This is good news for the country, even if it's bad for my wallet. The prior state of affairs was absurd. Online retailers already have major advantages in terms of convenience and inventory. Getting a N% discount vs. brick and mortar by not charging taxes was completely unnecessary.
In most cases, I much prefer to buy the Prime product at a small markup. I'm confident that it'll get there faster and that Amazon will stand behind it if there's something wrong.
I hate dealing with individual sellers on Amazon, and I really don't think I'm alone in that.
Exposing consumers to more regressive sales taxes is in no way good for the country. What would be good for the country is to abolish sales taxes entirely.
Exactly; sales taxes generally just hurt the poor and middle class. A good case could be made for consumption taxes on luxury items, but taxing things like food and inexpensive consumer items (like non-luxury clothing) simply hurts poorer people while not significantly affecting wealthier ones.
The problem with consumption taxes is it just starts a debate over what is considered necessary/unnecessary. I think you would be better off exempting people rather than classes of items.
Cleaning up a loophole that evens the playing ground for different types of businesses is a good thing. If you have a problem with sales tax or taxation in general that's a different issue.
States not having jurisdiction outside of their borders isn't exactly a loophole. If California wants to punish people for buying from Oregon, a state free from sales taxes, it should use its existing use tax and take it up with its own citizens. This ruling is saying that California can tell Oregon businesses what to do.
Sure, but there's no point in getting bogged down in strict adherence to jurisdiction when we're all one country. Would you feel better if the ruling was that an online retailer in Oregon has to get a business license in every state which would come with the same requirement to collect sales tax? Same effect, but now businesses have to do more paperwork.
If we're all one country, how did the President get elected when the majority of the country voted for someone else?
..and yes, I'd prefer that the ruling was that the online retailer had to get a business license in every state. That ruling would create such a torches and pitchforks situation from citizens suddenly having their lives disrupted that we'd quickly return to status quo.
I mean even if we lived under a monarchy we would still be one country, the two things aren't really related.
That is the worst possible reason to enact a law. It should be obvious why making people's lives worse purposefully for political posturing is a bad idea, and you run the risk of your plan backfiring and having to live forever in the now-worse world.
This isn't enacting a law, though. This is changing the interpretation of the constitution. Prior to this, the interpretation was that the framers' intent was for citizens to be governed by the laws of their own state, now it's not. Let the chips fall where they may.
I don't think the distinction between legislative and common law is really meaningful in this case. A judge making a decision in a case like this is bringing a new law into existence.
Suppose I the owner of a small retailer based out of Oregon but have a location in Ohio. Should I be exempt from collecting sales tax simply because my company is registered and HQ'd in Oregon? The previous ruling was no, Ohio has the right to require my company to collect sales tax for sales in Ohio, but the ruling required that my company have a physical presence in the state. All that happened today was that the requirement to be physically present was dropped.
I mean the law is fairly narrowly scoped and certainly doesn't give states a blank check to write laws for citizens of other states.
Interesting. One thing I've noticed is that certain on-line sellers exempt purchases to certain states. I wonder how long before they start exempting residents of states that force online sales tax collection.
"What would be good for the country is to abolish sales taxes entirely."
In favor of what, exactly? Don't pretend that sales taxes could just be abolished, and states would just go without that revenue. Kansas tried gutting their tax revenue; it failed miserably.
I'm strongly supportive of the LVT, but I'm not sure it can be the only tax strategy for every locality in a large and extremely heterogeneous country. Not every locality is seeing rapid appreciation in real estate values.
The unintended consequence may be to drive business offshore. The de minimis import duty was quadrupled to $800 a few years ago (meaning no duty while US retailers pay duty buying in bulk and incorporate into the US price) and this could be yet another advantage handed to sellers outside the country.
I find it hard to argue with from a fairness perspective. Clearly, retail is in a much different place from when Quill was decided. My concern is more in how a mom & pop online shop operating independently complies as a practical matter, which means not only collecting the right amount for different types of items but presumably remitting and filing with a huge number of different tax jurisdictions.
We’ve been looking at tech solutions for calculation / remittance. So far only found Avalara. I’d be surprised if PayPal, Stripe, and others won’t step into this now that it’ll be fairly profitable.
Yeah, it seems like something the payment processors have to handle automagically in some manner. Otherwise, small online merchants are going to have no practical choice other than 1.) Selling through e.g. Amazon or 2.) Just ignoring the law.
That seems to only address calculating the tax however. Presumably the business is still expected to remit the tax collected to each tax jurisdiction as required plus whatever necessary paperwork.
Keep in mind that Stripe only provides automated tax calculations for their Orders API (previously Relay) at this time. You'll have to use a sales tax API to handle calculations for subscriptions and one-off charges.
It doesn't really work very well together at all unless you're using Stripe Orders for physical products. You can't make the Stripe checkout.js show taxes, and it's just a big pain to integrate the API. There's a big opportunity for Stripe here to make it really simple, I would be happy to pay extra to have them completely deal with it.
You can sign up for a free trial with TaxJar right away without calling a sales rep, no CC required. Sandbox API environment is included for all plans, but marketed toward Plus plans. Once you log in, generate prod / sandbox keys from the account page.
Nope. I've logged in. Registered. I'm a paying customer, using it in production, and there's no visible way to generate a sandbox key, except 'go to plus'.
TaxJar provides a sandbox environment for automated testing and development on all TaxJar Plus plans. After generating a sandbox API token, point your API client to the sandbox environment...
There is no sandbox API available without 'plus'. Perhaps you had an earlier version and are grandfathered in?
Besides Avalara, I'm aware of taxjar.com, taxify.co, taxamo.com.
Avalara and Taxamo don't list prices on their sites as far as I managed to find. Googling turns up comments saying that Avalara is expensive.
TaxJar and Taxify do list prices.
For a small business (up to 1k transactions/month) is $17/month if you pay for a year up front ($19/month on month-to-month). A transaction is either giving them an order and having them figure the tax, or looking up a rate with their API.
That will get you reports for each state, ready to file. If you want them to actually file for you, that costs more. If you have to file in all 45 states that have sales/use tax, with a monthly filing in each, it would come to $5000/year at TaxJar.
Taxify is $47/month for up to 1k transactions, and it would be $14580 to have them handle filing under the same 45 state/monthly filing assumption.
That looks like their tax filing product for ecommerce. The prices look pretty good, actually, at least compared to other others. A single filing seems to be about the same price as the others, but they have good discounts if you are filing in a lot of states which looks like Avalara might be a winner if you are dealing with many states.
I don't see any pricing for their services for their services for determining how much tax you need to collect for a given transaction.
Correct, that pricing is specific to TrustFile for reporting and filing. They have a separate product called AvaTax [1] for calculating sales tax. If you decide to speak with a sales rep for an all-inclusive package, be mindful of setup fees, cancellation fees, and annual contracts.
In Colorado you're already asked when filing state taxes what the value of the goods you bought online that haven't been taxed yet, so the onus is on the filer to look up receipts from the year for tax purposes.
Amazon already collects tax in Colorado, but a few smaller retailers will send you a letter at the end of the year totaling up your untaxed purchases. Since different counties and localities collect different rates, it's hard to get the total tax right at the time of sale.
I assumed all of them do it, but maybe not. I’ve been complying with this in Indiana for years, but I agree that I’m almost certainly unusual in that regard.
I also live in Colorado and only got one such letter last year after a lot of online shopping. It was from B&H and was wrong, though the dollar amount wasn't very high. I placed an order where one item was back ordered, so separate shipments came. They said tax was owed on the back ordered item twice.
But, as you said, Amazon already collects tax at time of sale which was the bulk of my purchases.
It’s called an use tax. It’s equivalent to a sales tax, reporting is required but voluntary. Not paying use taxes on internet purchases is tax evasion. Here’s what CA’s state tax collectors have to say:
It is not hard to get the right rates. All you need to do is have a master file with all zip codes with the corresponding rate to charge. The difficult part is filing out the returns and dealing with potential audits.
ZIP codes don't align with taxing authorities 100%. You also have different types of products that have different rates - no standard "master file with all the zip codes" is going to express all that other stuff.
Yes, it is hard to 'get the right rates' 100% of the time.
> It is not hard to get the right rates. All you need to do is have a master file with all zip codes with the corresponding rate to charge.
If you are specifically talking about Colorado, you may be right. I'm not familiar with how Colorado does sales tax.
In general, though, zip code is not sufficient. Even if use zip+4 it might not be sufficient. For example, in Washington, people who live in zip 98027-5444 on Renton Issaquah RD SE in the address range 9100-9199 pay 8.6% if their address is even, and 10% if their address is odd. A tax district boundary runs right down the middle of their road.
I live in an Illinois border community, and work in Iowa. I wonder what tax would be collected if I close an Ebay transaction in Iowa, but have the products shipped to my address in Illinois.
While I can't speak for US law, most of the time it's the delivery address that matters - if the location you're at when purchasing matters, you could do all of your expensive on-line shopping when on holiday in some place with low taxes (or using a VPN...).
This is one of those "it depends on the state" questions. In general, a seller is going to calculate and remit tax based on the delivery address, but the laws are actually a bit more complicated than that. chasil, who lives in Illinois but is close to Iowa, might start having packages delivered to a P.O. Box in Iowa, for example. However, legally speaking, s/he must still pay Illinois use tax on that item provided it is "for use or consumption in Illinois" and less than the current Illinois use tax rate of 6.25% was collected originally. See http://www.revenue.state.il.us/Individuals/FAQs-Use-Tax.htm
Practically speaking, of course, few people keep detailed enough records to even calculate the correct use tax owed at the end of the year, and any tax that might have been owed goes uncollected and unnoticed. Which is the problem that led to this Supreme Court case in the first place.
One particular question is my use of Page Plus, my phone carrier. It was the first Verizon MVNO to get 4g.
I was on an automatic payment with them, and they announced that they were adding 911 taxes.
I canceled the automatic payment and started getting refills at pincheap.com (a dealer with no presence in either Iowa or Illinois), avoiding both sales tax and the 911 tax.
There is no "delivery" of any physical product, so I wonder if the tax status of that arrangement changes.
It's for this reason Illinois residents don't buy a car in Wisconsin or another neighboring state with a more advantageous tax structure; you'll get nailed post-haste.
