U.S. Supreme Court Rules States Can Force eShoppers to Pay Sales Tax

[engine]

The U.S. Supreme Court has ruled that States can require e-sales tax collection. This is quite a big change and could, ultimately, once enacted, affect every online buyer in the U.S.

The ruling is likely to lead other states to try to collect sales tax on purchases from out-of-state online businesses more aggressively. It also likely will lead to many consumers paying more at the online checkout. Forty-five of the 50 states impose sales taxes.

Most states would need to pass legislation before seeking to collect the additional taxes, although some have already enacted laws or regulations similar to South Dakota's.

[cnbc.com...]

[NickMNS]

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System: The following message was spliced on to this thread from: https://www.webmasterworld.com/ecommerce/4907495.htm [webmasterworld.com] by engine - 4:48 pm on Jun 21, 2018 (utc +1)

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[wnyc.org...]

The Supreme Court ruled Thursday that online sellers may collect state sales taxes on consumer purchases. The decision overruled a decades-old precedent that had protected out-of-state sellers from being required to collect such taxes.

[lucy24]

Huh. I didn't realize this had been taken to the Supreme Court, since I live in one of those states where sales tax has been collected from out-of-state businesses for, I dunno, a few years now.

Can't help but think it would have been more fun if {major online retailer} had instantly called the states’ bluff by declaring “We do not ship to {list of states that currently assess sales tax}.” And then wait for residents of those states to raise a stink with their respective legislators. Well, too late now.

[not2easy]

{major online retailer} has been collecting state sales tax in states where they have a physical presence. Even if the buyer is not in that state; if it ships within one of "their" states, they collect. Looks like now they will be collecting for all states.

This is something that many B&M merchants have been hoping for, if only because it reduces the incentive to shop online to avoid local taxes. It won't deal with city/county sales tax, but it may marginally improve local B&M sales in some cases.

It won't make physical shopping/parking/traffic any more pleasant.

[engine]

Yeah, it's going to rumble on a little longer, but, it's probably inevitable.

[Leosghost]

Been saying here ( for years ) that the USA should just use a variety of VAT, applied at the same rate for the same goods or services nationwide ( in different rate "bands" depending on the goods and or services, if necessary ) and have done with it, seems a step nearer with this ruling..states and towns can get "theirs" via property taxes ( paid yearly ) or residence taxes ( paid yearly )..or taxes on water, electricity or other "utilities" applied locally...really would simplify everything, would make for a more level playing field between B&M and "online"..and everyone would know who was really to blame for price hikes, or high prices, "due to taxes" or price differences, discrepancies between locations.

[lgn1]

Now more reasons for Amazon to build it's new Headquarters in Canada.

1) US customs has no mandate to collect state or city taxes.

2) $800 duty free entry on Chinese manufactured goods entering USA from Canada (bypassing Trade War risks) for most consumer purchases.

3) Legal Recreational Cannabis for Adults (effective Oct 17, 2018) :)

[lucy24]

state sales tax in states where they have a physical presence

States have always been allowed to do that. What's new in recent years is assessing sales tax in states where the vendor doesn’t have a physical presence (but where the buyer lives, and would therefore otherwise be paying tax on the purchase).

applied at the same rate for the same goods or services nationwide

It’s often hard to get Europeans to grasp that the US is not one homogenous blob; almost everything varies by state. (The same applies to Canada. I think there are even some things that Canada handles on the provincial level while they’re federal in the US.) To take the most extreme example, murder is not ordinarily a Federal crime. Sales taxes vary not only by state but often by county and even town. The great advantage to VAT is that it's invisible, so people don’t realize they’re paying an enormous regressive tax. (In particular, I don't think any state allows groceries to be taxed.)

[Marshall]

Bookkeeping nightmare.

[Webwork]

Bookkeeping nightmare

Credit card processors to the rescue . . for a small fee.

