Supreme Court overturns Quill, subjects all internet transactions to sales tax

[tschock]

One wonders....

Understood that as a resident of a state with a sales tax, it was always my obligation to report unpaid taxes from out-of-state purchases to the state, but it is now making all internet sellers (barring thresholds), as agents of the state, to now collect and supply those out-of-state taxes to the state. This will put undue burden more on small businesses rather than larger ones.

• As many sellers opt out of selling outside the US, will they now decide to opt out of selling to certain state residents (with overly burdensome/intricate regulations)?
  
• Will a new balance shift back to brick-and-mortar merchants for certain items? For example, would a Wilmington, DE B&M merchant have an unfair advantage for selling furniture since they don't have the same burden to even process paperwork for out-of-state buyers?

[barrysloate]

Every year I send $39 to Early American Coppers, an organization of large cent collectors, for my yearly dues. This week they sent me an invoice for $42.46. No, the rates didn't go up, but they did add $3.46 tax to my bill. Imagine paying sales tax on membership dues. My first experience with the new law.

[tschock]

Originally Posted by barrysloate

Every year I send $39 to Early American Coppers, an organization of large cent collectors, for my yearly dues. This week they sent me an invoice for $42.46. No, the rates didn't go up, but they did add $3.46 tax to my bill. Imagine paying sales tax on membership dues. My first experience with the new law.

Here's your second. In some states, dues and other services are subject to sales tax.

[barrysloate]

Originally Posted by tschock

Here's your second. In some states, dues and other services are subject to sales tax.

We'll soon find out who charges and who doesn't.

[BobC]

Originally Posted by barrysloate

every year i send $39 to early american coppers, an organization of large cent collectors, for my yearly dues. This week they sent me an invoice for $42.46. No, the rates didn't go up, but they did add $3.46 tax to my bill. Imagine paying sales tax on membership dues. My first experience with the new law.

And it is not just rates for sales tax that may vary by state and jurisdiction, each states has different rules and things they may tax for sales tax purposes, like dues in the state in Barry resides in.

I'm in Ohio and sales tax here is also on things like snow removal, exterminator services, physical fitness facility services, laundry and dry cleanings service, etc. The one fairly constant though among all states collecting sales tax is that it is collected on the sale of tangible personnel property to final users/consumers. In other words, baseball cards you buy as a collector are always going to be subject to sales tax. If you buy cards as a dealer and intend to resell them, your purchase would then not be subject to sales tax but, you would instead have to charge sales tax to whomever you sell those cards to, unless it is also another dealer going to resell them.

I've heard of people that will print off a sales tax exemption certificate from online and fill it out and then give it to an auction house or dealer they are buying cards from so as not to have to pay the sales tax by claiming they are a dealer themselves and going to resell the cards. Good luck if they ever get caught.

[Exhibitman]

Originally Posted by tschock

One wonders....

Understood that as a resident of a state with a sales tax, it was always my obligation to report unpaid taxes from out-of-state purchases to the state, but it is now making all internet sellers (barring thresholds), as agents of the state, to now collect and supply those out-of-state taxes to the state. This will put undue burden more on small businesses rather than larger ones.

I disagree. As a small business owner I already am registered with the state for sales and use tax reporting. I am already required to collect, report and remit sales/use tax. As it stands right now I have to track different types of sales. It will be easier just to slap a tax on every sale than to differentiate intrastate and interstate sales. My tax return just got a lot simpler. Or it will once the states react to the ruling and rejigger their rules, forms and practices to meet the new standard.

[tschock]

Originally Posted by Exhibitman

I disagree. As a small business owner I already am registered with the state for sales and use tax reporting. I am already required to collect, report and remit sales/use tax. As it stands right now I have to track different types of sales. It will be easier just to slap a tax on every sale than to differentiate intrastate and interstate sales. My tax return just got a lot simpler. Or it will once the states react to the ruling and rejigger their rules, forms and practices to meet the new standard.

Sincerely confused by this response. You said THE state. What about other states with different rates? I guess the bottom line is we have to wait and see what the changes will be. Though rather than simplify things, it seems the government tends to generally make things more complicated than need be.

[BobC]

Originally Posted by tschock

Sincerely confused by this response. You said THE state. What about other states with different rates? I guess the bottom line is we have to wait and see what the changes will be. Though rather than simplify things, it seems the government tends to generally make things more complicated than need be.