But if you're driving up to buy a few cases of New Glarus beer, chances are you're vastly unlikely (at or nearing 0%) that you'd be held to account for that purchase for Illinois tax purposes.
Technically you're supposed to pay your state's tax, even for a purchase where you were physically in another state. Even if that other state actually charges its own sales tax!
I thought with use taxes you owed the remaining difference in tax. Say I purchase a $100 widget in Kenosha, WI with a sales tax of 5.5%, and I live in MI with a sales and use tax of 6%. I would owe MI the 0.5% difference on the $100 which would be $0.50.
No my understanding is that the state wants their full X% -- the whole point of the use tax is "you paid that guy but you're supposed to pay me." If you paid a higher tax rate in another state do you think your home state would be happy with 0% or even reimburse you the difference?
IIRC you're expected to get the out of state retailer to reimburse you at a later time and then when you're paying your income taxes you include any purchases subject to use tax.
In Massachusetts, oddly, if you paid less than the Mass sales tax rate of 6.25%, you owe 6.25% use tax. It's not the delta you owe, it's the full amount. But you don't owe it at all if you paid more than the Mass rate.
I think it depends on the state. At least in MI, you only have to pay the difference [1] [2]:
> Use Tax on the Difference
> If you paid at least 6 percent to another state on your purchase, you do not owe use tax to Michigan. If you paid less than 6 percent, you owe the difference.
> NOTE: The full 6 percent use tax is also owed on purchases made in a foreign country.
There are two against it on fairness grounds I can see but your mileage may vary on practically and definitions of fairness.
One is that they don't use the infrastructure in the state. Shippers are either already taxed for their use if private or self funding government in the case of UPS.
The second is a more slippery taxation without representation which also gets into all sorts of semantic issues with who is really being taxed the in state residents or the out of state residents.
Really the tax infrastructure is in drastic need of modernization and streamlining. It may step on a lot of toes but I could see forcing online sales tax into a federal fixed rate with redistributed fixed percentages as worth it. Say 5% rate nationally and of that 1/3rd each to the buyer's state and the seller's state and 1/6th to each municipality respectively with it defaulting to the state if it is unincorporated. It would even actually fit in interstate commerce domain nicely.
On the other hand, local businesses are paying other types of taxes anyway (such as property taxes) and they're actually employing local people--so there's almost an argument that local businesses should be paying less sales tax rather than more. And then you're almost in why have a sales tax at all territory given that they're mostly regressive.
There's certainly a good argument for a flat national sales tax but that doesn't really fit with federalism and, anyway, good luck getting New Hampshire and New York to agree on a number.
> One is that they don't use the infrastructure in the state.
This is one way of looking at things, but I think sales tax is much closer to a tax on consumers than on businesses. Or at least is intended as a tax on consumers to fund their state infrastructure, often because imposing an income tax is impossible (e.g. Washington State constitution) or just politically unpalatable.
Normalising taxes is basically impossible in an environment where sales taxes are a meaningful part of a government's budget.
Do the consumers pay the tax to the federal government? No? Then it's not a tax on them, but on the businesses that pay the tax. Business's can choose to charge consumers directly for this, but for online retailers that means additional complexity in the checkout and billing process.
It's never going to be fair, since online shops don't have physical plant costs (as an example). Are you going to penalize them for that too and make them pay a phantom imputed presence tax? That's why fairness is the wrong path to go down.
The situation for retailers shipping to states where they have no physical presence reminds me of the situation of foreign retailers with significant online sales to customers in the EU.
In each case, the seller (who has no physical or other presence in X) is required to collect tax from the buyer (a resident of X) and remit it to the tax authorities in X.
The tax is owed by a resident of X, to the tax authorities in X. But the tax authorities in X want someone outside X to collect it on their behalf.
EDIT: According to Wikipedia, some states charge sellers sales tax, and others do it the way I assumed (tax is charged to buyers, but collected by sellers).
That is the price of doing business with customers of the EU, similar to how you must comply to EU regulations if you want to sell physical goods. In return, you get access to the EU market and can deal with a single ruleset for the whole EU instead of each country individually.
Also, this is only for consumers, to business customers you can reverse-charge the VAT so they have to handle it.
Anything can be construed as 'the price of doing business'. If the EU instead required every retailer with at least one customer in the EU to get a tattoo of the EU flag, in return for getting access to the market, would you also consider that just 'the price of doing business'?
My objections to this are:
- If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it.
- There are ~200 countries in the world. Should any company who wants to sell over the internet need to know about the sales tax or VAT registration thresholds in each of those countries? If so, this gives a huge advantage to large retailers over small ones.
> If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it.
That's the case, no? When I order stuff from AliExpress, the seller's only responsibility is to declare the item value honestly, it's then up to the carrier and local customs to charge VAT, import duties and fees.
Business whine a lot, but if the tax authorities actually stopped every package, analyzed it, calculated the tax and then charged the tax plus the cost of this whole process, the final cost to the consumer would skyrocket, they would stop buying online, and those businesses would go bankrupt.
Online business already have a bunch of advantages over brick-and-mortar, having to keep a database of VAT rates, and then generating a report and sending a few bank transfers is not that onerous in comparison.
> - If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it.
As far as my experience goes, that is the case when seller is outside of EU. Buyer needs to pay customs the taxes on the item. In Finland it's common that when package outside of EU arrives in Finland, customs will hold and send buyer a message to declare item and pay taxes on it, especially if the value was declared on it (though they won't tell you what value was declared on it which can get tricky with things such as mixed electronic & physical goods on Kickstarter). It has it's own share of problems, like that buyer needs to figure out the TARIC code of the item (which are extremely specific, like "Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes - Other footwear - Covering the ankle but not covering the knee - With uppers of plastics").
Within EU it used to be that seller collected local VAT if their sales didn't exceed certain threshold to the buyer's country (100k IIRC). There has been some talks about modifying it so that seller would always need to collect buyer country's VAT, but I don't remember what is the current state of it is.
More compliance and regulation for us to deal with. How about you just tax property? It doesn't move. And also, how about the state stops spending money?
Thankfully, we have computers! Any online sales program worth paying for includes automatic sales tax collection by jurisdiction.
Note, this ruling doesn’t mean that all businesses will immediately be taxed. The law over which this suit was filed requires collection if your annual business in the state is $100,000 or >200 sales, which means you’re already doing a sizeable business.
Compliance is far more complex than a simple look up table. Rates vary by state, county, city, school district, mass transit zone, water district. And each of these political subdivisions and the sales tax they assess changes with every ballot issue!
There's a lot of faxing, forms to fill, etc.
So most of the value is the vendor doing the legwork in keeping up with details and fixing corner cases. And leveraging their pre-existing trust network and economy of scale.
A computer program can't tell what category your product falls under.
Does a smock qualify as an Apron and thus it's free from sales tax? What if I print 'kiss the cook' on a smock?
Sales tax has a single set of rules that if you are in a specific physical location, but it becomes 50,000+ wildly inconsistent rule sets when you look nationwide.
Jurisdictional boundaries are very complex. The city field in an address really identifies the post office that serves the address, not the city that the address is in. Many people live outside of city boundaries, and "simple" processing may charge them city sales tax surcharges.
From experience, the city of San Jose barely knows what its border is, so I wouldn't expect others to either.
What's to stop the powers that be from lowering those threshold requirements, though, now that this has happened?
Also, "jurisdiction" is terribly complicated when it comes to sales taxes. A jurisdiction can be defined by the type of goods sold, date of sale, location, and sometimes (often?) there are overlapping jurisdictions. Full compliance is incredibly hard to achieve without a relatively pricey sales tax software solution that is actively maintained and updated every time a city, township, county, state, etc. decides to adjust something. If applied strictly this would essentially work to lock-in established, wealthy concerns and stifle entrepreneurship.
Sales tax is considered to be regressive because it takes a proportionally larger percent of income from low income tax payers. They don't own property but still need to purchase consumer goods, afterall.
> The vote was 5 to 4. Justice Anthony M. Kennedy wrote the majority opinion and was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch.
I can't imagine we're gonna see RBG agreeing with the Alito/Gorsuch/Thomas clan too often.
That's relevant to specific sections not the entire thing. I really don't see any applicable fuzzy language involved.
As far as I can see it's purely a political question and they simply chose ahead of time to change their minds independent of any arguments given. That's a huge perversion of the entire idea of the supreme court.
I can't imagine we're gonna see RBG agreeing with the Alito/Gorsuch/Thomas clan too often.
To some extent, sure, but that's also exaggerated. The one or two "ideological" decisions with stereotypical lineups get all the attention, because general readers can pick a team and root for it, just like sports and election politics, so it makes for lots of clicks and ad eyeballs. In reality, differing lineups happen frequently, because the justices have their own unique perspectives on most cases and areas of law, and over the past several years unanimous and 8-1 decisions are up compared to the past.
The media focuses on the most controversial cases. There's less headlines for court orders signed by all nine. Between even two of the most ideologically/philosophically different justices, they concur 67% of the time.
I love these crossover rulings. They give me just the faintest confidence that the judiciary actually works, and isn't simply filled with a bunch of partisan hacks.
All nine Justices agreed on the merit, including Justice Thomas who was in majority on Quill which he now voted to overturn. The decedent argued that the precedent, while wrongly decided, should be upheld on stare decisis grounds, and it should be left to Congress to correct the mistake.
Someone needs to develop a service to make calculating and paying the sales tax easier. Something like plugin an address and it spits out the tax percentage and where to remit the payment to. Ideally the states would get together and create a centralized service so companies don't have to be mailing checks to every single county government that has a sales tax.
The problem with this is: how do you know what the tax rate is for the product you're selling? For instance, if you're in New Jersey and you're selling a clothing item like a pair of socks, then there's no tax. But if you're selling a fur coat, then there's full sales tax. There's different tax rates for different products, and it varies wildly across almost 10,000 different jurisdictions in the US.
I wonder if this extends to county/city taxes? That would open up even more ridiculous complexity.
Locally, there's a poorly structured (ie not machine-readable) spreadsheet of municipal taxes that tell you, based on _what side of the street_ you're on, whether you fall under the "mosquito district tax" that requires a small percentage more sales tax to pay for the annual spraying of mosquitoes.
Without simplifying the tax codes, I'm not sure full compliance over the web is even possible...
