5 ms·

Last time I looked into this, it seemed to me like in the US you would need a separate license for each state you collect sales tax in (before collecting any ta

Last time I looked into this, it seemed to me like in the US you would need a separate license for each state you collect sales tax in (before collecting any tax)... and naturally, each state has a different licensing process, and some charge fees to register. For small independent projects, it seemed like kind of a nightmare.

kevin_thibedeau 5y ago
You don't have to collect tax for states you don't have a presence in. They have no jurisdiction outside their borders.
- scubakid 5y ago
  I think due to South Dakota v. Wayfair, states now have more power to define what constitutes "nexus"... so there are all these special rules and thresholds now to keep track of (different for every state) that define whether you have economic nexus and need to collect sales tax there. If you hit the threshold and/or other rules apply, you're obligated to collect sales tax... but of course you can't do this until you have secured a license in that state. This was my read on the situation, but if I'm missing something definitely let me know.
- comex 5y ago
  That used to be the law, but is no longer as of 2018: https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.
  - R0b0t1 5y ago
    A bad ruling. To let it stand, the more reasonable interpretation is that the purchaser has to remit sales tax to their own state. But it may not stand on further challenge. For example, why should the state the items are leaving not be entitled to sales tax?
    - gamblor956 5y ago
      The law already was that the purchaser should remit use tax to the state for purchasers from out-of-state vendors. But compliance was basically non-existent; most people didn't even know that they owed use tax on such sales, much less what rate would apply. Sales tax is basically use tax, but with the burden of compliance placed on the seller. As for why the sellers' state is not entitled to sales tax: in the old-time days, pre-Amazon, this was how many (but not all) tax jurisdictions determined sales tax. (For example, CO's sales tax regime pre-Wayfair used to use the seller's address to determine tax rates.) But the rise of Amazon and online sales meant that sales tax would go to a few jurisdictions where the sellers were located, rather than be spread out where the buyers were located. As sales tax pays for things like roads, etc., that these remote sellers used, many jurisdictions thought this was unfair, and moved to change sales tax sourcing to destination-based sourcing (i.e., to taxing based on the customer's location). And in the Wayfair decision, SCOTUS said this was acceptable. (At the national and international level, destination-based sourcing has been the law for decades, and has been part of America's tax treaties dating back to at least the 1970s.)
      - jxramos 5y ago
        I was just wondering about this. I recently purchased something online, and when I got the email receipt it had all the state and county and city level tax breakdown. I thought to myself, was this tax being charged due to the billing or shipping address? Apparently it was the shipping address when I asked.
      - briandear 5y ago
        > But compliance was basically non-existent; most people didn't even know that they owed use tax on such sales As a business owner, I would ask myself “how is this my problem?” If a stare has a problem with residents not complying with a tax, I am not sure why a business in another state should care. If I buy a product from China, are they required to collect sales taxes for Montana? Of course not. So not sure why a business located in a sovereign US state has any obligation to follow laws of some other state in which they don’t operate. It’s the purchaser that has the relationship with their local state, not the seller. The Wayfair decision was ridiculous. The Quill decision it overturned was the correct answer in terms of interpreting the Interstate Commerce Clause. Interestingly, Amazon and other large e-commerce companies don’t have a problem with collecting sales taxes everywhere because their compliance costs are trivial as a proportion of revenue.

kevin_thibedeau 5y ago

You don't have to collect tax for states you don't have a presence in. They have no jurisdiction outside their borders.

scubakid 5y ago
I think due to South Dakota v. Wayfair, states now have more power to define what constitutes "nexus"... so there are all these special rules and thresholds now to keep track of (different for every state) that define whether you have economic nexus and need to collect sales tax there. If you hit the threshold and/or other rules apply, you're obligated to collect sales tax... but of course you can't do this until you have secured a license in that state. This was my read on the situation, but if I'm missing something definitely let me know.
comex 5y ago
That used to be the law, but is no longer as of 2018: https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.
- R0b0t1 5y ago
  A bad ruling. To let it stand, the more reasonable interpretation is that the purchaser has to remit sales tax to their own state. But it may not stand on further challenge. For example, why should the state the items are leaving not be entitled to sales tax?
  - gamblor956 5y ago
    The law already was that the purchaser should remit use tax to the state for purchasers from out-of-state vendors. But compliance was basically non-existent; most people didn't even know that they owed use tax on such sales, much less what rate would apply. Sales tax is basically use tax, but with the burden of compliance placed on the seller. As for why the sellers' state is not entitled to sales tax: in the old-time days, pre-Amazon, this was how many (but not all) tax jurisdictions determined sales tax. (For example, CO's sales tax regime pre-Wayfair used to use the seller's address to determine tax rates.) But the rise of Amazon and online sales meant that sales tax would go to a few jurisdictions where the sellers were located, rather than be spread out where the buyers were located. As sales tax pays for things like roads, etc., that these remote sellers used, many jurisdictions thought this was unfair, and moved to change sales tax sourcing to destination-based sourcing (i.e., to taxing based on the customer's location). And in the Wayfair decision, SCOTUS said this was acceptable. (At the national and international level, destination-based sourcing has been the law for decades, and has been part of America's tax treaties dating back to at least the 1970s.)
    - jxramos 5y ago
      I was just wondering about this. I recently purchased something online, and when I got the email receipt it had all the state and county and city level tax breakdown. I thought to myself, was this tax being charged due to the billing or shipping address? Apparently it was the shipping address when I asked.
    - briandear 5y ago
      > But compliance was basically non-existent; most people didn't even know that they owed use tax on such sales As a business owner, I would ask myself “how is this my problem?” If a stare has a problem with residents not complying with a tax, I am not sure why a business in another state should care. If I buy a product from China, are they required to collect sales taxes for Montana? Of course not. So not sure why a business located in a sovereign US state has any obligation to follow laws of some other state in which they don’t operate. It’s the purchaser that has the relationship with their local state, not the seller. The Wayfair decision was ridiculous. The Quill decision it overturned was the correct answer in terms of interpreting the Interstate Commerce Clause. Interestingly, Amazon and other large e-commerce companies don’t have a problem with collecting sales taxes everywhere because their compliance costs are trivial as a proportion of revenue.