What Adam is likely referring to is that he is currently registered and licensed to collect and remit sales tax in the state in which he and his business reside. So if he had sales to customers in his home state where he is located and has nexus, he properly collects the sales tax and sends it in. Under the prior law, sales to a customer outside of his home state where he does not have nexus and is not required to be licensed and registered for that other states' sales tax, he would not charge and collect sales tax. That would be the responsibility of the buyer to report and pay the use tax to their home state of residence.

That is the problem with this recent ruling. In the future Adam may be forced to start registering and filing sales tax returns in other states merely because he reaches a certain level of business (sales) to customers in those other states. And he would then have to start keeping additional records and such to comply.

If this does go through and leads to the potential impact many fear, I can see that some software company(ies) will take advantage and try to create a program to assist small business owners in filing and complying with the various sales tax laws in all the states they have sales in. At some cost of course. And then market providers like Ebay would become hard pressed to interact with such other software to help their sellers, or have to develop it themselves. Whatever way it would end up going, it is not something Ebay wanted to have to deal with I would guess.

[tschock]

Originally Posted by BobC

What Adam is likely referring to is that he is currently registered and licensed to collect and remit sales tax in the state in which he and his business reside. So if he had sales to customers in his home state where he is located and has nexus, he properly collects the sales tax and sends it in. Under the prior law, sales to a customer outside of his home state where he does not have nexus and is not required to be licensed and registered for that other states' sales tax, he would not charge and collect sales tax. That would be the responsibility of the buyer to report and pay the use tax to their home state of residence.

That is the problem with this recent ruling. In the future Adam may be forced to start registering and filing sales tax returns in other states merely because he reaches a certain level of business (sales) to customers in those other states. And he would then have to start keeping additional records and such to comply.

If this does go through and leads to the potential impact many fear, I can see that some software company(ies) will take advantage and try to create a program to assist small business owners in filing and complying with the various sales tax laws in all the states they have sales in. At some cost of course. And then market providers like Ebay would become hard pressed to interact with such other software to help their sellers, or have to develop it themselves. Whatever way it would end up going, it is not something Ebay wanted to have to deal with I would guess.

OK. I believe he disagreed with my statement "This will put undue burden more on small businesses rather than larger ones." (but will have to let him respond). But I believe I see now where this coming from.

I think what you are saying is that this new 'mess' might be addressed by someone creating software to handle it (or possibly a coordinated effort to make this 'simpler' for businesses to handle). I can buy that as a possibility, but I would still have a 'wait and see' attitude regardless. Does Turbo Tax make filing taxes simpler? Yes. Does the (generally speaking) government action necessitate the reason for something like Turbo Tax in the first place? That proof is left to the student.

[BobC]

Originally Posted by tschock

OK. I believe he disagreed with my statement "This will put undue burden more on small businesses rather than larger ones." (but will have to let him respond). But I believe I see now where this coming from.

I think what you are saying is that this new 'mess' might be addressed by someone creating software to handle it (or possibly a coordinated effort to make this 'simpler' for businesses to handle). I can buy that as a possibility, but I would still have a 'wait and see' attitude regardless. Does Turbo Tax make filing taxes simpler? Yes. Does the (generally speaking) government action necessitate the reason for something like Turbo Tax in the first place? That proof is left to the student.

Turbo Tax is basically for income taxes, not for sales and use taxes. Usually the individual companies/sellers have to keep track of their sales tax collections and such themselves, and the various business software products they use will assist them in the calculation and billing and record keeping for sales taxes purposes. But they are still usually responsible for the filing and remittance of the sales tax returns themselves. Not sure there is a software out there right now that can also file for you in every state. I know for example that some states, like Ohio, have their own website that requires you to go onto their platform and site to report and pay your sales tax. They don't allow you to file and pay any other way.

If this new change to the law goes through and makes it where more sellers are now going to be responsible for collecting and remitting multi-state sales taxes, that may increase the number of users of such software to the point someone will figure they can now make money off it and develop such a product.

[Batpig]

Just as an FYI since it has been mentioned several times in the thread - 3rd party sales and use tax management already exists. I'm aware of Vertex, and I'm sure there are others.