I work as a sales tax auditor. The answer is, you as the merchant need to know those rules. For smaller retailers they usually just tax everything unless the buyer has given some sort of exemption certificate. For the merchant you can tax exempt items as long as you remit the tax but if you dont tax a taxable item then you become fully liable for the uncollected tax. Thats why these smaller retailers tax everything.
On top of this there are also conditional taxations and tiers. For instance you pay $x in tax if you've moved $y in product $z in jurisdiction q unless condition c applies. This seems pretty nasty for any business that doesn't have full time legal and accounting teams.
In general you would identify the product type from a list of a lot of product types and then let your sales tax calculator as a service provider sort out what needs taxed and at what rate.
What if each state has a different set of product types?
IMO, the federal government's responsibility to regulate interstate commerce should include creating a standard of product categories. States can then tax those categories at whatever level they see fit.
That shouldn't matter too much, identify with the most granular option there is one time for each product and then let the tax provider figure out what falls into each bucket for each state. Also, UPC codes should help automate it for large swaths of products. If I buy a Sony lens cap from B&H or Amazon or Random Joe's Camera Shop it would have the same UPC and can be automatically classified by any number of tax vendors.
When using a sales tax API, the merchant configures their product catalog by assigning products to specific tax categories or tax codes based on the sales tax provider. Some tax categories are extremely granular to accommodate the scenario you mentioned. The logic on whether or not the product is taxable in a specific state based on a certain threshold is done completely within the API when passing over tax codes for each line item.
We have used TaxCloud which handles computing and paying the sales tax. You have to set what type of product each item you sell is so they know how to calculate tax for that type of item where you're selling it
And that "someone" should be whoever is requiring the tax to be collected. If such a process is too complicated or expensive for a state to offer, that should be the first clue that it's too complicated or expensive to require every single business across the country to implement.
I have a hunch that this will, in the end, be a massive win for large retailers vs. small ones. The task of figuring out how to calculate tax for all states is more or less the same amount of work regardless of size, which means for someone like Amazon it's more or less trivial, but for a mom-and-pop store it's a major hassle.
Payment processing services will most likely provide a solution to do this automatically. Charging credit cards is already pretty complicated, and they abstract it away already, so it would make sense for them to provide this as an additional service.
Agreed. I envision "tax compliance as a service" being offered by processors or third parties.
My only question is then whether individual municipalities in states that allow them to have their own sales tax will also now be able to force compliance. If that's the case, what a nightmare for online retailers.
That's how large retailers do it already. I worked at a company that created software for calculating sales and use tax for large retailers. It was an incredible headache and I doubt any retailer would do it themselves since they can also point to the vendor as the liable party when a mistake is made, and those mistakes will be made.
We even had areas where we could not find the correct tax because the government in charge refused to tell us
And... I've conflicting info from different states as to when the sales tax should be calculated. I'm dealing with a project right now that is both "pay now" and "delivery and services paid for later". At least one state said they'd prefer us to calculate the tax both at 'time of sale' and after money is collected after the service is provided/delivered, and because the rate may have changed (between months, for example) and they want the higher amount.
And there was that standardized sales tax system that the states were going to adopt but only ~15 did if I recall correctly. I can't remember the name but I do remember that each state then added their own idiosyncrasies to the "standard" and they inserted incorrect data we had to catch.
Or the 100s of thousands of literal exceptions such as "windows 98 physically shipped to a customer once in California on CD so you need to calculate the tax on it as a physical good forever, even when it's sold and received over the internet"
The supreme court decision was basically a refinement of what constitutes a nexus with respect to common carrier shipments. 200 sales, or $100k in revenue per year is what is reasonable here. It will be interesting to see what LA, Chicago, and NYC do to handle this specifically.
Payment processing services could certainly build out their own solution to collect and remit sales tax, but a lot of merchants sell on a variety of platforms and channels. For instance, a merchant might sell on Amazon and their own eCommerce site powered by Shopify. They might also have an ERP system as a "single source of truth" to record all of their transactions. Each of these platforms collect sales tax differently, possibly providing automatic calculations or simply leaving it to you to provide your own rates. This can get complicated very quickly and a payment processing service only has insight into the data you're passing over to them.
That's why companies like TaxJar and Avalara are focused on sales tax -- to integrate with every shopping cart, payment processor, marketplace, accounting, order management / ERP platform out there to combine all of your transaction data and determine how much sales tax you need to remit in every state.
They can match up rate to location, but most jurisdictions have their own laws on what items are taxable. There are also jurisdiction-dependent tax holidays. For example, Texas has a weekend in August where certain kinds of items (that are "back-to-school" appropriate) are tax free. So you have to know not only the rate, but also the rules for categorization, and those vary by jurisdiction and time of year, sometimes differently from year to year.
Congrats to Avalara on their recent IPO, pretty good timing... this is a Seattle-area firm that does local/state/etc. tax calculations. In the end, it's a huge tax on infrastructure.
The South Dakota tax only applies if you sell more than $100k or send more than 200 shipments, which factored into the decision:
Respondents argue that “the physical presence rule has permitted start-ups and small businesses to use the Internet as a means to grow their companies and access a national market, without exposing them to the daunting complexity and business-development obstacles of nationwide sales tax collection.” These burdens may pose legitimate concerns in some instances, particularly for small businesses that make a small volume of sales to customers in many States. State taxes differ, not only in the rate imposed but also in the categories of goods that are taxed and, sometimes, the relevant date of purchase. Eventually, software that is available at a reasonable cost may make it easier for small businesses to cope with these problems. Indeed, as the physical presence rule no longer controls, those systems may well become available in a short period of time, either from private providers or from state taxing agencies themselves. And in all events, Congress may legislate to address these problems if it deems it necessary and fit to do so.
In this case, however, South Dakota affords small merchants a reasonable degree of protection. The law at issue requires a merchant to collect the tax only if it does a considerable amount of business in the State; the law is not retroactive; and South Dakota is a party to the Streamlined Sales and Use Tax Agreement, see infra at 23.
That's still difficult to comply with. Imagine 50 different laws like that, each with their own tiers, and consider the difficulty accounting for them all and staying in compliance. That's not even getting into municipal taxes.
Yes, those platforms may handle sales tax calculations automatically for you for their specific platform. That's only the very first step. Merchants will then need to report and remit their sales tax to each state. If those platforms plan to handle the entire process, trust me they have a ton of work ahead of them if they decide to handle it in-house.
We don't. We're one of those mom-and-pop businesses that uses a self-hosted shopping cart, and use Braintree as our payment processor which has no sales tax recording system that I'm aware of.
Arguments like this annoy me. Someone has it figured out so it's OK for these complex tax implementations to exist. No, it's not OK, and it's not a solved problem. We recently implemented sales tax collection using the TaxJar API combined with Stripe. It took at least a month to integrate. These integrations are huge drains on business productivity. Government has to stop creating these complex rules. Create simple rules and stop treating everyone's time with such reckless abandon.
The problem is each government wants to make rules of their own and no one can agree to streamline. Then comes the issue with democrat and republican politics. Republicans will want low tax and little services while democrats the opposite. Good luck getting them to agree.
The end result is smaller busineeses get stomped. Only solution i see is to streamline it with software. Software is getting easier to use so hopefully it becomes less burdensome.
I'm curious where your 2% margin came from in this estimate. From what I can tell, that number is often quoted as Amazon's profit margins, but I'm not sure smaller more-specialized online retailers necessarily need to match Amazon's low margins.
If you are manufacturing something then the profit margins can be much higher. However, for retail 2% is fairly solid and likely above average when you include people losing money, but not outstanding.
Paying sales taxes online for the one state where I have a business that does retail sales takes between 10 and 30 minutes, depending on how complex that quarter's sales were.
Multiply by 50 states, and it's up to 25 hours a month of work.
For those of you who have never done this, sales taxes are a lot more complicated than they seem. In the three states where I've had retail businesses, different types of products have different sales taxes and each has to be reported individually.
It gets exponentially more complicated if your state also has use, consumption, or other retail taxes; and if it requires you to report purchases your company made out of state.
If I had a popular company, even with small sales, I could easily see this becoming a week-long headache I offload onto my accountant, who will then charge me extra.
So not only do I have to raise prices to include the sales tax for various states, I have to factor in the extra accounting expense.
But if the cutoff really is $200k per state, and you really had 50 states to take care of -- You'd be looking at a minimum of $10M in annual sales. If you're a $10M company, I think one of your accountants could spare the 6 hours per week taking care of it.
I've worked with a lot of small businesses so I don't mean to disparage things but this seems like a really obvious law that should be enforced.
That's a pretty big if. The $200k cutoff from the article is South Dakota. I've never had a business in a state that had any cutoff at all. Only sell $1 this quarter? Pay the tax.
Or you could just outsource it to companies like TaxJar that specialize in this and pay a few bucks to have to all done automatically. After this ruling I expect more and more platforms will have this sort of thing built in. One or two more fields to fill out for your products, but otherwise completely automated.
That page doesn't appear to factor in filing costs, which run up to $5000/year.
Also, I wouldn't generally classify it as "a little more work", since in many cases the old system could be hard-coded and the new system requires reworking the checkout flow to capture the full mailing address and pass it through an external API before calculating the transaction total.
I think people's point is that if a small business HAS to hire an outside service like TaxJar to comply with the law (pragmatically, if not legally), then it's a bad law.
Imagine if filing your personal tax return was, by law, so complicated that it was impossible for an individual to do it without hiring H&R Block -- that would be bogus. And to many of us, it seems awfully similar to what's happening here.
200 shipments is nothing, and $100k isn't particularly meaningful revenue, either. I don't know what kind of margins people get, but I'd guess $100k yearly revenue isn't even enough for one person to live decently, let alone afford to handle keeping up with a business.
It's 200 shipments or $100k in North Dakota which would be impressive for any mom and pop eCommerce site that isn't somehow focused on ND. Almost no one lives there.
There's a bunch of services that you can send your transactions to and they'll return sales tax data via API, your accounting software should have integration for them already. Worst case you can do them on a simple web form online (enter the address, types of goods, etc)
Those same services can also automate your tax filings with each state. It's not free, though.
If you have the resources to proactively keep your data up-to-date, then a lookup API is trivial. But it also doesn't begin to address remittance, which is by far a bigger burden.
Many online payment gateways already offer some kind of sales tax API. Keep in mind in California, sales tax changes per county. In places like Tennessee, the tax rate can change if your item is a grocery or isn't a grocery.
