Thought this might be of interest to some of you regarding a follow-up to the recent Supreme Court case involving Wayfair in South Dakota. Here's a link to a recent article in accountingToday that talks about the possible ramifications of the ruling and potential reactions from other states going forward.
https://www.accountingtoday.com/news...les-of-wayfair
The interesting thing here to note is that under this Remote Seller's Law, originally enacted by South Dakota and effective back on May 1, 2016, is that their threshold and definition of a large online retailer/seller is anyone with more than $100,000 in sales to South Dakota residents/businesses in a current or prior year OR 200 or more transactions with residents/businesses in a current or prior year. Hitting $100K in sales may be a little tough for smaller sellers but, having over 200 transactions may not be so tough, especially for anyone selling a lot of smaller value cards. This puts outfits like PWCC and Probstein right in their cross hairs as 200 transactions a year only amounts to about 16-17 sales a month, which is really not that many and will likely impact quite a few sellers on Ebay.
Also, this recent Supreme Court ruling is not the final action. The case actually went back to South Dakota courts then for final resolution, so the actual law has not yet officially been put into full effect yet and still has to get over some additional constitutional hurdles. Here's another article talking about the history of this and where it now stands. Still, this should start being enforced sooner than later I would think as the South Dakota courts had already aligned with the state on the legality of this. Thankfully it sounded like South Dakota was only going to enforce this going forward, and not put any added burden on businesses by trying to make the law retroactive as trying to go back and collect sales tax after the fact is virtually impossible in my opinion.
https://www.salestaxinstitute.com/re...constitutional
Another interesting question is what exactly counts as a "transaction" towards the 200 per year threshold. If someone buys from a catalog or off a website from a seller like say Kit Young or Wayne Varner, i would think the total number of things they purchased at the same time would be bundled and sold altogether as one transaction. However, if such a seller also sells items on Ebay, which I'm pretty sure both of these guys I mentioned do, I'm not sure if each individual listing being sold on Ebay would be considered as a separate transaction or not, even if someone purchased several items all at once and then bundled and paid for them through checkout in one payment. I'm guessing that is something the South Dakota sales tax department will have yet to determine and opine on.
Also, sellers have to remember that if they sell through catalogs, websites, Ebay, or via other means, the $100K and 200 transaction thresholds are for total sales and activity through all those venues added together, not just Ebay sales and transactions. Ebay sales and transactions are probably the most visible and easiest for the states to go look at though, which is another reason Ebay is very unhappy about this because they are so big and visible to the states. Sellers trying to get around this may just reduce their activity on Ebay, or get off it entirely, so South Dakota doesn't come looking for them. Ebay knows this will likely have some negative impact for them going forward, just how much, no one knows yet. Also, it will possibly put Ebay in the middle if the South Dakota sales tax department comes asking them for information on sales into their state, or detail on seller's activity such as sales amounts or the number of transactions with SD residents/businesses. They won't have much of a choice and will likely have to comply with any such requests, so this will probably cost them additional time and effort as well.
This could become real interesting, and not necessarily in a good way!!!
08-07-2018, 10:04 AM
Similar Threads
Threaded Mode