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

[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.

[BobC]

Originally Posted by 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.

I'm aware of it and other sales tax management software also but, in this case the trick is, does that software currently interface with a seller's Ebay account so they don't have to go through all the time and effort to gather and keep track of all the sales tax data themselves and enter into the Vertex software by hand to then be able to file and pay all the various state taxes they end up owing? Software like that will not be cheap, and will need to be constantly updated and revised as sales tax laws and rates change over time. And what about if they also sell at shows or have their own site they sell from? Aren't they going to have to record all that data and possible enter it into the tax management software by hand themselves?

Also, that software simply manages the data and information, and may or may not actually be able to prepare and file actual sales tax returns for you in every state, or properly remit the sales taxes in an electronic or other automated manner. And then as was alluded to by some other posters, there is also the matter of having to look at each state you sell in and checking their rules and nexus limits.

And then a seller is going to have to register or license themselves in each and every state they end up being responsible for sales taxes in. The software isn't going to do that for you. And don't forget that all those various states have separate and different rules and rates and you still have to comply with their separate laws, etc. And let's say you decide to take a break and not sell for a while, in most states you're still going to have to file sales tax returns, even if the tax due is $0. And if you decide to quit selling, then you're going to have to formally go and dissolve or terminate your license or registry in all those states so they don;t keep coming after you for sales tax returns and taxes.

Additionally, I'm not so sure Ebay would like to share their source code with someone to write such a program to interface with their software, at least not if they didn't own the software themselves. And as earlier poster previously speculated, figure out a way to then charge for the cost of doing so. Of course, this then may present an added dilemma to Ebay as I pointed out in my previous post in regards to Ebay not wanting to do things that could potentially make them responsible for the sales tax themselves. If they create/sponsor such software, and especially if they charge sellers for its use, they may add to the risk of them being viewed as directly responsible for the sales taxes themselves by the states as well.

And also, by creating/owning/selling/charging for such software, they could become liable for interest and penalties on screw-ups and bad or missed sales tax filings or payments if there are errors or mistakes made by the software, among other things I extremely doubt that Ebay would in any way want to become part of the tax software and compliance business and add that risk and liability to their plate.

[Exhibitman]

I am sure all of this is going to be addressed in legislation in Congress.

But seriously, I think this will open the door to serious consideration of a Federal sales tax and the creation of a Federal-state partnership on sales taxes for interstate sales. Congress certainly could enact a uniform set of sales tax provisions and rules for interstate commerce, which would ideally allow a retailer in one state to enter all data for all interstate sales into a single Federal sales tax return and leave it to the agency administering the program to apportion the money and distribute it to all of the states.

I would also guess that most states are going to address this case in the next legislative session. Until the state laws are changed, there is nothing to do, really. The ruling just opens the door to future changes in the tax programs.

[BobC]

Originally Posted by Exhibitman

I am sure all of this is going to be addressed in legislation in Congress.

But seriously, I think this will open the door to serious consideration of a Federal sales tax and the creation of a Federal-state partnership on sales taxes for interstate sales. Congress certainly could enact a uniform set of sales tax provisions and rules for interstate commerce, which would ideally allow a retailer in one state to enter all data for all interstate sales into a single Federal sales tax return and leave it to the agency administering the program to apportion the money and distribute it to all of the states.

I would also guess that most states are going to address this case in the next legislative session. Until the state laws are changed, there is nothing to do, really. The ruling just opens the door to future changes in the tax programs.

Oh, that has been talked about for a while but, the problem as pointed out before, all the different state rules, taxes and rates in effect. Normally when you get the feds involved they try/want to set it up as one set of rules for all, to make it more simple and easier to handle. Also, what do you do for those states that don't have a sales tax?

Trust me, while it sounds like a good idea at first, many states will end up fighting this tooth and nail. A good example would be if you look at Ohio, which has virtually every city and village in the state with their own city income tax. The state has been trying to take that over and regulate and collect it on behalf of the cities for quite a few years now. The cities have been fighting it all along as they figure once the state handles it, they are now at their mercy. Same thing will hold true with the states allowing the feds to handle and collect this for them. They don't trust the feds at all either, and rightly so. Just like the cities in Ohio know not to trust the state.