States can now collect online sales taxes

[Marvin the Martian]

This is going to be interesting. Some of you may sell on the internet. I understand there are 12,000 taxing districts in the US. How on earth are ma and pa businesses going to keep track of sales taxes for 12,000 districts?

The article I read did not mention the details of the ruling. I will find it interesting how the court explains changing the law after two previous courts ruled the other way.

I'm not saying this court was wrong, but I do think it is going to hurt small business. Amazon has tax professionals by the bucket I would imagine.

 

[IUCrazy2]

This is going to be interesting. Some of you may sell on the internet. I understand there are 12,000 taxing districts in the US. How on earth are ma and pa businesses going to keep track of sales taxes for 12,000 districts?

The article I read did not mention the details of the ruling. I will find it interesting how the court explains changing the law after two previous courts ruled the other way.

I'm not saying this court was wrong, but I do think it is going to hurt small business. Amazon has tax professionals by the bucket I would imagine.

Exempt businesses below a certain revenue threshold from having to comply with the state sales tax.

 

[Marvin the Martian]

Exempt businesses below a certain revenue threshold from having to comply with the state sales tax.

I see Indiana requires a "sales tax nexus". But doesn't this ruling mean Indiana could charge for every sale made to the state? Here is the nexus definition:

• Owned or leased tangible property
• An employee or independent sales representative in the state
• Indiana inventories
• Third parties that install, repair or service property that is sold to Indiana customers.

 

[IUCrazy2]

I see Indiana requires a "sales tax nexus". But doesn't this ruling mean Indiana could charge for every sale made to the state? Here is the nexus definition:

• Owned or leased tangible property
• An employee or independent sales representative in the state
• Indiana inventories
• Third parties that install, repair or service property that is sold to Indiana customers.

Not every sale. I don't think Indiana law requires Mom and Pop seller in California to collect Indiana sales tax. I do not think this would necessarily change that. This is more in response to companies like Amazon I think.

Requiring every Mom and Pop to comply with every taxing district is an undue burden IMO.

It isn't fair.

 

[Aloha Hoosier]

This is going to be interesting. Some of you may sell on the internet. I understand there are 12,000 taxing districts in the US. How on earth are ma and pa businesses going to keep track of sales taxes for 12,000 districts?

The article I read did not mention the details of the ruling. I will find it interesting how the court explains changing the law after two previous courts ruled the other way.

I'm not saying this court was wrong, but I do think it is going to hurt small business. Amazon has tax professionals by the bucket I would imagine.

It becomes a barrier to entry for small businesses.

 

[Fro]

The banks/payment app should be able to provide that service to small businesses. I don't think many sales are a wad of cash going through the mail.

 

[Marvin the Martian]

The banks/payment app should be able to provide that service to small businesses. I don't think many sales are a wad of cash going through the mail.

That is probably true, even someone running their own site probably has a vendor supplied program for processing payments. On the other hand, I'm sure the vendor will charge for it.

 

[Stuffshot]

I see Indiana requires a "sales tax nexus". But doesn't this ruling mean Indiana could charge for every sale made to the state? Here is the nexus definition:

• Owned or leased tangible property
• An employee or independent sales representative in the state
• Indiana inventories
• Third parties that install, repair or service property that is sold to Indiana customers.

There's more to it than that. The Indiana Department of Revenue says:

"Generally, any type of business entity (individual, partnership, corporation, etc.) that makes purchases of tangible personal property is subject to use tax unless it previously paid at least a seven percent sales tax on the purchase to the vendor. Use tax can be thought of as a mirror of the sales tax. Both our sales tax and use tax rates are seven percent.

Use tax is due on property brought into Indiana for use, storage or consumption, unless the Indiana Code (IC 6-2.5-5) contains an applicable exemption for your purchase. If you paid at least seven percent sales tax at the time of purchase, you do not owe a use tax. However, if you did not pay at least a seven percent sales tax, you may owe use tax." (My underlining).

Here's the link: https://www.in.gov/dor/4006.htm

Now, if you focus on the part I underlined and compare it to the Department of Revenue's instructions for reporting use tax liability on the instructions for Form IT-40, I don't think you'll see the underlined part anywhere. In other words, the Indiana Department of Revenue instructs individual taxpayers (not just businesses) to report (and pay tax on) ALL out-of-state purchases regardless whether the product was "brought into Indiana for use, storage or consumption."

 

[Noodle]

Now, if you focus on the part I underlined and compare it to the Department of Revenue's instructions for reporting use tax liability on the instructions for Form IT-40, I don't think you'll see the underlined part anywhere. In other words, the Indiana Department of Revenue instructs individual taxpayers (not just businesses) to report (and pay tax on) ALL out-of-state purchases regardless whether the product was "brought into Indiana for use, storage or consumption."

That is true in a lot of states, including Ohio.

 

[Marvin the Martian]

That is true in a lot of states, including Ohio.

And I am sure that's why states want sales taxes, it is going to be far easier to collect. I wonder what percentage of people give an accurate accounting as it now is?

