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

[Brian Van Horn]

I love this part of the ruling which is just going to open a wonderful can of worms:

"(d) In the absence of Quill and Bellas Hess, the first prong of the Complete Auto test simply asks whether the tax applies to an activity with a substantial nexus with the taxing State, 430 U. S., at 279. Here, the nexus is clearly sufficient. The Act applies only to sellers who engage in a significant quantity of business in the State, and respondents are large, national companies that undoubtedly maintain an extensive virtual presence. Any remaining claims regarding the Commerce Clause’s application in the absence of Quill and Bellas Hess may be addressed in the first instance on remand. Pp. 22–23."

This isn't the last word. This is just the commercial break after the first quarter of this football game.

[barrysloate]

What about sales on BST? Hmmm...

[Brian Van Horn]

Originally Posted by barrysloate

What about sales on BST? Hmmm...

Oy!

Well, at least there is one politician chiming in with a viewpoint I support (admittedly a bit of grandstanding):

http://www.4-traders.com/WAYFAIR-INC...fair-26812903/

It should be interesting how this plays out and the way the herding of cats will be resolved.

[TaxMechanick]

It does not appear to me that every small retailer, with limited sales in most jurisdictions, will necessarily be burdened with having to collect and remit sales tax in all jurisdictions. It appears to me that the Wayfair decision serves to support an "economic" nexus standard already employed by many jurisdictions, and potentially now to be employed by many more. This economic standard is often based on a minimal $ amount or based on # of transactions in a given year. For example, North Dakota (Wayfair case) employs a minimal $ amount of $100,000 of economic sales in the state. So, the threshold is and would be measured jurisdiction by jurisdiction.

Prior to this decision, the Quill case had supported the long standing Hess case decision that there must be some sort of "physical presence" in a jurisdiction (state or local) in order for that jurisdiction to force a seller to collect and remit sales tax as a defined "retailer." The Wayfair decision reverses that exclusive requirement of physical nexus, and gives jurisdictions the ability (by Supreme Court "National" applicability) to employ minimal economic nexus standards.

[Brian Van Horn]

Originally Posted by TaxMechanick

It does not appear to me that every small retailer, with limited sales in most jurisdictions, will necessarily be burdened with having to collect and remit sales tax in all jurisdictions. It appears to me that the Wayfair decision serves to support an "economic" nexus standard already employed by many jurisdictions, and potentially now to be employed by many more. This economic standard is often based on a minimal $ amount or based on # of transactions in a given year. For example, North Dakota (Wayfair case) employs a minimal $ amount of $100,000 of economic sales in the state. So, the threshold is and would be measured jurisdiction by jurisdiction.

Prior to this decision, the Quill case had supported the long standing Hess case decision that there must be some sort of "physical presence" in a jurisdiction (state or local) in order for that jurisdiction to force a seller to collect and remit sales tax as a defined "retailer." The Wayfair decision reverses that exclusive requirement of physical nexus, and gives jurisdictions the ability (by Supreme Court "National" applicability) to employ minimal economic nexus standards.

"So, the threshold is and would be measured jurisdiction by jurisdiction." That is where it gets messy.

[TaxMechanick]

Brian, yes indeed! Some jurisdictions have a much lower threshold than the ND $100,000 threshold. Here's something I located online for states with "current" thresholds...$10,000 is lowest $ threshold (i.e. PA and Washington State), $500,000 is the highest. Some states base it on # transactions.

https://blog.taxjar.com/economic-nexus-laws/

Obviously, the Wayfair decision opens it up for jurisdictions that employ current standards to consider new economic and marketplace thresholds, as well as additional jurisdictions employing new such standards.

Glenn

[chalupacollects]

Originally Posted by barrysloate

What about sales on BST? Hmmm...

You mean trades? Lol...

[steve B]

Just a thought, there's enough junk wax out there that if enough people started selling it card by card repeatedly the volume of sales would pretty much cripple the systems the states use to collect the tax.

[Exhibitman]

Originally Posted by steve B

Just a thought, there's enough junk wax out there that if enough people started selling it card by card repeatedly the volume of sales would pretty much cripple the systems the states use to collect the tax.

No, that is incorrect. The sales tax system is self-reporting: the merchant calculates, collects and remits with a tax return the merchant prepares. The harder it is to calculate and track the more trouble it is for the merchant and the more likely the merchant will mess up and owe penalties and interest. Having to collect tax on interstate and intrastate sales will actually be a relief for some businesses because there will no longer be a need to keep track of as many forms of sales. Right now, they have to track sales by jurisdiction and make intra v inter state calculations.

[steve B]

Originally Posted by Exhibitman

No, that is incorrect. The sales tax system is self-reporting: the merchant calculates, collects and remits with a tax return the merchant prepares. The harder it is to calculate and track the more trouble it is for the merchant and the more likely the merchant will mess up and owe penalties and interest. Having to collect tax on interstate and intrastate sales will actually be a relief for some businesses because there will no longer be a need to keep track of as many forms of sales. Right now, they have to track sales by jurisdiction and make intra v inter state calculations.

Massachusetts requires reporting sales anywhere annually to monthly depending on sales. 1201 makes it monthly. The form is pretty simple, but at least when I had a resale number filing electronically was required. Nobody is required to file/pay earlier, but I think they're ok with getting paid more often.
In 2 years I had no in-state sales.

I was mostly kidding about the junk wax, I was picturing them trying to work out a few million individual .01 sales.

One of the places I used to go got in trouble - not a lot, but trouble- because they included the tax in the item price. Not bad if you've got 10 things at $1 back when the rate was 5%. But with odd amounts and rounding if you do that you collect more tax than you should.

[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?