talk about taxation. It doesn’t jive well with the current lay of the Internet, and it will be interesting to see the reaction here. In Australia a single GST was introduced (long ago, July 1 2000) and it’s a big simplification for online transactions. The catch: everyone would need to agree to a number.
- nsnick 8y ago
  "jibe well"
  - verelo 8y ago
    Thanks, too long back to correct it now :(