SoylentNews is people
SoylentNews
The U.S. Supreme Court ruled Thursday that states can require retailers to collect and remit sales taxes on out-of-state purchases. The 5-to-4 decision reversed decades-old decisions that protected out-of-state vendors from sales tax obligations unless the vendor had a physical presence in the state.
Those earlier decisions, one half a century ago, the other a quarter-century ago, date back to a time when mail-order sales were relatively small and online sales were all but nonexistent. As the justices acknowledged Thursday, however, the court back then "could not have envisioned" a world in which e-commerce sales have revolutionized the dynamics of the national economy.
Writing for the five-justice majority, Justice Anthony Kennedy said that the previous decisions "were flawed," and in the modern economy, they "create, rather than resolve market distortions." In today's context, he said, the physical presence rule is "an extraordinary imposition by the judiciary on the states' authority to collect taxes and perform critical public functions."
Furthermore, Kennedy said, the previous decisions effectively functioned as a "judicially-created tax shelter" for out-of-state retailers, and put local businesses at a "competitive disadvantage."
The problems with these earlier decisions, Kennedy said, were made "all the more egregious" by technological innovation. "The Internet's prevalence and power have changed the dynamics of the national economy," he wrote in the majority opinion.
[...] The decision was a victory for South Dakota, which, like some other states, has no income tax and relies on sales taxes to fund most of the state's services. Because of dramatic fall-offs in state sales taxes, the state in 2016 enacted a law to test the physical presence rule. Three large online vendors, Wayfair, Newegg, and Overstock, challenged the law in court, and lost on Thursday.
[...] "The chessboard just looks a lot different now," said Stephanie Martz, general counsel for the National Retail Federation, which includes 18,000 businesses large and small. "Now our members are going to be able to figure out how to construct their businesses without worrying about whether putting a distribution center on this side of a state line or that side of the state line will result in a different tax implication."
While the court made clear that the states do not have unlimited power to require sales tax collection, "The court blessed South Dakota's law," said Carl Davis, research director for the Institute of Taxation and Economic policy.
The law specifically protects small businesses from collecting sales taxes if they have less than $100,000 in sales or fewer than 200 transactions in the state. The state also provides sales tax collection software for free for any business that wants it, and using that software immunizes the business from audit liability. Perhaps most importantly, the state law does not permit sales tax collection for past purchases, meaning that businesses don't have to worry about a huge tax bill that they never anticipated.
(Score: 2) by bob_super on Friday June 22 2018, @08:35PM (13 children)
The people who sell you stuff in a brick-and-mortar store (or a multi-location chain) have to figure it out. Why would the internet sellers be excused, just because they cry that it's too hard ? Can't handle it ? stop selling there !
Of course, some jurisdiction may find that websites stop shipping to them because their tax system is too obscure, which would, if politicians were logical, result in them simplifying things for everyone ...
One solution to lessen the pain is to stop being stupid, and follow the rest of the civilized countries in showing the customer tax-included prices, which correspond to the average tax expected to be paid for the product. That removes the real-time requirement, and you can figure out remittances over the next few days/weeks based on actual shipping location. If your business absolutely depends on a +/-2% local discrepancy, you're already in trouble anyway.
(Score: 4, Insightful) by Anonymous Coward on Friday June 22 2018, @08:56PM (7 children)
Yes, those stores do, but there is one huge simplification they enjoy that an internet retailer does not enjoy.
Those brick and mortar stores exist in only one locality and only have to collect sales taxes according to the rules of that one locality.
Now, yes, that one localities rules may be a byzantine maze of twisty passages, that all look the same, but it is only one set of rules.
Now multiply that one rule-set by 50 (for 50 states [*]) and then by 100 (for 100 counties in each of 50 states [*]) and then by 20 (for 20 separate local cites/towns/etc. in each county [*]) and you now have a morass of 100,000+ different tax rule-sets, any one of which can change on the whim of a politician, without warning, and with no notification to anyone that they are changing. And all 100,000 of which can result in fines (or worse) for failing to follow them to the satisfaction of the auditor who just stuck his nose deep up your accounting books.
