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

[glchen]

Originally Posted by Santo10Fan

As best I can tell, the sales tax charge will be based on the seller's zip code. The burden will then be on the seller to determine if the item falls under state, local and county tax codes.

I think it will be based upon the buyer's ship to zip code, and not the seller's zip code. Therefore, unless ebay changes their software to automatically collect the tax for all sellers, each seller may have to collect tax for all of their buyers and then send these taxes that they collected to all 50 states (or those that have a sales tax), which would be a huge pain. Right now, I only collect tax for buyers in California, and I have to complete a form every year for that. If I have to do that for all 50 states, it would be a tremendous overhead.

[Rhotchkiss]

Have not read the decision -- when is it effective? I mean, by what date do sellers need to charge/buyers need to pay, sales tax?

[Santo10Fan]

Originally Posted by Rhotchkiss

Have not read the decision -- when is it effective? I mean, by what date do sellers need to charge/buyers need to pay, sales tax?

I assume Supreme Court decisions are effective immediately. South Dakota may be able to retroactively collect from the time the court case began. But if the SC overturns a criminal conviction, that person is freed pronto. If anyone sees sales tax crop up on ebay seller/buyer invoices this week please let me know.

[rats60]

Originally Posted by Santo10Fan

I assume Supreme Court decisions are effective immediately. South Dakota may be able to retroactively collect from the time the court case began. But if the SC overturns a criminal conviction, that person is freed pronto. If anyone sees sales tax crop up on ebay seller/buyer invoices this week please let me know.

The South Dakota law says that they can't collect tax retroactively. The Supreme Court pointed this out in their decision as a point to their law being resonable and not placing an undue burden on retailers.

[markf31]

It is interesting to note, as I just am finding out myself while reading articles on all if this, that several states including my home state of Pennsylvania (also Oklahoma, and Washington at least) have Marketplace Facilitator Laws in place. Pennsylvania's just went into effect April of this year.

The Marketplace Facilitator Law for PA requires facilitator sites such as Etsy, Ebay and Amazon to either collect sales tax on items purchased by PA residents, or in lieu of collecting the tax the facilitator must supply a notice to the purchaser that sales tax was not collected and that a use tax might be due on the sale by the purchaser. If the facilitator elects the 2nd method of notification, the facilitator must submit to the state an annual report by January 31 of each year to the Pennsylvania Department of Revenue that includes the following:

The purchaser’s name, billing address, delivery address and, if different, the purchaser’s last known mailing address.
The total dollar amount of purchases from this marketplace facilitator.
The name and address of the marketplace facilitator that made the sale.

Each failure to comply with the notice and reporting requirements can result in a penalty of $20,000 per violation, per year, or 20 percent of total Pennsylvania sales during the previous 12 months, whichever is less.

Marketplace Facilitators

So Pennsylvania now has a law on the books, but where the state will now know from information provided by Ebay, Etsy, etc.. how much every resident of Pennsylvania paid for items bought through 3rd part facilitators.

[drcy]

What will be interesting is the competitive imbalance and state politics due to differing state sales tax rates. Here in Washington State, there is no state income tax but a high sales tax.

[cardsnstuff]

Originally Posted by markf31

It is interesting to note, as I just am finding out myself while reading articles on all if this, that several states including my home state of Pennsylvania (also Oklahoma, and Washington at least) have Marketplace Facilitator Laws in place. Pennsylvania's just went into effect April of this year.

The Marketplace Facilitator Law for PA requires facilitator sites such as Etsy, Ebay and Amazon to either collect sales tax on items purchased by PA residents, or in lieu of collecting the tax the facilitator must supply a notice to the purchaser that sales tax was not collected and that a use tax might be due on the sale by the purchaser. If the facilitator elects the 2nd method of notification, the facilitator must submit to the state an annual report by January 31 of each year to the Pennsylvania Department of Revenue that includes the following:

The purchaser’s name, billing address, delivery address and, if different, the purchaser’s last known mailing address.
The total dollar amount of purchases from this marketplace facilitator.
The name and address of the marketplace facilitator that made the sale.

Each failure to comply with the notice and reporting requirements can result in a penalty of $20,000 per violation, per year, or 20 percent of total Pennsylvania sales during the previous 12 months, whichever is less.