[tangor]

Putting things right. Others might disagree, but the user is supposed to pay the taxes voluntarily. The free ride will soon be over, too little, too late as many B&Ms simply could not compete on an un-evel playing field.

[tangor]

As for accounting and nightmare fears, baloney. Database of tax rates is not only doable, probably already exists. For most this will be a plug and play update to their carts. Where the PROBLEM exists is in the reporting and payment side and that's not onerous, just more than one has been doing. Mail the check. (Don't even have to do that given today's digital transfers).

[glakes]

Credit card processors to the rescue . . for a small fee.

Would be the easiest solution since they are capturing the zip code, customer info along with the money.

The advantage goes to sellers in big marketplaces where they already collect and remit tax. Might drive a lot of small businesses into places like Amazon, eBay, etc. to avoid the compliance headache.

[keyplyr]

I've never had a problem paying taxes. I do get upset when those funds are spent foolishly.

[Shaddows]

I do get upset when those funds are spent foolishly.

Yeah, and I'm in a perpetual state of upset.

[Leosghost]

^^^often referred to as the 51st state.

[tangor]

More concerned with the folks spending my tax money. Most of them are idiots, but I can't say that in public. Wouldn't be nice, Sigh.

[engine]

Back on topic.

This has huge implications for online business, and, obviously, consumers, and some argue it's too little, too late. Well, it may be both of those, but, if it's going to happen, and the "cheap" ride for online purchases is coming to an end.

[keyplyr]

One scenario I'm familiar with is... some online marketplace businesses at {major online retailer} in neighboring Arizona (and other states) were benefiting from California buyers since those buyers weren't taxed when they bought outside California, which has been taxing in-state online sales for a couple years.

California has always enjoyed a robust economy and has a lot of shopping dollars. That milk cow will soon be neutralized.

[glakes]

Well, it may be both of those, but, if it's going to happen, and the "cheap" ride for online purchases is coming to an end.

That depends how it's implemented. For example, there are a lot of Chinese sellers on ebay. If those sellers are not required to remit taxes from sales, or collected directly by ebay, tax can be avoided. Even if the big marketplaces are required to collect/remit taxes on behalf of seller's transactions with Americans, it would not apply to places like AliExpress, Gear Best, and the other popular offshore shopping portals that cater to Americans. If people can afford to wait a week or two, my guess is they will still be able to avoid taxes when all is said and done. Since most of what Americans are buying is produced overseas, it's not as if the quality would be different. We do this as well, when purchasing a basic disposable shop item, but not to avoid taxes. The item in question, made by an American company, costs $40 but can be bought in China for just over $8 and shipped to the states for free. If you're going through 20+ of these a week, the savings add up.

[Rlilly]

Soon each county in each state will want you to start collecting for them.. There are 62 counties in NYS and each one picks thier own sales tax to collect. We supposed to charge buyers in that country the county tax rate.

So one day every quarter, one will have to make 3007 payments to every county in the USA.

[Marshall]

So one day every quarter, one will have to make 3007 payments to every county in the USA.

This is what I was referring to as a bookkeeping nightmare. I have an e-commerce site I run as a hobby and currently only pay tax on purchases made in my state, Pennsylvania. And then, just that alone, I have to worry about which county the purchase is from. 2 of the 67 counties tax differently. I cannot imagine how much time and money would be involved paying multiple states/counties, even with automation. For someone running a small hobby site like me, that may be the proverbial nail in the coffin of online sales. Good thing I have a day job.

As much as I hate having the federal government involved, it would be simpler to apply a uniform "online" tax collected by one agency then divided between the states based on say population. I can see where to do otherwise would drive a lot of small online retailers out of business, or lie about their earnings if there is a break point before you are required to pay the tax. But then, when do you establish that? Do you collect the sales tax as you go along and if you do not reach the break point, keep the money? Or not collect it and if you reach the break point, pay it out of your own pocket? Or, as I said, lie about your sales. Bottom line, there are going to be losers and like so many other instances, it will be the little guy.