There are companies that already sell massive lookup tables or API access to calculate a lot of this stuff. I think for most retailers, this won't be that big a change.
Most mom-and-pop online stores have disappeared too. Gone are the days when you went to Pricewatch.com and Pricescan.com. Now all the individual shops just create a store on Newegg, Amazon and eBay. I'm pretty sure the big players will start offering up tools to do these calculations for them as well.
Hopefully you're right and that there will be/are services that make it fairly easy/cheap for anyone of any size to be compliant without a lot of extra work. While there are a lot of edge cases, the reality is that companies using a payment processor will probably be fine even though there's a mistake here and there--which no one will actually know about.
And the reality is that small businesses will mostly just fly under the radar if they want to even if some states don't have a floor for the sales that trigger taxes.
Yes, there are affordable sales tax APIs available for calculating sales tax. Usually massive lookup tables are at the zip / postal code level and don't provide enough granular detail by jurisdiction to accurately collect sales tax. They also don't contain logic around product exemptions, customer exemptions, shipping taxability, sales tax holidays, etc. I recommend using an API if you want to avoid under-collecting or over-collecting sales tax.
However, this is a HUGE change. Instead of registering for a sales tax permit and remitting tax for one state, smaller merchants will have to do this in many states if they meet a certain threshold. They will likely have to use sales tax compliance software to aggregate all of their transaction data across multiple platforms (Amazon, eBay, Walmart, etc) and their shopping cart, then report / remit accordingly.
Tennessee also has a "Sales Tax Holiday" on which certain items are tax exempt during certain times (during the holiday). And because we know how much programmers love date and time manipulations, it starts on "the last Friday in July" (I mean, it kinda had to, to be a weekend).
An exemption such as this is one of those things that I'd say is not worth supporting unless you're based out of TN, or do enough of sales there to make it worth your while. Sure, I'd implement it if it's required but every special case is just another point of failure.
But if you don't support it, are you liable for collecting more tax than required? How do you "not support" it? Just reject purchases from people in TN during the holiday?
Disclaimer: I am not an accountant. I would figure tax holidays are optional and might even require an application to take advantage of. So you would charge the regular sales tax and remit it to the state.
UPDATE: Out of curiosity I looked it up. And it looks like sales tax holidays depend as usual on the state. The MO back to school one is optional if less than 2% of merchandise is affected. But the TN one doesn't look optional.
"Under color of law" means that you're a law enforcement official. Collecting extra tax and then remitting to the state will almost certainly not cause you any issues.
I'm pretty sure that in most states so long as you remit the tax to the state, they are happy to take it, even if you didn't have to collect it. You only really get in trouble if you collect the tax from customers then pocket it.
You dont have to participate in the holidays though. If you charge a tax on an exempt item during the holidays then you just have to remit the tax. No system changes required.
> There are companies that already sell massive lookup tables or API access to calculate a lot of this stuff. I think for most retailers, this won't be that big a change.
Ok great so you know the tax to collect. How do you remit to a vast amount of jurisdictions? You think that's trivial? It's not.
Programming one of these for a Canadian website for provincial tax to hook into another recurring payment script, that hooked into PayPal was an annoying overhead especially when the company was bootstrapped and had like $0 revenue to even care about at that point.
I would hope Stripe or people using online services like Shopify will quickly add support for everyone. But the state by state, county by county, grocery vs non grocery stuff sounds like a goddamn nightmare.
EDIT: You won't be able to just be some just launch it break stuff and fix later SASS. You will have to keep track of all this shit and send out 50 different cheques, or track when your company has reached the minimum to have to pay sales tax back.
When I launch a single brick and mortar store, I have to worry about the tax jurisdiction that store is in.
When I launch a single small web app, I have to worry about everything single tax jurisdiction in the country.
I'm super not opposed to taxes, but I do think this is an area that the federal government should step in. If only to provide a standardized system for different jurisdictions to report their sales tax laws.
It seems like a very very clear use of the commerce clause and regulation of interstate commerce.
Congress has had decades to step in. They declined to, largely due to an anti-tax sentiment among a large block of them. Absent a resolution from Congress, and no indication that they'd do anything, the courts had to work with what they were given.
We should differentiate between 1) standardizing the tax calculation algorithm, and 2) standardizing the taxation rates
As long as the two are conflated nothing will change. Irrespective of political/personal/ideological position on nr.2) I think most of us can agree on nr.1)... (except for the bigger chains, and the FUD navigation services.
That analogy is not perfect, if you restrict your web app to only serve people within the same single tax jurisdiction as the brick and mortar store, then there is no need to worry about every single tax jurisdiction.
But I fully agree with you regarding the need for the federal government standardizing.
The support for this has been there on Shopify for quite some time. With a tool like https://www.taxjar.com/ I was able to easily pay all the state, county and city taxes in a few minutes for my wife's small online shop.
Still, tested correctness is different from guaranteed correctness. Either the taxation is unambiguously defined in law (howver scattered within the law) or it is not and we have void for vagueness.
The people who define the taxation are payed by taxes, so why not require the deliverable to include a cryptographically signed algorithm? Then all the shops can have free peace of mind:
What is likely to happen is Congress will finally pass the Marketplace Fairness Act which requires states to comply with the Streamlined Sales and Use Tax Agreement before they can collect the sales tax. 23 states already fully comply with the agreement.
As part of the agreement those entities without a physical presence in the state pay only a single state agency all sales tax and not have to pay tax to individual localities within the state. For each state the type of products subject to tax and the rates of tax on them are uniform across the state.
The states are also required to make available free of charge databases with boundaries and the tax rate on goods within each boundary. States must not hold any businesses liable for the under or over collection of taxes based upon any errors in their database. In addition the Streamlined Sales Tax Board of Governors certifies service providers. If a busines uses a certified service provider they are not liable for under or over collection of taxes based upon an error by the service provider. There are currently 7 certified providers. The certified service providers provide data regarding what taxes need to be collected on a transaction, will collect the tax on behalf of the business and submit it to the state on behalf of the business. Many e-commerce platforms already integrate with one or more CSPs. I imagine those that don't today will quickly do so or if large enough become a CSP themselves.
> Keep in mind in California, sales tax changes per county.
More than that. Sales tax in California can change arbitrarily, not just by county. E.g. different cities in the same county can have different sales tax. To further complicate things, shipping address may have a city on it but they might not actually "live" in that city.
E.g. in SoCal there is a city of "Westlake Village", which spans the Ventura-LA county border, which technically is a city in LA County, but technically is just a neighborhood within the city of Thousand Oaks in Ventura County.
When I last looked at this a few years ago for a project, for certain problem addresses, no one got them right. Not Macy's, not Amazon, etc.
The only real way to properly calculate sales tax is to geolocate their location.
As a fellow former resident of the county-spanning Westlake area, I can tell you that even the people that live there don't know where they live. I was debating with a friend of mine just the other day, and her and her mom couldn't even agree what city they lived in. Then I looked it up on the map, and different maps gave different answers. And they keep building new houses, so who the hell knows which tax jurisdiction each individual house is in? The people that live in them can't even keep track!
The ruling is technically limited to states which do not impose burdensome restrictions on interstate commerce. The ruling specifically notes that South Dakota streamlined its sales tax process.
It doesn't matter what Westlake Village wants to charge in sales tax to Amazon. In order for the sales tax to survive South Dakota v. Wayfair, it must be minimally restrictive on an out-of-state vendor. This means that it can't include local sales taxes, because an out-of-state vendor can't be expected to know about such taxes unless they do sufficient business with that locality. Note that both of the current federal sales tax laws before Congress also disallow local sales taxes in favor of state-level sales taxes.
Long story short: there will be up to 50 sales taxes that online stores must deal with.
In order for the sales tax to survive South Dakota v. Wayfair, it must be minimally restrictive on an out-of-state vendor.
While the outcome you describe might be a good one, I think you are greatly overstating when you read into this decision a new standard of "minimally restrictive". Major vendors already charge local sales taxes to the best of their abilities, and almost certainly will continue to do so.
This decision merely says that there is nothing inherently unconstitutional about a particular South Dakota law requiring a retailer without a physical presence to collect sales tax on behalf of the state. This does mean that a law in another state with similarly restricted characteristics is likely to survive review as well. But it doesn't (yet) create any line that says all of same characteristics must be met.
If New York City were to attempt to enforce the same law, it might find enforcement difficult, but it likely would not have constitutional impediments. If another state were to choose some wider scope, it too might well be judged constitutional. At the least, we wouldn't know until more cases have been decided: it's not yet clear how much 'stare decisis' has been thrown out here.
Instead, this case sets a standard for what is clearly constitutionally allowed, saying that there no longer a requirement of physical presence, but doesn't say much about what else would be required. It gives Congress an opening to pass a clearer national law about what the standards need to be, but doesn't create such a standard itself.
Still reading the case in detail, but these quotes address your comments head on and indicate that SCOTUS likely would not support a state scheme allowing for a multitude of local sales taxes (a la California).
EDIT: While it is true that the dissenting opinions wanted Congress to solve this problem for them, the physical nexus rule was (and generally always has been) a construct of the Courts, and should have been struck down by the courts. Having a legislative counterpart is no excuse for letting bad decisions live.
EDIT2: Also, SCOTUS did not strike down the nexus requirement, only the specific physical nexus requirement of Quill. The dicta quoted below strongly suggests that complex sales tax system would require stronger nexus than the South Dakota regime.
"Complex state tax systems could have the effect of
discriminating against interstate commerce."
"That said, South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. S. B. 106, §5. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules."
Also, SCOTUS did not strike down the nexus requirement, only the specific physical nexus requirement of Quill.
Yes, this is important to note. Still, much of logic involved in the decision makes it sound like in the future nexus may be defined quite loosely, based largely on the states' desire to collect the tax and the practical difficulties involved, rather than just being a redefinition of "substantial nexus". Consider this part:
Under this Court’s decisions in Bellas Hess and Quill, South Dakota may not require a business to collect its sales tax if the business lacks a physical presence in the State. Without that physical presence, South Dakota instead must rely on its residents to pay the use tax owed on their purchases from out-of-state sellers. "[T]he impracticability of [this] collection from the multitude of individual purchasers is obvious." [[cite]] And consumer compliance rates are notoriously low.