Marketplace Facilitators

So Pennsylvania now has a law on the books, but where the state will now know from information provided by Ebay, Etsy, etc.. how much every resident of Pennsylvania paid for items bought through 3rd part facilitators.

I'm in PA too; in simple terms, what does this mean for me as an ebay seller?

[BosseFieldBoy]

I’m a very small time seller, so I’m guessing I will be exempt from many states’ sales tax laws. But I’m not really sure what to do at this point. I’m guessing most states have de minimus exemptions, but that’s just an assumption. Does anyone know a quick hit resource of state sales taxes and exemptions?

[markf31]

Originally Posted by glchen

I think it will be based upon the buyer's ship to zip code, and not the seller's zip code. Therefore, unless ebay changes their software to automatically collect the tax for all sellers, each seller may have to collect tax for all of their buyers and then send these taxes that they collected to all 50 states (or those that have a sales tax), which would be a huge pain. Right now, I only collect tax for buyers in California, and I have to complete a form every year for that. If I have to do that for all 50 states, it would be a tremendous overhead.

I believe you are correct, that the tax would be based on the buyer's ship to zip code.

This case originated out of South Dakota, which enacted a law that required all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 individual transactions in the state. State officials sued three large online retailers — Wayfair, Overstock.com and Newegg — for violating the law. Those lawsuits led to this decision today.

I would hope that states, as they move forward with this new taxing power, would institute similar statues in regards to which merchants they would require to collect sales tax.... ie annual sales over X number of dollars or Y number of transactions.

[AGuinness]

I wonder what impact this will have on COMC, too...

If the SD law is mirrored by other states, the 200 transactions part would be an easy one to surpass just breaking a single box of cards and selling singles. Could be a few hundred transactions at a total of maybe $100...

[glchen]

The problem with # of transactions in the state (or something similar) is that at the beginning of the year, who knows if you are going to hit that limit. Let's say in a hypothetical case, New York decides that if a seller has 50 or more transactions in that state, you need to collect the sales tax. Based upon my previous sales, I haven't hit 50 in New York before. But then what if by June, you are up to 40 New York sales, so it seems likely you are going to cross the threshold. What are you going to do? You can't retroactively ask those 40 previous New York buyers to cough up sales tax now for the past sales. You'd have to either eat the sales tax amount yourself, or say after sale 49 to New York, try to say that you will no longer sell to New York residents.

[bobbyw8469]

What a nightmare.

[brianp-beme]

And how will this affect Auction House sales...I assume all winners would be paying some sort of sales tax. Even more pain on top of hammer price painl for the buyer, an extreme hassle for the auction house (if sales tax is to directed to state of buyer).

Brian

[Santo10Fan]

Originally Posted by brianp-beme

And how will this affect Auction House sales...I assume all winners would be paying some sort of sales tax. Even more pain on top of hammer price painl for the buyer, an extreme hassle for the auction house (if sales tax is to directed to state of buyer).

Brian

This reminds me that Heritage, who has a physical presence in Illinois, charged me sales tax before and it was at the rate of it's office address in Chicago. The levy was significant-over $200.

[egbeachley]

It’s not only having to collect and remit the sales taxes for the 45 states that have it, and fill out all those forms, but for many cities and counties too. That’s why the number is 11,000 jurisdictions.

The worst part is the rules. For cards they may be simple. But I saw how in one particular state you must collect sales tax for Snickers, but not Twix, because Twix has flour in it and can be considered food, not candy.

[AGuinness]

Originally Posted by egbeachley

The worst part is the rules. For cards they may be simple. But I saw how in one particular state you must collect sales tax for Snickers, but not Twix, because Twix has flour in it and can be considered food, not candy.

That is hilarious. What a world we live in!



Sent from my iPhone using Tapatalk

[savedfrommyspokes]

Originally Posted by glchen

I think it will be based upon the buyer's ship to zip code, and not the seller's zip code. Therefore, unless ebay changes their software to automatically collect the tax for all sellers, each seller may have to collect tax for all of their buyers and then send these taxes that they collected to all 50 states (or those that have a sales tax), which would be a huge pain. Right now, I only collect tax for buyers in California, and I have to complete a form every year for that. If I have to do that for all 50 states, it would be a tremendous overhead.