[tangor]

If users have to pay the tax THEIR LOCATION HAS IN PLACE, no biggie. Always been there so nothing new TO THEM. However HIGH TAX STATES like CA NY will squeal like stuck ... whatevers-- that tax free ride will come to a screeching halt.

Reality is all buyers have always had to report their out of state purchases to their state authorities and PAY THAT SALES TAX. Few ever have, hence the uneven playing field. If that part gets squared away and it will, we are back to business as usual. The user will ALWAYS look for the best price +tax, and that will become even more important when based against their OWN STATES sales tax liability.

Not rocket science.

[motorhaven]

Tangor+, no that has not always been. Paying the state sales tax on out of state purchases is called a use tax, and not all states have it. Some states do require you to pay them a use tax on out of state purchases, some don't.

And it is rocket science, almost. Some states exempt certain items from sales tax, others don't, some charge the tax on shipping in addition to the product. Some charge sales tax not only on goods but services, others don't.

This has not been a free ride, it's been a constitutional ride. Remember, this is a reversal ruling. Like not having to pay sales tax on something bought out of the country, it's not a matter or a free ride or not, it's a matter of sovereign jurisdiction.

[motorhaven]

Also, I can foresee many people in the USA buying from Canadia and Mexican online retailers in the near future. Avoid the taxes and the long wait on shipping. Maybe its time to invest on just over the border warehousing!

[keyplyr]

I can foresee many people in the USA buying from Canadia and Mexican

Not likely since the POTUS just levied steep tariffs on them both.

[tangor]

This is not a place to debate tax law(s). States with use tax, sales, tax, property tax, personal inventory tax, etc .... a state will get the money one way or the other.

That said, a bing search developed six (6) downloadable tables for sales tax in the usa and territories broken down to state, county, and city levels because some cities add a bit as well.

The free ride has been the customer not doing their civic duty and reporting their taxable items to their jurisdictions, AND the other free loader: the web site operator or internet facing business.

Every year since 1998 the same topic has been brought up in congress and finally ended up at SCOTUS. The handwriting has been on the wall for nearly two decades. Whew!

Plugging in a table for places you sell to (or the entire country and territories) is not rocket science.

[Webwork]

six (6) downloadable tables for sales tax in the usa and territories broken down to state, county, and city levels

I didn't look but did all those tables include data detailing what products are taxed and what products aren't taxed? That's the BIG CHALLENGE. A business goes from having to know 50 or 150 tax rates multiplied by the number of products taxed / not taxed at that rate. There may also be a number of "fine points" to know about the classification of certain products: ~"looks like dairy product but acts like . . . ".

It will be interesting. It's definitely do-able . . at a price / cost for keeping product data current.

[keyplyr]

I've been using Paypal carts for the last couple years. They've always kept up with who to add state tax and who not to. For my needs, they're more reasonable than other payments services, plus their Privacy Policy [paypal.com] is GDPR compliant.

[tangor]

detailing what products are taxed and what products aren't taxed?

Most (I would say all, but an absolute statement like that would probably be wrong somewhere!) states have no tax on food items. If you are not selling mangos and chopped liver you probably won't have to collect taxes for remit. Some medical items are exempt, but that's an entirely different category and would have to be explored more carefully ... there's a difference between asprin and viagra. :) All other products (tv, car, dental floss, bar soap, spaceships, etc) are subject to tax reporting.

The big difference with the recent SCOTUS decision is that states can demand ACROSS STATE LINES the collection of taxes the CONSUMER IN THEIR STATE WHO RECEIVES THAT GOOD is required to remit TO THE STATE. That's the biggie, and one we knew was coming since 1998.

Aside: the lack of this requirement since the 1990's for on line purchases has led to the desolation and in some cases utter destruction of brick and mortar shops across the USA. Why? Human nature being what it is, the BUYER thumbs their nose to THEIR HOME STATE and claims they got a deal "with no tax!". But that's a different thread and probably not worth investing a lot of time (as IR1-2). Duh!