This might be good change socially, but it feels more like the court is pushing a policy change rather than offering a reinterpretation of the constitutional requirements. In this part of the logic, there's no change of the interpretation of nexus (since it's based on only the customer's failure to obey other existing laws), and yet it's used as justification for why the state has a right to demand action from an otherwise out-of-jurisidiction company. Same nexus (or lack thereof), but different constitutionality.
While one would hope for a balance between burden and benefit, I think it points to a much more inclusive concept of nexus. In the absence of a clear national law, until there is a case showing the limits in the other direction, I'd guess that states will pass more and more inclusive laws on who is required to collect on their behalf. We'll likely end up in a situation where a multitude of state laws technically require most retailers to collect, but selective enforcement means that only the large (or unpopular) players are pursued. I didn't like this previous approach of on-the-books but unenforced use taxes, but I'm uneasy about this outcome too.
But that's only if you're company doesn't have a point of presence in that state right? If you have an office in California, then you do have to use a service/API that handles all those crazy local taxes cases (or at least attempts to).
One of the things I've been wondering is if "state sales tax" in this ruling includes cities, counties, other subdivisions, or just full state level taxes only.
It's not just rates, it's product categories that matter. The rules separating one product category from another can get incredibly arcane. Here in Minnesota, a pizza ordered from Papa John's is taxed but from Papa Murphy's it isn't - because the Papa Murphy's isn't cooked. Clothing isn't taxed, but determining what is or isn't considered clothing isn't always easy out at the margins. If you live in a state you can get guidance on this stuff, but if you don't you might not even know to look.
> In places like Tennessee, the tax rate can change if your item is a grocery or isn't a grocery.
That's not even the half of it. Grocery vs. non-grocery changes the rate. Some services that are tax exempt in other states are not in Tennessee.
And in Tennessee, you have the state level of 7%, and the ability for it to rise up to 9.75% based on a whole lot of inter-dependent local tax overlays.
The 2.75% difference comes from county, state, school district, transportation district, and "special purpose district" levies. All of which are optional to levy and voted on at the local level, and which may or may not overlap with each other to "stack" up to that cap at 9.75%.
Avalara, which is the de-facto owner of the sales tax calculation software space, has a good write up[1].
I find it highly unlikely that mom-and-pop stores will have to collect and remit taxes to other states.
From they very start of Quill they said: "we ruled that a "seller whose only connection ... is by common carrier ... lacked the requisite minimum contacts with the State." So the issue was: how substantial does the seller's contact have to be?
The court ends this decision by saying "the first prong ... asks whether the tax applies to an activity with a substantial nexus with the taxing State... sellers who engage in a significant quantity ... are large, national companies ... undoubtedly maintain an extensive virtual presence." So the issue remains: how substantial does the seller's contact have to be?
The underlying logic of the law hasn't changed, they just fixed some imprudently broad language referring to a physical presence.
So I doubt the SCOTUS abandoned one bright-line rule for being flawed in favor of another bright-line rule that equally fails to address the underlying issue of substantiality (e.g. imposing a "single-sale" rule).
In order to enforce this ruling a State Attorney General would have to file a lawsuit against a company and get an injunction requiring them to collect taxes and get a judgement for back taxes.
Small businesses will just ignore this because there will be no enforcement unless you are operating at a scale large enough (millions in taxes) to justify enforcement.
That is an interesting take on it. I was thinking it would be more of a level playing field for small physical retailers if the larger online stores had to charge the same retail tax.
My thoughts were that if you bought something from a store it would be x% more expensive with sales tax than purchasing off of amazon and having it delivered without needing to pay sales tax.
This way both have to charge the same sales tax and the difference in price will simply be down to the costs relating to owning a store.
Amazon already collects sales taxes based on the state the order is delivered to, despite not being legally required to until now. They've already baked the compliance costs into their prices. Smaller retailers who weren't doing this will suffer, as they now need to raise prices.
You seem to be conflating online vs. physical with large vs. small. There are small online merchants and large physical retailers — for example, Walmart is significantly bigger than, say, the online bakery Vegaron.
Thankfully with Shopify it is extremely easy and straightforward to manage for my wife's small online store. Their platform does a great job properly charging taxes by state, county and city in certain situations. Then using an inexpensive plan from https://www.taxjar.com/ the entire filing and paying process is 100% automated.
In 10 minutes I was able to file and pay all the sales taxes to several state, dozens of California counties and a handful of cities that charge additional taxes on top.
So you assume. As a small business you are unlikely to be audited, but that software could easily be wrong creating a huge minefield and potential liability.
So that would be the software companies' liability. And such business practice can differentiate good ones from the bad ones. I'm seeing a new business market here even.
There is zero economic gain from more complex tax rules. Further, the software does not absolve you of liability. At best they may agree to cover it, but that's unlikely and they can also go broke if they get it wrong.
>here’s zero national economic gain from _any_ variation in law from state to state
Yes there is. States compete with each other and this prevents any one of them from having laws that are much crappier and more oppressive than average because when that happens businesses and people leave.
So competition might prevent one of many downsides to different states having different laws? I don't see why this means there's any benefit to that situation over just having one set of laws?
The model [1] GP alludes to claims that competition forces small governments to provide better (more efficient, more optimally chosen, etc) local services than monopoly governments, for the same reasons that competitive companies are expected to provide better services at a lower price.
Actually, current sales tax software provided by South Dakota and other states does absolve a merchant for liability if used to calculate sales tax due.
Actually, the federal government should oblige each member state to provide the algorithm, and sign it cryptographically and have it expire every X fixed time interval, and have signed algorithms for the current and next time interval, so that software can automatically fetch and stay up to date.
Then the "business opportunity" of navigating FUD evaporates. Currently any such enterprise charging for such a service can spend a fraction of their budget lobbying against harmonization...
Since it would be an obligation of the states to the federal government, these algorithms (provided by each member state) should be hosted on a fixed federal government site.
This would reduce costs of tax collection for all parties.
What is the most convenient format for this layered geographic data? Are the tax district boundary polygons already otherwise available as open data?
What do localities call these? Sales tax tables, sales tax database, machine-readable flat files in an open format with a common schema?
How much tax revenue should it cost to provide such a service on a national level?
States, Counties, Cities, 'Tax Zones'(?) could be required to host tax.state.us.gov or similar with something like Project Open Data JSONLD /data.json that could be aggregated and shared by a server with a URL registry, a task queue service, and a CDN service.
While the Bitcoin tax payments bill passed the Senate and House in Arizona, it was vetoed in May 2018. Seminole County in Florida now allows tax payment with crytocurrencies such as Bitcoin:
> According to a press release, the county will begin accepting Bitcoin (BTC) and Bitcoin Cash (BCH) to pay for services, including property taxes, driver license and ID card fees, as well as tags and titles. The Seminole County Tax Collector will reportedly employ blockchain payments company BitPay, which will allow the county to receive settlement the next business day directly to its bank account in US dollars.
This could also help reduce the costs of tax collection and possibly increase the likelihood of compliance with the forthcoming tax bills!
these are all very good questions, and only a community discussion of people with the right skills and interests can draft a petition, if enough people contribute to the discussion we can make the proposal more reasonable and robust against valid criticisms... but I believe we can make this happen by just starting the discussion. We can bitch on Hacker News, or we can draft a proposal for the different government levels. The more reasonable we draft it, the higher the probability the petition will be a success. I think it wouldn't be hard to argue against this proposal that a legally enforced computation should be open source, i.e. not just the algorithm for the computation but also all the data lists and boundary polygons used in the algorithm...
I think you are conflating several different types of liability here.
If: i)your accountant messes up due to negligence or worse, ii) you get audited, and iii) it turns out you owe far more than you thought, then you are liable to the Govt for the extra amount owed. The accountant may be liable to you for professional negligence, damages etc. Your damages against the accountant are not the extra amount owed (because it is what you should have paid in the first place), but losses caused by the mistake. In the above scenario, the Gov't may assess a "penalty" and/or "fee" for late payment of taxes, but those fees are usually waived and/or extremely nominal. In the above-scenario, criminal liability simply does not happen. The above is not legal advice.
This assumes these mom and pop shops have heard of these services. Personally I was helping someone get their little internet store off the ground and it was a huge hassle even with woocommerce.
If they accept credit cards online, their credit card solution ought to include tax management feature.
Usually, small shops can ignore stuff like this until they get a bill from an authority, or get big enough for it to matter. As long as they save money for estimated tax liability (approximately equal to their local tax rate), they are fine.
And what would it look like if Mom & Pop were starting an ice-cream shop instead of an online storefront? Would they _not_ have to pay tax then?
I get that being subject to regulation or taxation is more burdensome than not being subject to it, of course that's the case. But it does not follow that requiring sellers to pay sales tax is unduly burdensome.
If the underlying complication of tax is the problem, fix that.
> And what would it look like if Mom & Pop were starting an ice-cream shop instead of an online storefront? Would they _not_ have to pay tax then?
They would only have to pay sales tax in one tax jurisdiction, the one in which they are physically based and in which they can vote to change those taxes.
> But it does not follow that requiring sellers to pay sales tax is unduly burdensome.
What follows is requiring sellers to track and remit sales tax in some 10,000 jurisdictions is burdensome.
With a brick-and-mortar storefront, they have to figure out one jurisdiction's salestax (rate and what is taxable), their own. That is quite literally orders of magnitude simpler than this.
How much do you end up having to pay for TaxJar? It looked to me like the monthly plan was cheap but you'd get totally hosed if you tried to use them to auto-file all the taxes. Are you filing yourself?
How do you handle knowing what items are taxable vs non-taxable for each item and taxing district? How do you handle customers who are tax-exempt? How do you handle tax holidays and reduced tax on school items in August?
How many mom and pop stores go through the hassle of maintaining their own software for this vs just paying someone else to handle it, who can do so trivially?
I agree. The most challenging task for smaller in house built sites is going to be figuring out how to stay up to date with the hundreds of tax rates especially in CA as well as modifying their systems to handle blended tax rates when a customer orders both a digital and physical product.
Except for the part where mom-and-pop stores were competing with large retailers operating out of state, who could undercut them because they weren't charging sales tax.
I suppose we should continue that state of affairs, because heaven forbid we hurt the mom-and-pop online stores... Which make up a tiny fraction of overall commerce, compared to physical mom-and-pop stores.