If ebay is able to change their software to both collect and report collections for each state, from there submitting will be a much more manageable task. For my state, I self track my in-state sales and submit one form at year end. It takes me longer to find my password to access my on-line state tax site than it does to submit my taxes. Last year it was less than a 5 min process total to submit for my state. So if ebay automatically tracked and provided a record of all of the annual collections for each state, and each state is as simple as my state, this whole process would probably take no more than an additional 4-5 hours per year.

In regards to increased costs to card collectors, just like every other added cost, sales tax will just get figured into the price. A $3k card will still be a $3k card, now just 5-8% off the price will go to the buyer's state.

I see a whole new venture for online sales tax management.

[JustinD]

I would doubt eBay has any need to change software, I can not see where that line of thinking is coming from. Much like why you do not charge sales tax at a garage sale, future laws should in all cases not affect a occasional seller on eBay.

As was quoted earlier South Dakota brought this forth will a set of guidelines that the seller have 100k in business or a minimum of 200 transactions. To take it lower as was theorized earlier would be a enforcement nightmare, the states see this as some cash cow, but will soon find the costs of an enforcement group for this will outpace easily the rewards against crossstate small sellers.

This is for large internet sellers and companies.

I would assume that if you are an eBay seller that is big enough to be going after as a state agency and have it think there is a reward in it, you are either already collecting it or known this was coming eventually because you have been using this income on your 1040 as a job.

[rats60]

Originally Posted by JustinD

I would doubt eBay has any need to change software, I can not see where that line of thinking is coming from. Much like why you do not charge sales tax at a garage sale, future laws should in all cases not affect a occasional seller on eBay.

As was quoted earlier South Dakota brought this forth will a set of guidelines that the seller have 100k in business or a minimum of 200 transactions. To take it lower as was theorized earlier would be a enforcement nightmare, the states see this as some cash cow, but will soon find the costs of an enforcement group for this will outpace easily the rewards against crossstate small sellers.

This is for large internet sellers and companies.

I would assume that if you are an eBay seller that is big enough to be going after as a state agency and have it think there is a reward in it, you are either already collecting it or known this was coming eventually because you have been using this income on your 1040 as a job.

I don't think you will see states going after small retailers. It took South Dakota's levels to get 5 votes in the Supreme Court. Anthony Kennedy, who was the driver of this case, praised South Dakota for taking a moderate approach. He also pointed out that states may not place undue burden on interstate commerce. Trying to collect sales tax on every online sale with individuals would certainly fit. Probstein and PWCC will be affected. Most eBay sellers will not.

[JustinD]

Originally Posted by rats60

I don't think you will see states going after small retailers. It took South Dakota's levels to get 5 votes in the Supreme Court. Anthony Kennedy, who was the driver of this case, praised South Dakota for taking a moderate approach. He also pointed out that states may not place undue burden on interstate commerce. Trying to collect sales tax on every online sale with individuals would certainly fit. Probstein and PWCC will be affected. Most eBay sellers will not.

Totally agree on the point with small retailers,

The case was pushed because of Wayfair.com. Those are the folks in the crosshairs, retailers that have millions in sales and only charge tax in states of operations.

[Brian Van Horn]

My initial reaction before loopholes:

[ValKehl]

Originally Posted by rats60

I don't think you will see states going after small retailers. It took South Dakota's levels to get 5 votes in the Supreme Court. Anthony Kennedy, who was the driver of this case, praised South Dakota for taking a moderate approach. He also pointed out that states may not place undue burden on interstate commerce. Trying to collect sales tax on every online sale with individuals would certainly fit. Probstein and PWCC will be affected. Most eBay sellers will not.

Sorry to be a contrarian, but unfortunately, I suspect that in the not too distant future, we will see eBay adding sales tax to ALL invoices from ALL sellers, except for purchasers who are exempt because they are resellers. Being a huge organization, it should not be difficult for eBay to do this. eBay would transfer the sales tax info to PayPal so that PayPay can collect the taxes and remit them periodically to all the state and local jurisdictions on behalf of ALL the eBay sellers. Being a huge organization, it should not be difficult for PayPal to accomplish this. While eBay sellers will thus not be burdened, I assume that eBay and/or PayPal will increase their fees to sellers for handling the sales tax collections and remittances.

