South Dakota v. Wayfair, Inc. - Countdown to Supreme Court Decision

[s0me0nesmind1]

South Dakota v. Wayfair, Inc. is a pending United States Supreme Court case dealing with the nature of sales tax for purchases made over the Internet. The petitioner, the state of South Dakota, seeks the Court to abrogate the 1992 decision of Quill Corp. v. North Dakota, which reaffirmed that, under the Dormant Commerce Clause, states may not compel retailers to collect sales or use taxes in connection with mail order or Internet sales made to their residents unless those retailers have a physical presence in the taxing state. The Court has agreed to hear the case, with oral arguments heard on April 17, 2018 and a decision expected by the end of the current term in June 2018.

Since the decision of Quill in 1992, the volume of interstate sales via electronic channels, particularly purchases from Internet vendors, has grown rapidly, and the Government Accounting Office has estimated that in 2017 states had lost over US$13 billion in taxes they could not collect. Following a statement made in a concurrence opinion by Justice Anthony Kennedy in a 2015 related case which suggested that it was time to review the decision of Quill in the wake of modern technology, more than 20 states passed "kill Quill" legislation intending to collect sales tax from out-of-state vendors, purposely to provide the necessary legal vehicle to take to the Supreme Court; South Dakota's was the first to make it through lower courts to the Supreme Court.

https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.

Supreme Court should make their decision sometime in June 2018, as it mentions

Big case going through the Supreme Court right now that I think many people should be aware of. For reference, the case Quill Corp v. North Dakota is what determined that online vendors aren't liable to collect sales tax for jurisdictions that they don't have a physical presence in....

If somehow this passes - that would definitely hurt any small online vendors. Goodluck calculating tax rates for all 65k+ jurisdictions.

 

[dullard]

If somehow this passes - that would definitely hurt any small online vendors. Goodluck calculating tax rates for all 65k+ jurisdictions.

If only online sellers had something like computers at their disposal with plenty of applications that already do such calculations. But too bad, that couldn't possibly exist, especially not for computer based small businesses. Also, think of all the lost profits by collecting tax and passing it through the business!

As someone who is one of the very few actually pays his use tax, this will not affect me. The horror of the government enforcing their own existing laws!

 

[s0me0nesmind1]

If only online sellers had something like computers at their disposal with plenty of applications that already do such calculations. But too bad, that couldn't possibly exist, especially not for computer based small businesses. Also, think of all the lost profits by collecting tax and passing it through the business!

As someone who is one of the very few actually pays his use tax, this will not affect me. The horror of the government enforcing their own existing laws!

I'm not worried about myself paying use tax - but as someone that actually knows the "applications that already do such calculations"... I can tell you, it's not that simple

Believe me when I say, small companies can't afford such software.

 

[dullard]

Believe me when I say, small companies can't afford such software.

The very first one I clicked on:
https://www.taxjar.com/pricing/plans/
1.7 cents per order at the most expensive option to 0.18 cents per order at the least expensive.

If 1.7 cents per order makes or breaks your business, then I suggest you look into a different business.

 

[s0me0nesmind1]

The very first one I clicked on:
https://www.taxjar.com/pricing/plans/
1.7 cents per order at the most expensive option to 0.18 cents per order at the least expensive.

If 1.7 cents per order makes or breaks your business, then I suggest you look into a different business.

I think you're looking more small scale of individual sellers - whereas I mean small business.

Not always that easy mang. System integration is key here, it's not just a matter of calculating the rate for a given jurisdiction. Just about every company is going to need:
1) Integrate to a source system (typically ERP) for GL/Accounting
2) Flow through to reporting software
3) Have an actual audit trail of all transactions with all tax details
4) Integrate with your Invoicing system - obviously your tax amounts need to make it on to the actual invoice displayed to the customer
5) Tax software needs to account for non-taxable items, exemptions, tax holidays, etc..

From what I can tell - TaxJar does none of those. Looks like it integrates with a given website that 3rd Party sellers can utilize (Etsy, Amazon, etc.) and counts the tax collected (which is actually calculated by the website [Amazon, Etsy]) and allows you to submit a return for it. That is just the tip of the iceberg - and is severely limiting. I'm talking an actual business.

See https://blog.taxjar.com/non-taxable-items/ From what I can tell, it's basically admitting it can't account for all the items mentioned here such as Nontaxable Items, Exemptions, and tax holidays.

 

[dullard]

Something that I've long wondered if it would work:

Can a state, theoretically, pass an import tax on the shipping companies (FedEx, UPS, USPS) based on the value of the items shipped with a credit equal to the tax if the shipping company shows that the sales/use tax was paid on the shipment? The shipping companies are clearly doing business in the state, so that would bypass this whole supreme court battle. It would be a heck of a lot more overhead, but it seems like it would be theoretically legal.

 

[dullard]

I think you're looking more small scale of individual sellers - whereas I mean small business...
See https://blog.taxjar.com/non-taxable-items/ From what I can tell, it's basically admitting it can't account for all the items mentioned here such as Nontaxable Items, Exemptions, and tax holidays.

Taxjar was just the first of hundreds that I clicked on. There are plenty of others. Cheaper and more expensive, more or less options, etc.

Don't most small businesses sell items in a pretty narrow category? An electronic store sells computer items. A clothing store sells clothes. A candy store sells candy. There really aren't that many small online businesses that sell everything. Thus, they don't need the complexity of trying to negotiate the maze of exceptions. And, what is the worst case, that an online store accidentally charges 6.25% on a blanket because it is a receiving blanket that shouldn't be taxed in Texas because it was not a standard blanket? Is that extra 6.25% on one item in one location really going to kill off the business?

Even skipping all tax holidays will still not kill the online store. So what if a few locations don't shop on that one day because of a small tax?

 

[s0me0nesmind1]

Something that I've long wondered if it would work:

Can a state, theoretically, pass an import tax on the shipping companies (FedEx, UPS, USPS) based on the value of the items shipped with a credit equal to the tax if the shipping company shows that the sales/use tax was paid on the shipment? The shipping companies are clearly doing business in the state, so that would bypass this whole supreme court battle. It would be a heck of a lot more overhead, but it seems like it would be theoretically legal.

How would the shipping company ever know the value of the contents? And what would stop someone from lieing about the supposed value to pay a lower amount?

 

[dullard]

How would the shipping company ever know the value of the contents? And what would stop someone from lieing about the supposed value to pay a lower amount?

That is up to the shipping company. They can easily contact the businesses selling the items. Like I said, it would be more overhead, but doable. A few random spot checks would keep the shippers mostly in line (most shipments have a receipt inside that could be used to verify the value). Does UPS (A) want to lose all business in California or (B) put a line item on the shipping form? Triple check it with credit card charges, does Visa want to lose all business in California?

 

[dainthomas]

Might help local b&m a little if it's reversed. Won't affect here thought because no sales tax in Oregon .

 

[dullard]

Won't affect here thought because no sales tax in Oregon .

I'd much rather go that route. Sales taxes are too recessive, too complex, and harm the economy more than other taxes (we should encourage transactions that grow the economy, not tax them).

 

[glenn1]

Supreme Court shouldn’t legislate. U.S. Congess had decades to “fix” this and did not; thus IMHO the status quo is their intent via deliberate inaction. Change the Congress then change the law if you disagree with how Congress has handled it to date.