Software engineers and entrepreneurs are extremely clever, numerous solutions will arise to integrate with all of the major ecommerce platforms to automate this. This won't be much of a burden on business. As long as regulations are clearly defined (unlike GDPR) the industry will deal. Uncertainty is always the biggest risk.
That depends on whether this decision gets extended to the municipal-level taxes. That's where things get really complex. The geo-boundaries on the areas where taxes are enforced aren't limited to simple city boundaries. Street number or side of the street (odd/even addresses) can matter. And taxes can vary depending not just on location, but also the items purchased. It's a nightmare scenario for internet businesses. Brick-and-mortar stores deal with this by just supporting taxation for a one specific location. If internet stores are required to support all locations, it will be a huge disadvantage.
> If internet stores are required to support all locations, it will be a huge disadvantage.
Who said anything about internet stores being required to support all locations? Nothing is stopping an e-commerce outfit from restricting sales to a particular state, or county, or city, and simplifying their tax situation considerably. And brick-and-mortar chains with multiple locations already have to deal with these rules.
I don't see the "huge disadvantage" you're talking about.
There's a huge difference between being required to support each of your locations and being required to support each of your customer's locations. Each Walmart is able to sell to nearby customers. Asking internet retailers to collect local taxes would be like requiring Walmart to get home addresses for each of their customers and collect taxes according to that address instead of the store's address.
You have no idea what you are talking about. Won’t be much burden on business? If you have physical shipping addresses, it is a bit easier, but what if you sell virtual goods/services? Billing address? But that doesn’t actually have anything to do where the person is actually buying the product. If I go to a masseuse in California but my credit card has a Texas billing address, I am still charged California taxes. So the precedent of using billing address for tax calculation is a bit ridiculous and innaccurate. What if I have a foreign billing address? So do we use IP address? My IP address routinely has me in the wrong city and sometimes wrong region. When I lived near Avignon, France, my IP would always show me as being in Corsica. Then there is VPN that could make us all in Oregon and avoid taxes completely. Oregon-as-a-Service.
Engineers are clever. Sure that might be true, but now that cleverness is going to be wasted building tax compliance solutions which aren’t even close to being “not much of a burden.”
If the purchaser has an address in an area with taxes, you then pay it. If they do some weird VPN workaround and billing address in the Cayman Islands, then you don't pay the taxes. It's self compliance. We sent men on the moon in 1969, this isn't rocket science to calculate a tax bill.
It's really interesting to think about this. Very different types of complexity.
The smallest possible correct program implementing a tax calculator is going to be a LOT bigger than the smallest possible correct program for controlling a 60's era manned flight to the moon. The latter is more complex in other ways, of course.
Complexity can be "deep" or "wide". software for rockets is "deep and thin complexity", but calculating hyper-local minimal tax bills is extreme "wide and shallow complexity".
> Engineers are clever. Sure that might be true, but now that cleverness is going to be wasted building tax compliance solutions which aren’t even close to being “not much of a burden.
Orrrrr a couple of companies will step into this problem space, solve it, and everyone will offload their tax compliance to those companies, in exactly the same way that we don't all waste 1,000,000 engineering hours on the arcana of banking and credit card networks and just offload that concern to payment gateways with nice APIs.
This is already the way it works in most of the world. HN is showing its provincialism by convincing themselves this is some kind of impossible-to-solve problem.
This is great news for Amazon. They already collect sales tax on everything they sell in most states (47 I think?). Now that smaller sellers (marketplace sellers, eBay, etc.) also have to collect tax, that hurts the ~8% discount built in, so why even shop around?
How does f'ing the third-party sellers help Amazon? You know they make money from them, too right? If anything Amazon and eBay have offloaded inventory and sometimes logistics risk onto third parties and they're happy to just extract rent. They're not interested in going back to be a first-party warehouse of everything.
The problem with Amazon is that shipping can take months for non-prime users. In most cases you are better off buying from walmart if they carry the item.
If you're going to take the onus away from the _purchaser_ to file correctly for his state and put it on the retailer, then there should be a uniform, very simplified way to correctly do that in place first.
First, random trade wars, raising prices for all those clueless, provincial consumers whom don’t realize what made Walmart prices cheap. Next, cuts to MedicAid for tax breaks for the very rich that are literally blood money by killing people, throwing them off health insurance and sentencing them to bankruptcy. Then their genius band of self-destructive nincompoops hurls some more arbitrary taxes onto the people whom can least afford it, i.e., anyone not rich. Is this the same, worn political cycle of “sabotage the country while blaming the other side for doing” it gambit as usual? smh
I tend to view the avoidance of paying local taxes as one of the internet's original legislation workarounds (1). The entire wholesale (you buy for resale, pay taxes when that happens) vs retail (you sell to the end user) division was abused to allow the historical "nobody pays taxes on the internet, so buy there and avoid them" logic many people used.
It would have been interesting to see how differently retail sales would have grown, especially Amazon, if they were required to wrangle with local sales tax in all the places they sold into.
Additionally, most locations have a Use Tax that's identical to local sales tax, so it's transferring the legal burden onto the buyer. Almost nobody does this.
1: It's not a new or internet-specific tactic either - many car dealerships advertise "No City Sales Tax!" and are barely on the other side of the city limits.
This wasn't invented by the internet. Interstate mail order sales delivered by railroad in the 19th century were always tax free. E-commerce inherited that system.
This is potentially much broader though -- say you buy a domain on some registrar, do you pay taxes on that now? Every such place then needs your address, too.
And going down this road, p2p barter on the internet of any kind might be subject to a tax regime soon.
You need the address to charge them the _correct_ sales tax. In Washington State, the rate is based on the address where the product is delivered, so in the case of your example sandwich, that's the address of the deli.
Because you’re in the physical location, so you have to abide by that tax law. You’d need at least the zip code of someone to charge appropriate taxes for where that person physically is.
So while the states and small businesses are busy patting themselves on their backs, Amazon will quietly build distribution points in every zip code and prepare for 1 hour shipping everywhere.
One of the nice benefits of the US system of government is that the ability to relatively easily pick and choose where to live, where to work, where to do business, etc forces the states to compete with each other to some degree. This ruling runs counter to that because using online retailers to avoid local taxes is a very low effort way to avoid local taxes or avoid funding a local government you disagree with and this ruling paves the way for states to prevent that.
I have no problem with sales tax. I have a problem with states getting a cut of transactions that did not result in transfer of money to an entity within their borders.
Sales taxes generally follow the location where the money was received, not where the goods were used. If I buy something at a brick and mortar store then I'm subject to the sales tax where that store is located. Why should the state of buyer be getting a cut of the transaction when the state of the merchant is the one that is responsible for the environment in which that commerce happened?
If I live in MA and drive to NH and buy fireworks then MA has no claim to tax the transaction because it's obviously the environment of NH that made that commerce possible at all (you can't buy fireworks in MA). What if I live in CA and want to buy some special paint or cleaning product not for sale in CA so I drive to NV to buy it? What if I want to buy a widget and my home state taxes it and some other state subsidizes it (not necessarily at the retail level, the tax/subsidy could be anywhere in the supply chain) so much that I drive to the other state. In that case my home state still has no claim to tax the transaction since it happened out of state. What if the price is so much better elsewhere I'll be willing to pay shipping from half was across the country? How does the fact that the a 3rd party (shipping company) is responsible for getting the goods to their address change the situation? Does the fact that the transaction originates online affect anything?
I have no problem paying state sales tax as long as it goes toward the state of the merchant. The state of the merchant is responsible for creating the environment that facilitated the commerce. They should be the ones getting a cut.
Edit: I genuinely would like to know what the reasoning of those who disagree with me is. I see no good that can come from allowing states to exert authority on businesses outside their jurisdiction.
In what way? I choose to live in Oregon. Oregon doesn't have a sales tax. So the Supreme court ruling has no bearing on me. There is nothing stopping anyone from moving to one of the states that don't have a sales tax.
The US system allows you to easily pick and choose where to live, from which where you work and where you do business generally follows.
Except in the case of living close to a border (which is a bit of a hack), you generally live, work, and pay sales taxes in the same jurisdiction in which you vote and receive services.
You're right that it forces states to compete with each other, which is great.
Your example runs completely counter to your stated narrative. Your example is one in which you live and collect services in one place, but refuse to pay taxes to support your chosen lifestyle by instead "supporting" with your dollars a system you don't want to live under.
Sales tax has one of the most complicated structures. Recently ADP built logic to tax according to counties and sub-zones (not just states and cities) to save millions on taxes for its customers. I doubt small start-ups can afford their software. It will be great if Stripe can come up with an API to simplify this. Or else, its clearly a win for large retailers and not as much for small ecommerce stores.
Isn't this at some level taxation without representation? If I don't like how some other state is taxing, I can't alter that behaviour by voting. At least in my current state I might have a chance to do so.
>Isn't this at some level taxation without representation?
I'm not a fan of the ruling but I would expect the answer to your question would be: "No because you aren't forced to buy the product from a retailer in that state"
From the perspective of "the retailer is being taxed," then this _is_ taxation (of the retailer) without representation. But of course, almost every retailer passes sales taxes right along to the consumer, so "the retailer is beng taxed" is only true in a theoretical sense.
And if the retailer really doesn't like it, they can just not sell to customers in the state. But we know that's not going to happen. Like you said, the customer is the one paying the taxes, and the customer is the one who votes to elect those who make the tax laws that affect him.
Am I missing how this operates? I see others on the article making the same claim as you, but isn't the ruling that if company X sells to person A then the state where A resides gets to tax the sale? So in any transaction there will be one or more party that can vote on the tax. You can hardly complain about that unless you think it is valid to tax transactions that occur between two people if and only if they live near each other. Edit: and the sales tax was already legal to impose, the only change is whether the purchaser or the seller collects it. So this doesn't change whether anything is taxed, hence not changing whether it's taxation without representation.
By that measure, if I am driving through a state, and I don't like their gas tax policies, me paying tax on gas that I had to buy while driving through is also taxation without representation.
The taxation is on the person living in that state. Most states require that a person buys something and doesn't pay sales tax, they are supposed to self-report and pay the tax. (Most people don't).
>The taxation is on the person living in that state.
Right, and before this decision, it was that person's responsibility to remit. Now it is the business's. So the burden of remittance has shifted to the disenfranchised party.