That's the problem with internet stores collecting sales tax. It rapidly devolves into a nightmare mess of too many twisty passages, all alike.
I predict the outcome of this decision will be a handful of companies cropping up offering the service of monitoring these 100,000+ taxing localities for changes and keeping their master rule-set in sync with the political winds of the day in each locality, all for a fee (likely percentage based) of sales. Which in effect will simply amount to yet another tax for the customer to pay. Only this time, it is to a "tax-processor" company instead of a local government office.
* - Yes, I know not states or local govt's charge a sales tax, but I don't have all of those rules in front of me now, so this is a simplifying approximation
(Score: 2) by bob_super on Friday June 22 2018, @09:03PM (6 children)
Two things, which should have been obvious before you went redundant:
1) Physical stores can have many locations across many tax areas, and they keep track. Car dealerships around here (CA) have to figure out your tax based on your home already. It's not like it's a new concept. It's been going on for decades, pretty much a couple centuries. "On a computer" should actually be the easiest part.
2) Nobody is forcing anyone to sell their wares in places where they don't understand the tax rate.
(Score: 0, Flamebait) by Anonymous Coward on Friday June 22 2018, @09:32PM
The AC is right. Your points are stupid.
(Score: 1, Interesting) by Anonymous Coward on Friday June 22 2018, @09:33PM
Almost never as many as online stores. I'm more worried about small businesses; the large ones will be able to handle this just fine.
(Score: 1, Insightful) by Anonymous Coward on Friday June 22 2018, @09:53PM
Yes, but each store only considers one set of rules, that of the specific locality where that physical store is located.
If you travel from AZ to WA and make a purchase at a Seattle Best Buy, you get charged Seattle, WA sales tax, not your home AZ sales tax, in the Best Buy physical store.
So that physical store in Seattle WA only has to worry about Seattle WA sales tax rules.
You are often responsible for paying AZ their "double dip" sales tax when you return to AZ with your Seattle WA Best Buy booty. Few folks actually pay this part, however.
But, the Seattle WA Best Buy does not need to know anything about the sales tax rules in your home state of AZ.
Not so with internet retailers. They are now going to be expected to know that you are presently in AZ, and charge you tax against current AZ rules, while simultaneously knowing all the other rules for all the other localities, plus the location of each purchaser, so they can charge each purchaser the local tax rules of that purchaser.
This is where it begins to become untenable. Tracking one rule-set per physical store, based upon the physical locality of the physical store, is trivial vs. knowing all of the rule-sets in every possible taxing locality, and then tracking the location of the purchaser to match up the proper twisty rule-set to the correct purchaser location, is the nearly untenable task. Espically for small startup operators. Which is why the big boys (Amazon, etc.) supported this. It puts a huge barrier up against the formation of the next "Amazon" that could grow to rival the current "Amazon". The current Amazon is big enough they can afford to keep track of all the rules. The small internet startup (who could become the next Amazon if allowed to take root and grow) will find it much harder to take root and grow to challenge the current Amazon.
(Score: 4, Insightful) by VLM on Friday June 22 2018, @09:55PM (1 child)
Because they usually only have one tax rate, which varies slowly. Even high school kids can be taught to add 5.5% or whatever to every bill, or just hit the "tax" key on the register which is very easy to program with a constant rate.
Internet businesses serving a large area, especially small ones, will have a different tax rate and different remitting authority for quite possibly literally every single customer.
If you have 100K customers my state DoR will let your AS/400 minicomputer talk directly to theirs which I'm sure is very convenient for everyone except the AS/400 sysprogs, anything smaller and they're like F-off do it by hand on their website. So that's what I do. Its actually not that hard, although if I had to do it 49 times for other states I'd be getting pissed off. Its possibly the weirdest website I've ever used. They do have on-shore tech support although they only work 9-5 for password lockouts. My favorite feature is I have to submit annually (almost wrote anally) at my small scale and my account is locked after 6 months without a login, hilarious every friggin time. So I log in at the start and end of summer to reset the clock, just did that recently in fact. Looking forward to doing that 49 more times, gonna be such fun.
