5 ms·

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._

by 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.
    - codehawke 5y ago
      Luckily, my home state of Virginia has exclusions. From what I understand, until congress acts, more lawsuits need to happen from companies challenging states to pay these bullshit taxes. VAT is also a terrible burden.
      - gamblor956 5y ago
        The trend in courts and legislatures, both in the US and in Europe and the ROW, is toward customer-based tax sourcing and away from seller-based sourcing. You can thank Amazon for abusing seller-based sourcing for this shift, though it has actually been a decades-long process that began before most people on this forum were born. Amazon simply accelerated the transition.
    - R0b0t1 5y ago
      This is my point. It happens with brick and mortar stores, too. The MO/KS border has a large population buildup. It's totally normal to shop in the state that has the best tax rate for your goods. If you apply the ecommerce logic to this, you need to have people show ID at stores so the store can apply the right tax rate. It seems to me the seller's state has just as much claim to sales tax as the buyer's. The seller is potentially making use of business development credits etc, etc, originating in their state. This is an issue that falls under the federal government.

by 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.
  - codehawke 5y ago
    Luckily, my home state of Virginia has exclusions. From what I understand, until congress acts, more lawsuits need to happen from companies challenging states to pay these bullshit taxes. VAT is also a terrible burden.
    - gamblor956 5y ago
      The trend in courts and legislatures, both in the US and in Europe and the ROW, is toward customer-based tax sourcing and away from seller-based sourcing. You can thank Amazon for abusing seller-based sourcing for this shift, though it has actually been a decades-long process that began before most people on this forum were born. Amazon simply accelerated the transition.
  - R0b0t1 5y ago
    This is my point. It happens with brick and mortar stores, too. The MO/KS border has a large population buildup. It's totally normal to shop in the state that has the best tax rate for your goods. If you apply the ecommerce logic to this, you need to have people show ID at stores so the store can apply the right tax rate. It seems to me the seller's state has just as much claim to sales tax as the buyer's. The seller is potentially making use of business development credits etc, etc, originating in their state. This is an issue that falls under the federal government.