>The party paying the tax votes on representation.
Technically the business is "the party paying the tax", in the sense that they are the party sending money to the government. If I drop ten dollars on the counter and sprint out of a store carrying an item that costs ten dollars plus tax, the store is still responsible for paying tax on that item to the government.
Not really disenfranchised. You don't have to sell to someone in another state if you don't want to.
The laws of various states place many restrictions and requirements on businesses who want to sell to their citizens. This is just another one of those.
This is about whether using a common carrier to ship goods somewhere is considered a business nexus. And the supreme court ruled that it is, if you are making 200+ shipments a year or $100k in revenue.
Most of the coverage I've seen downplays it, but it should be noted that the question is not whether tax is owed on these out-of-state internet purchases, but whether the retailer should be required to collect it and submit it to the state. Currently, the purchaser is (in 45 of 50 states) legally required to pay a "use tax", but most Americans (98%?) are blissfully unaware of this requirement, or have simply decided not to pay it. This is pure illegal tax evasion, based on the (correct) assumption that enforcement is lax and risk of punishment is low: https://www.npr.org/sections/money/2013/04/16/177384487/most...
Rather than attempting to enforce these existing laws against their residents (unpopular and difficult), states believe it will be easier to get compliance from retailers. Until this decision, it was unconstitutional under the Commerce Clause for a state to demand this collection unless the retailer had a "substantial nexus" in the state, generally defined as a physical presence. Post-decision (pending new national laws created by Congress) all retailers are fair game. The particular South Dakota law in question has requirements as to volume of purchase, but this is not a principle of the decision.
Beyond the implications for internet retailers, this is an interesting counter-example to the Supreme Court tradition of "stare decisis" (to stand by things already decided). Apparently, everyone on the court agrees that earlier decisions that produced the physical location test were poor precedent. Usually, the court is very reluctant to revisit these decisions, but in this case, the majority justices decided to abandon precedent and explicitly call the earlier decisions mistakes. The dissenting justices, despite conceding that "Bellas Hess was wrongly decided", felt that the court was better off sticking with the flawed precedent than changing things up now.
Personally, whether or not this is good constitutional precedent, I think I agree with the dissenters that allowing local jurisdictions to make laws affecting far-away businesses who have no other local presense is going to lead to problems. Beyond just the burden of collecting confusing locally defined taxes, I fear about where else it leads. If a locality can enforce its local tax laws, what other custom crafted local laws can it enforce in return for access to customers? Can it require a business license? Should it be allowed to enforce its local environmental and labor standards as well? Is this a good thing?
>If a locality can enforce its local tax laws, what other custom crafted local laws can it enforce in return for access to customers? Should it be allowed to enforce its local environmental and labor standards as well?
This is pretty much what happens with California and car manufacturers. Even today on certain aftermarket car parts (primarily exhaust systems), there are explicit notices that they are legal anywhere in the US except California.
It seems kind of silly that the stock prices dropped for online sellers that already collect state sales tax. Is this a knee-jerk reaction or is there more to this ruling that would be cause for this?
If you run a SaaS company, you're affected too. You probably live in California (which doesn't consider SaaS sales-taxable), but other states do[1] so you'll have to start collecting taxes.
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[ 5.3 ms ] story [ 702 ms ] threadThe prime markup with tax is almost always more expensive than the 3rd-party seller without.
I hate dealing with individual sellers on Amazon, and I really don't think I'm alone in that.
https://www.tax.ohio.gov/faq/tabid/6315/Default.aspx?Questio...
The problem with consumption taxes is it just starts a debate over what is considered necessary/unnecessary. I think you would be better off exempting people rather than classes of items.
From some sales taxes. That is far from universal.
Wrong. Come here to Virginia and try it. Or any Southern state for that matter.
Note: In Virginia, groceries are taxed, but at a lower rate than the normal sales tax.
..and yes, I'd prefer that the ruling was that the online retailer had to get a business license in every state. That ruling would create such a torches and pitchforks situation from citizens suddenly having their lives disrupted that we'd quickly return to status quo.
That is the worst possible reason to enact a law. It should be obvious why making people's lives worse purposefully for political posturing is a bad idea, and you run the risk of your plan backfiring and having to live forever in the now-worse world.
Suppose I the owner of a small retailer based out of Oregon but have a location in Ohio. Should I be exempt from collecting sales tax simply because my company is registered and HQ'd in Oregon? The previous ruling was no, Ohio has the right to require my company to collect sales tax for sales in Ohio, but the ruling required that my company have a physical presence in the state. All that happened today was that the requirement to be physically present was dropped.
I mean the law is fairly narrowly scoped and certainly doesn't give states a blank check to write laws for citizens of other states.
In favor of what, exactly? Don't pretend that sales taxes could just be abolished, and states would just go without that revenue. Kansas tried gutting their tax revenue; it failed miserably.
- I don't hate taxes
- I wasn't babysitting this thread
- The idea that, of all things, regressive sales tax is the only conceivable and fair thing to get state tax revenues from is ridiculous.
Tax land value, most of the appreciation in land value is windfall gain.
https://stripe.com/docs/orders/tax-integration
From their docs: https://developers.taxjar.com/api/reference/#sandbox-environ...
* Sandbox Environment
TaxJar provides a sandbox environment for automated testing and development on all TaxJar Plus plans. After generating a sandbox API token, point your API client to the sandbox environment...
There is no sandbox API available without 'plus'. Perhaps you had an earlier version and are grandfathered in?
Avalara and Taxamo don't list prices on their sites as far as I managed to find. Googling turns up comments saying that Avalara is expensive.
TaxJar and Taxify do list prices.
For a small business (up to 1k transactions/month) is $17/month if you pay for a year up front ($19/month on month-to-month). A transaction is either giving them an order and having them figure the tax, or looking up a rate with their API.
That will get you reports for each state, ready to file. If you want them to actually file for you, that costs more. If you have to file in all 45 states that have sales/use tax, with a monthly filing in each, it would come to $5000/year at TaxJar.
Taxify is $47/month for up to 1k transactions, and it would be $14580 to have them handle filing under the same 45 state/monthly filing assumption.
I don't see any pricing for their services for their services for determining how much tax you need to collect for a given transaction.
[1] https://www.avalara.com/us/en/products/sales-and-use-tax/ava...
Amazon already collects tax in Colorado, but a few smaller retailers will send you a letter at the end of the year totaling up your untaxed purchases. Since different counties and localities collect different rates, it's hard to get the total tax right at the time of sale.
Many states do this. I imagine that relatively few individuals (as opposed to businesses) actually comply.
https://www.npr.org/sections/money/2013/04/16/177384487/most...
But, as you said, Amazon already collects tax at time of sale which was the bulk of my purchases.
https://www.ftb.ca.gov/individuals/use-tax.shtml
https://www.cdtfa.ca.gov/taxes-and-fees/use-tax.htm
Yes, it is hard to 'get the right rates' 100% of the time.
If you are specifically talking about Colorado, you may be right. I'm not familiar with how Colorado does sales tax.
In general, though, zip code is not sufficient. Even if use zip+4 it might not be sufficient. For example, in Washington, people who live in zip 98027-5444 on Renton Issaquah RD SE in the address range 9100-9199 pay 8.6% if their address is even, and 10% if their address is odd. A tax district boundary runs right down the middle of their road.
See this comment from a few months ago explaining in detail how you find the sales tax on a sale in Washington: https://news.ycombinator.com/item?id=16196591
Practically speaking, of course, few people keep detailed enough records to even calculate the correct use tax owed at the end of the year, and any tax that might have been owed goes uncollected and unnoticed. Which is the problem that led to this Supreme Court case in the first place.
I was on an automatic payment with them, and they announced that they were adding 911 taxes.
I canceled the automatic payment and started getting refills at pincheap.com (a dealer with no presence in either Iowa or Illinois), avoiding both sales tax and the 911 tax.
There is no "delivery" of any physical product, so I wonder if the tax status of that arrangement changes.
But if you're driving up to buy a few cases of New Glarus beer, chances are you're vastly unlikely (at or nearing 0%) that you'd be held to account for that purchase for Illinois tax purposes.
AWS launches new 'Guaranteed to be in Oregon' VPN endpoints! Free for use while shopping on Amazon.com.
IIRC you're expected to get the out of state retailer to reimburse you at a later time and then when you're paying your income taxes you include any purchases subject to use tax.
In Massachusetts, oddly, if you paid less than the Mass sales tax rate of 6.25%, you owe 6.25% use tax. It's not the delta you owe, it's the full amount. But you don't owe it at all if you paid more than the Mass rate.
> Use Tax on the Difference
> If you paid at least 6 percent to another state on your purchase, you do not owe use tax to Michigan. If you paid less than 6 percent, you owe the difference.
> NOTE: The full 6 percent use tax is also owed on purchases made in a foreign country.
[1]: https://www.taxslayer.com/support/1153/michigan-use-tax
[2]: https://www.michigan.gov/documents/taxes/MI_1040_Instruction...
One is that they don't use the infrastructure in the state. Shippers are either already taxed for their use if private or self funding government in the case of UPS.
The second is a more slippery taxation without representation which also gets into all sorts of semantic issues with who is really being taxed the in state residents or the out of state residents.
Really the tax infrastructure is in drastic need of modernization and streamlining. It may step on a lot of toes but I could see forcing online sales tax into a federal fixed rate with redistributed fixed percentages as worth it. Say 5% rate nationally and of that 1/3rd each to the buyer's state and the seller's state and 1/6th to each municipality respectively with it defaulting to the state if it is unincorporated. It would even actually fit in interstate commerce domain nicely.
There's certainly a good argument for a flat national sales tax but that doesn't really fit with federalism and, anyway, good luck getting New Hampshire and New York to agree on a number.
This is one way of looking at things, but I think sales tax is much closer to a tax on consumers than on businesses. Or at least is intended as a tax on consumers to fund their state infrastructure, often because imposing an income tax is impossible (e.g. Washington State constitution) or just politically unpalatable.
Normalising taxes is basically impossible in an environment where sales taxes are a meaningful part of a government's budget.
In each case, the seller (who has no physical or other presence in X) is required to collect tax from the buyer (a resident of X) and remit it to the tax authorities in X.
The tax is owed by a resident of X, to the tax authorities in X. But the tax authorities in X want someone outside X to collect it on their behalf.