(Score: 0) by Anonymous Coward on Saturday June 23 2018, @11:58PM
It is function of the people who own the addresses... USPS. Check an address and USPS will tell you the rate. Ship with FedEX or UPS or USPS and tell them the value, they will check the address and tell you the rate and amount, and added to your the shipping "cost". Then they are collecting the tax, since they are actually the holding the product and giving it to the consumer. simple and easy.
PS: dod this on AS/400 that was validting the address with USPS and have a tax table from a big 4 company, with taxes rate by city, county and zip, updated monthly. We were good at it, the states' auditors all 50 states and terrioiries gave us flying colors. We ven built in error corrections, in cases of areas being re-zipped or rename - average simular names in near same zip for exmaple. We tested every address at least once every 90 days to update any zip+4 or new names, hence new tax rate possible. To us and the law... the "cash register" was in the truck in front of house. Just like any delivery truck.
Mostly good. screwed up on MTAs like Washington State that follow elementary school districts. But in the end it is, owner of the land that affects the tax rate. The land is know by addresses and those are owned by USPS.
OH. about 3 man-months to general case. Even if USPS was to handle it fully (and they should!
Federal Land do not pay State taxes
State Land do not pay County taxes
County Land do not pay City taxes
So in Arkansas where a city incorpates all the surrounding land. If the land is own by a "higher" authority... City Sale tax do not apply.
(Score: 1) by khallow on Sunday June 24 2018, @01:00AM
While plenty of people have pointed out the problems with thing #1, there's a huge problem with thing #2 as well. Namely, you completely ignore the problem and why it is a problem. It's like observing that people weren't forced to run through the death maze of the Cold War era Berlin Wall, and thus concluding that the Berlin Wall was fine (ignoring details like the 140 deaths from people killed either through cold-blooded murder or accident, or the fact that East Germany would have completely depopulated, if they didn't have this policy of killing escapees).
These many, obscure tax districts act as an unnatural barrier to entry for any would-be mail order business. It's great for Amazon to have such obstacles in place. It's not great for everyone else.
(Score: 0) by Anonymous Coward on Friday June 22 2018, @08:59PM (4 children)
Yes, but each physical location has to only figure out one set of tax rules per location. Internet sellers have to know the rules for all potential areas in the country, even if only to figure out which places aren't worth it to them to sell to.
Besides, is it legal to refuse to sell to, say, Chicago, Illinois, while you do sell to Springfield, Illinois? I honestly don't know.
(Score: 2) by bob_super on Friday June 22 2018, @09:08PM (3 children)
> is it legal to refuse to sell to, say, Chicago, Illinois, while you do sell to Springfield, Illinois? I honestly don't know.
Stores do it all the time. Go back twenty years and try to get a mattress store to deliver 5 miles, let alone 200 miles away !
(Score: 0) by Anonymous Coward on Friday June 22 2018, @09:56PM
Deliver != Sale
If you are willing to cart the mattress away on top of your car (or in your truck) they do not care where you live, and will sell you as many mattresses as you wish to buy. All of the sales, however, will be charged the sales tax rules of the locality within which the physical mattress store resides. They don't have to worry about the oddball tax rules at the location where you plan to haul and install the mattress.
(Score: 0) by Anonymous Coward on Saturday June 23 2018, @12:32AM (1 child)
Wow. I've been reading your posts in this thread, and I must say there is nothing super about you, Bob.
(Score: 0) by Anonymous Coward on Saturday June 23 2018, @01:34AM
I think you are confused. Super is his _last_ name, came from his family (at least conceptually). If he was pretending to be "super", he would pre-pend the word, ala, Super_Bob, like SuperMan.