American Sellers: Supreme Court Ruled Today (6/21/18) On States Collecting Taxes on Online Sales

Calibrick

See http://money.cnn.com/2018/06/21/technology/wayfair-vs-south-dakota/index.html. This ruling paves the way for any state to set future law to collect taxes on any sales made to their state, so keep an eye out in coming months re any changes in your own states. This overturned the 1992 law we all work against now, where you only collect taxes for sales in your own state/district/city.

Note, NO changes yet. This paves the way, so keep an eye out with your own BOE. Hopefully we won't run into a State A you must collect/report theirs, State B no, State C only if you live/work in it, etc... that could get crazy. My biggest hope is that the governors all agree to limit this to businesses over X sales/year, which would then exclude small businesses like ours.

Stay tuned!

R,
Calibrick

Graham

Yeah eBay are flipping out over this... I wonder why?

There are already enough oddities state by state, for example Palmetto State Armory in South Carolina are required to collect sales tax in Georgia, even tho they have no physical presence, because GA officials seem to set an arbitrary threshold for "too much business"

This could turn into an administrative nightmare, not to mention even more government employees.

I fear this may eventually turn into a federal purchase tax :( "to make it easier for small businesses"

Graham

I didn't realize it was already such a mess. 31 states already have some form of taxation on goods sold on line from out of state.

If South Dakota is anything to go by, not good news for some of us...

"South Dakota's law applies only to those businesses with more than $100,000 in sales, OR at least 200 transactions, in the state each year"

Current federal reporting by PayPal is $20,000 AND 200+ sales

If they use the 200+ a few of us will be affected.

On the positive side, this may help B&M businesses - maybe

Hoddie

Sounds like something similar to what we have in the EU. Each country sets its own VAT rates and if a retailer reaches a certain threshold of sales to any particular country (€100,000 last time I checked), they must begin charging that country's VAT rate and pass it on to that country's tax authorities. If similar limits are set across the US, this change shouldn't really affect any business other than those who already pay for decent accounting software or firm, which will surely be able to deal with it.

fitbricks

It would be too easy to simply have a business rate and a national VAT at purchase. ;))

Calibrick

So here's where I scratch my head... for our business, we don't actually KNOW if we will sell 200 orders to say South Dakota (or if other states borrow that model, GA, WV, whatever) - until AFTER the orders are sold. But we didn't charge customers tax as we didn't know we'd sell 200 orders that year for that state. I haven't seen anything about "begin to charge", SD implies you are expected to have taxed them.

This oughta be interesting to watch and sort out!

cameron.thorne

There are something like 12,000 sales tax jurisdictions in the US. The way I understand this ruling, and with the changes that many of those tax authorities are likely to adopt in the wake of this ruling, US-based sellers are going to have a massive compliance burden. South Dakota might exempt under 200 orders, but what do each of the other 11,999 jurisdictions do?

I suspect marketplace facilitators like BrickOwl, et al. are going to have to offer integrated tax platform seller tools the same way they offer integrated payment gateway seller tools, or this won't be manageable at all.

Let's hope US Congress steps in and establishes a reasonable minimum that applies nationwide so the small sellers can safely ignore interstate sales tax without exposing themselves to liability.

Calibrick

One of the rare times I *want* congress to step in! ;-)