 

[Noodle]

And I am sure that's why states want sales taxes, it is going to be far easier to collect. I wonder what percentage of people give an accurate accounting as it now is?

Of course it is. And it's because hardly anyone pays the use tax, particularly individuals. Why do you think that states make retailers collect the sales tax for them at the cash register?

 

[Marvin the Martian]

Of course it is. And it's because hardly anyone pays the use tax, particularly individuals. Why do you think that states make retailers collect the sales tax for them at the cash register?

Same reason my employer collects my income tax instead of relying on me.

 

[Noodle]

Same reason my employer collects my income tax instead of relying on me.

Because the IRS doesn't trust you?

 

[TheOriginalHappyGoat]

I've always felt the answer to this was obvious: make online retailers collect sales tax for the state they are in, just like they were physical businesses. There would be no undue burden then.

 

[Marvin the Martian]

I've always felt the answer to this was obvious: make online retailers collect sales tax for the state they are in, just like they were physical businesses. There would be no undue burden then.

This just in, all online retailers have moved to Delaware, Montana, Oregon, and New Hampshire.

 

[TheOriginalHappyGoat]

This just in, all online retailers have moved to Delaware, Montana, Oregon, and New Hampshire.

Not the mom and pops we are worried about.

 

[Quix0te]

I understand there are 12,000 taxing districts in the US. How on earth are ma and pa businesses going to keep track of sales taxes for 12,000 districts?
.

I believe the SC ruling applies only to state sales taxes, so we're talking 50 districts, not 12,000.

 

[i'vegotwinners]

This is going to be interesting. Some of you may sell on the internet. I understand there are 12,000 taxing districts in the US. How on earth are ma and pa businesses going to keep track of sales taxes for 12,000 districts?

The article I read did not mention the details of the ruling. I will find it interesting how the court explains changing the law after two previous courts ruled the other way.

I'm not saying this court was wrong, but I do think it is going to hurt small business. Amazon has tax professionals by the bucket I would imagine.

no doubt a third party will offer a site/service that small sellers can use for this, but they will also take a cut on top of the tax cut.

better option would be to get rid of all sales taxes in every state, to put local merchants on a more even playing field with online merchants.

not going to happen though. they entire purpose of sales taxes, gas taxes, tolls, and user fees, is to move the govt revenue system from progressive to regressive taxes.

 

[Stuffshot]

This just in, all online retailers have moved to Delaware, Montana, Oregon, and New Hampshire.

And Seattle/washington, right?

 

[Stuffshot]

That is true in a lot of states, including Ohio.

Below is how the Indiana Department of Revenue blatantly and incorrectly misdescribes an individual's use tax liability for out-of-state purchases. This is from the official instructions for the 2017 Form IT-40. Note that it says nothing about taxes being due only for products brought back for use or consumption in Indiana -- instead it claims the use tax is applicable to all products purchased out-of-state.

"Line 1 – Use Tax on Internet, Mail Order and/or Out-Of-State Purchases
If you have purchased items while you were outside Indiana, through the mail (for instance, by catalog or o er through the mail), through radio or television advertising and/or over the Internet, these purchases may be subject to Indiana sales and use tax, if sales tax was not paid at the time of purchase. is tax, called “use” tax, is gured at 7 percent (.07).
When you make purchases from a company in Indiana, that company is responsible for collecting the Indiana sales tax from you. When you make purchases from an out-of-state company, you are responsible for making sure the use tax is paid. Either the out-of-state company collects the tax from you, or you must pay the tax directly to the State of Indiana.
Complete the worksheet below to gure your tax. If you paid sales tax to the state where the item was originally purchased, you are allowed a credit against your Indiana use tax for an amount paid up to 7 percent."

 

[MonroeCity]

This is going to be interesting. Some of you may sell on the internet. I understand there are 12,000 taxing districts in the US. How on earth are ma and pa businesses going to keep track of sales taxes for 12,000 districts?

The article I read did not mention the details of the ruling. I will find it interesting how the court explains changing the law after two previous courts ruled the other way.

I'm not saying this court was wrong, but I do think it is going to hurt small business. Amazon has tax professionals by the bucket I would imagine.

I think this is a dangerous decision as it opens the door for state overreach at the expense of small online businesses and consumers. Congress can fix this problem by codifying the physical presence standard. They need to fix this issue without enacting a federal Internet sales tax, which unfortunately I could see happening.

 

[Marvin the Martian]

I think this is a dangerous decision as it opens the door for state overreach at the expense of small online businesses and consumers. Congress can fix this problem by codifying the physical presence standard. They need to fix this issue without enacting a federal Internet sales tax, which unfortunately I could see happening.

I agree. I think what this is the death of is the old mail order. My buddy that runs an online business still does some. Some people still don't like to use online payment systems. Online, I am sure the vendors handling credit card payments will come up with something. But now to have to track each check's origin, know when the states require payment and what rate, it becomes a lot more. At least it seems it does to me.