[Santo10Fan]

Originally Posted by ValKehl

Sorry to be a contrarian, but unfortunately, I suspect that in the not too distant future, we will see eBay adding sales tax to ALL invoices from ALL sellers, except for purchasers who are exempt because they are resellers. Being a huge organization, it should not be difficult for eBay to do this. eBay would transfer the sales tax info to PayPal so that PayPay can collect the taxes and remit them periodically to all the state and local jurisdictions on behalf of ALL the eBay sellers. Being a huge organization, it should not be difficult for PayPal to accomplish this. While eBay sellers will thus not be burdened, I assume that eBay and/or PayPal will increase their fees to sellers for handling the sales tax collections and remittances.

I concur with this sentiment, and I do have some evidence to back it up. On May 31, I received an email from ebay asking me to sign a useless petition-the "last chance" to "make my voice heard". I disregarded it as absurd, since the Supreme Court makes decisions based on reasoned argument-not whining. It got my radar up however, because I forgot the Court was considering it, and I realized ebay had a dog in the fight in the from of seller backlash. Considering how expensive it is do business on ebay, combined with the risks-I firmly believe it is the administrators' responsibility to integrate the new tax initiatives into the site.

[rats60]

Originally Posted by ValKehl

Sorry to be a contrarian, but unfortunately, I suspect that in the not too distant future, we will see eBay adding sales tax to ALL invoices from ALL sellers, except for purchasers who are exempt because they are resellers. Being a huge organization, it should not be difficult for eBay to do this. eBay would transfer the sales tax info to PayPal so that PayPay can collect the taxes and remit them periodically to all the state and local jurisdictions on behalf of ALL the eBay sellers. Being a huge organization, it should not be difficult for PayPal to accomplish this. While eBay sellers will thus not be burdened, I assume that eBay and/or PayPal will increase their fees to sellers for handling the sales tax collections and remittances.

I don't see that ever happening. Why would EBay want to destroy their business? Why would they want to take on an unnecessary burden? If they force all sellers to charge sales tax when 90%+ don't need to, most of those sellers will leave. I collect sales tax on sales within my state and send it to them. In the unlikely event I need to do it for other states I will. I will not charge people sales tax on items they don't need to pay it on.

This decision is aimed at large resellers like Warfare, who hurt small business by not charging sales tax and states who have seen revenue decrease because of large online retailers. It is not aimed at trying to collect on every single sale, even if it is an individual selling an used item that they no longer have need of.

[BobC]

Originally Posted by rats60

I don't see that ever happening. Why would EBay want to destroy their business? Why would they want to take on an unnecessary burden? If they force all sellers to charge sales tax when 90%+ don't need to, most of those sellers will leave. I collect sales tax on sales within my state and send it to them. In the unlikely event I need to do it for other states I will. I will not charge people sales tax on items they don't need to pay it on.

This decision is aimed at large resellers like Warfare, who hurt small business by not charging sales tax and states who have seen revenue decrease because of large online retailers. It is not aimed at trying to collect on every single sale, even if it is an individual selling an used item that they no longer have need of.

This is not technically aimed at Ebay since they are only a platform used by seller's to create a marketplace for selling their goods online. The burden for actual sales tax collection, reporting and remittance is on the actual sellers who own and sell their inventory. Someone like Wayfair is the actual seller themselves so they are charged with having to collect and report the sales tax. What Ebay is likely concerned about is that even if they are not technically responsible for collecting the sales tax, they do have records and data concerning all the sales transactions and buyer and seller data that the various states would come after and start demanding from them to enforce their various state sales tax laws. And as soon as people selling on Ebay realize their information may be getting reported to the states, they may decide to drop off Ebay and look to sell on other sites and venues where the states may not be looking so strongly at yet, or just quit selling altogether as they don't want to deal with the hassle. Because of the added work and such involved, it could end up costing Ebay business down the road, and thus it makes sense that they would try to fight this up front.

Also, I'm not sure that Ebay could specifically force sellers to use software created by them to calculate and collect sales tax. By doing so it may end up looking like they are admitting to the states that they actually are responsible for the sales and collections of sales taxes, which they definitely do not want to do.