And someone above mentions it only impacts state taxes, this is true. But I would be curious how a county tax would be held unconstitutional. Now I think most county taxes are food and beverage, as well as hotel, so I'm not sure how many county sales taxes there are. But one would think somewhere such a tax exists.

 

[Rockfish1]

Here is the decision, the concurrences, and the dissent. Justice Gorsuch's concurrence explains what this was about:

Our dormant commerce cases usually prevent States from discriminating between in-state and out-of-state firms. National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967), and Quill Corp. v. North Dakota, 504 U. S. 298 (1992), do just the opposite. For years they have enforced a judicially created tax break for out-of-state Internet and mail-order firms at the expense of in-state brick-and-mortar rivals. As Justice White recognized 26 years ago, judges have no authority to construct a discriminatory “tax shelter” like this. The Court is right to correct the mistake and I am pleased to join its opinion.
​

As Justice Kennedy explains, the law includes a number of protections for small businesses:

South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability.
​

Interestingly, all nine justices agreed that there was no rational basis for the "physical presence" standard of Quill and that online retailers should no longer be exempt from sales tax. The four dissenters, however, concluded that the Court should leave it to Congress to fix this -- even though the Court had created the problem in the first place.

By the way, Indiana passed legislation substantially identical to South Dakota's. As contemplated by the Act, enforcement of that law has been stayed pending the Supreme Court's decision in Wayfair. Presumably that stay will soon be coming to an end, and online retailers will start collecting and remitting Indiana's 7 percent tax on sales made to Indiana residents.

 

[Marvin the Martian]

Here is the decision, the concurrences, and the dissent. Justice Gorsuch's concurrence explains what this was about:

Our dormant commerce cases usually prevent States from discriminating between in-state and out-of-state firms. National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967), and Quill Corp. v. North Dakota, 504 U. S. 298 (1992), do just the opposite. For years they have enforced a judicially created tax break for out-of-state Internet and mail-order firms at the expense of in-state brick-and-mortar rivals. As Justice White recognized 26 years ago, judges have no authority to construct a discriminatory “tax shelter” like this. The Court is right to correct the mistake and I am pleased to join its opinion.
​

As Justice Kennedy explains, the law includes a number of protections for small businesses:

South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability.
​

Interestingly, all nine justices agreed that there was no rational basis for the "physical presence" standard of Quill and that online retailers should no longer be exempt from sales tax. The four dissenters, however, concluded that the Court should leave it to Congress to fix this -- even though the Court had created the problem in the first place.

By the way, Indiana passed legislation substantially identical to South Dakota's. As contemplated by the Act, enforcement of that law has been stayed pending the Supreme Court's decision in Wayfair. Presumably that stay will soon be coming to an end, and online retailers will start collecting and remitting Indiana's 7 percent tax on sales made to Indiana residents.

I found Indiana's requirement, it is " $100,000 worth of business or more than 200 separate transactions in the state in a year". That seems reasonable. We don't know if states will get more aggressive (down toward zero tolerance) but this sort of limit is good.

 

[Marvin the Martian]

I spoke to my buddy that does online sales, he thought the 200 transactions was awfully low. For him that could easily be $2000 worth of sales. Which creates another problem, let's say I never have sold more than 100 transactions to Wyoming before, and suddenly I become popular and sell 101 in December. I probably would not have collected sales tax never expecting to go over the 200 limit.

I think the national sales tax may be the way to go.

 

[i'vegotwinners]

Here is the decision, the concurrences, and the dissent. Justice Gorsuch's concurrence explains what this was about:

Our dormant commerce cases usually prevent States from discriminating between in-state and out-of-state firms. National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967), and Quill Corp. v. North Dakota, 504 U. S. 298 (1992), do just the opposite. For years they have enforced a judicially created tax break for out-of-state Internet and mail-order firms at the expense of in-state brick-and-mortar rivals. As Justice White recognized 26 years ago, judges have no authority to construct a discriminatory “tax shelter” like this. The Court is right to correct the mistake and I am pleased to join its opinion.
​

As Justice Kennedy explains, the law includes a number of protections for small businesses:

South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability.
​

Interestingly, all nine justices agreed that there was no rational basis for the "physical presence" standard of Quill and that online retailers should no longer be exempt from sales tax. The four dissenters, however, concluded that the Court should leave it to Congress to fix this -- even though the Court had created the problem in the first place.

By the way, Indiana passed legislation substantially identical to South Dakota's. As contemplated by the Act, enforcement of that law has been stayed pending the Supreme Court's decision in Wayfair. Presumably that stay will soon be coming to an end, and online retailers will start collecting and remitting Indiana's 7 percent tax on sales made to Indiana residents.

Joe Voter thinks packing courts with conservative judges is about abortion or gay rights.

might be to Joe Voter, but to those packing the courts, it's about packing the courts with judges who'll virtually always side with big business and big govt vs the consumer or the citizenry.

the consumer/citizen is like zero for a hundred, in the last 100 big business vs the consumer and big govt vs the citizenry cases.