EDIT: According to Wikipedia, some states charge sellers sales tax, and others do it the way I assumed (tax is charged to buyers, but collected by sellers).
Also, this is only for consumers, to business customers you can reverse-charge the VAT so they have to handle it.
My objections to this are:
- If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it.
- There are ~200 countries in the world. Should any company who wants to sell over the internet need to know about the sales tax or VAT registration thresholds in each of those countries? If so, this gives a huge advantage to large retailers over small ones.
That's the case, no? When I order stuff from AliExpress, the seller's only responsibility is to declare the item value honestly, it's then up to the carrier and local customs to charge VAT, import duties and fees.
Online business already have a bunch of advantages over brick-and-mortar, having to keep a database of VAT rates, and then generating a report and sending a few bank transfers is not that onerous in comparison.
As far as my experience goes, that is the case when seller is outside of EU. Buyer needs to pay customs the taxes on the item. In Finland it's common that when package outside of EU arrives in Finland, customs will hold and send buyer a message to declare item and pay taxes on it, especially if the value was declared on it (though they won't tell you what value was declared on it which can get tricky with things such as mixed electronic & physical goods on Kickstarter). It has it's own share of problems, like that buyer needs to figure out the TARIC code of the item (which are extremely specific, like "Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes - Other footwear - Covering the ankle but not covering the knee - With uppers of plastics").
Within EU it used to be that seller collected local VAT if their sales didn't exceed certain threshold to the buyer's country (100k IIRC). There has been some talks about modifying it so that seller would always need to collect buyer country's VAT, but I don't remember what is the current state of it is.
https://ec.europa.eu/taxation_customs/business/vat/what-is-v...
That page says that VAT is 'a consumption tax because it is borne ultimately by the final consumer. It is not a charge on businesses.'
Note, this ruling doesn’t mean that all businesses will immediately be taxed. The law over which this suit was filed requires collection if your annual business in the state is $100,000 or >200 sales, which means you’re already doing a sizeable business.
There's a lot of faxing, forms to fill, etc.
So most of the value is the vendor doing the legwork in keeping up with details and fixing corner cases. And leveraging their pre-existing trust network and economy of scale.
Does a smock qualify as an Apron and thus it's free from sales tax? What if I print 'kiss the cook' on a smock?
Sales tax has a single set of rules that if you are in a specific physical location, but it becomes 50,000+ wildly inconsistent rule sets when you look nationwide.
From experience, the city of San Jose barely knows what its border is, so I wouldn't expect others to either.
Also, "jurisdiction" is terribly complicated when it comes to sales taxes. A jurisdiction can be defined by the type of goods sold, date of sale, location, and sometimes (often?) there are overlapping jurisdictions. Full compliance is incredibly hard to achieve without a relatively pricey sales tax software solution that is actively maintained and updated every time a city, township, county, state, etc. decides to adjust something. If applied strictly this would essentially work to lock-in established, wealthy concerns and stifle entrepreneurship.
ADDED: Though the decision has some language that would seem to imply there has to be some lower bound.
Sales tax is considered to be regressive because it takes a proportionally larger percent of income from low income tax payers. They don't own property but still need to purchase consumer goods, afterall.
> The vote was 5 to 4. Justice Anthony M. Kennedy wrote the majority opinion and was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch.
I can't imagine we're gonna see RBG agreeing with the Alito/Gorsuch/Thomas clan too often.
Quill now harms states to a degree far greater than could have been anticipated earlier. That hardly seems like it changes the Constitution.
Thus our perception of what is undue, excessive, cruel, or unreasonable can change, without the Constitution changing a word.
As far as I can see it's purely a political question and they simply chose ahead of time to change their minds independent of any arguments given. That's a huge perversion of the entire idea of the supreme court.
To some extent, sure, but that's also exaggerated. The one or two "ideological" decisions with stereotypical lineups get all the attention, because general readers can pick a team and root for it, just like sports and election politics, so it makes for lots of clicks and ad eyeballs. In reality, differing lineups happen frequently, because the justices have their own unique perspectives on most cases and areas of law, and over the past several years unanimous and 8-1 decisions are up compared to the past.
I typed "avatax vs" in Google and it autocompleted "taxjar", so there's another I guess.
Yes it would be nice if the states made it easier.
Locally, there's a poorly structured (ie not machine-readable) spreadsheet of municipal taxes that tell you, based on _what side of the street_ you're on, whether you fall under the "mosquito district tax" that requires a small percentage more sales tax to pay for the annual spraying of mosquitoes.
Without simplifying the tax codes, I'm not sure full compliance over the web is even possible...
IMO, the federal government's responsibility to regulate interstate commerce should include creating a standard of product categories. States can then tax those categories at whatever level they see fit.
https://www.taxjar.com/
https://www.avalara.com/
Lots of ERP's have it built in.
My only question is then whether individual municipalities in states that allow them to have their own sales tax will also now be able to force compliance. If that's the case, what a nightmare for online retailers.
We even had areas where we could not find the correct tax because the government in charge refused to tell us
Or the 100s of thousands of literal exceptions such as "windows 98 physically shipped to a customer once in California on CD so you need to calculate the tax on it as a physical good forever, even when it's sold and received over the internet"
That's why companies like TaxJar and Avalara are focused on sales tax -- to integrate with every shopping cart, payment processor, marketplace, accounting, order management / ERP platform out there to combine all of your transaction data and determine how much sales tax you need to remit in every state.
Cheaper to just hire avalara to do it for you.
Respondents argue that “the physical presence rule has permitted start-ups and small businesses to use the Internet as a means to grow their companies and access a national market, without exposing them to the daunting complexity and business-development obstacles of nationwide sales tax collection.” These burdens may pose legitimate concerns in some instances, particularly for small businesses that make a small volume of sales to customers in many States. State taxes differ, not only in the rate imposed but also in the categories of goods that are taxed and, sometimes, the relevant date of purchase. Eventually, software that is available at a reasonable cost may make it easier for small businesses to cope with these problems. Indeed, as the physical presence rule no longer controls, those systems may well become available in a short period of time, either from private providers or from state taxing agencies themselves. And in all events, Congress may legislate to address these problems if it deems it necessary and fit to do so.
In this case, however, South Dakota affords small merchants a reasonable degree of protection. The law at issue requires a merchant to collect the tax only if it does a considerable amount of business in the State; the law is not retroactive; and South Dakota is a party to the Streamlined Sales and Use Tax Agreement, see infra at 23.
The end result is smaller busineeses get stomped. Only solution i see is to streamline it with software. Software is getting easier to use so hopefully it becomes less burdensome.
If you're making $100k to each 50 states, then you've got $50 Million in Revenue and can afford to do it.
If you've sold 10 t-shirts at $20 a piece, then your total sales of $200 isn't worth bothering with.
If we want there to be problems we can certainly create them, but doesn't seem all that complicated if we want it to work.
Enough to live comfortably on, but not exactly a big money. Further, the ruling applies to all taxes and has no cutoff under 100k/year required.
Isn't it $100k or 200 transactions?
200 transactions is just 17 customers with a year of monthly subscription payments.
Multiply by 50 states, and it's up to 25 hours a month of work.
For those of you who have never done this, sales taxes are a lot more complicated than they seem. In the three states where I've had retail businesses, different types of products have different sales taxes and each has to be reported individually.
It gets exponentially more complicated if your state also has use, consumption, or other retail taxes; and if it requires you to report purchases your company made out of state.
If I had a popular company, even with small sales, I could easily see this becoming a week-long headache I offload onto my accountant, who will then charge me extra.
So not only do I have to raise prices to include the sales tax for various states, I have to factor in the extra accounting expense.
I've worked with a lot of small businesses so I don't mean to disparage things but this seems like a really obvious law that should be enforced.
That's a pretty big if. The $200k cutoff from the article is South Dakota. I've never had a business in a state that had any cutoff at all. Only sell $1 this quarter? Pay the tax.
Please be more specific.
Also, remember that every single one of those bucks will be passed on to the customer in higher prices.
Considering you are already required to do it for where you are located it's just a little more work to automate it for all locations.
Also, I wouldn't generally classify it as "a little more work", since in many cases the old system could be hard-coded and the new system requires reworking the checkout flow to capture the full mailing address and pass it through an external API before calculating the transaction total.
Imagine if filing your personal tax return was, by law, so complicated that it was impossible for an individual to do it without hiring H&R Block -- that would be bogus. And to many of us, it seems awfully similar to what's happening here.
Consider selling 100x$1000 computers at $50 profit per each, vs 1000x$100 jewelry at $50 profit per each.
Those same services can also automate your tax filings with each state. It's not free, though.
There are companies that already sell massive lookup tables or API access to calculate a lot of this stuff. I think for most retailers, this won't be that big a change.
Most mom-and-pop online stores have disappeared too. Gone are the days when you went to Pricewatch.com and Pricescan.com. Now all the individual shops just create a store on Newegg, Amazon and eBay. I'm pretty sure the big players will start offering up tools to do these calculations for them as well.
And the reality is that small businesses will mostly just fly under the radar if they want to even if some states don't have a floor for the sales that trigger taxes.
However, this is a HUGE change. Instead of registering for a sales tax permit and remitting tax for one state, smaller merchants will have to do this in many states if they meet a certain threshold. They will likely have to use sales tax compliance software to aggregate all of their transaction data across multiple platforms (Amazon, eBay, Walmart, etc) and their shopping cart, then report / remit accordingly.
[1]: https://www.tn.gov/revenue/taxes/sales-and-use-tax/sales-tax...
UPDATE: Out of curiosity I looked it up. And it looks like sales tax holidays depend as usual on the state. The MO back to school one is optional if less than 2% of merchandise is affected. But the TN one doesn't look optional.
No.
Collection of taxes is done to enforce law, unless the state is compelling people with something else?
To _comply with_ law.
Ok great so you know the tax to collect. How do you remit to a vast amount of jurisdictions? You think that's trivial? It's not.
I would hope Stripe or people using online services like Shopify will quickly add support for everyone. But the state by state, county by county, grocery vs non grocery stuff sounds like a goddamn nightmare.
EDIT: You won't be able to just be some just launch it break stuff and fix later SASS. You will have to keep track of all this shit and send out 50 different cheques, or track when your company has reached the minimum to have to pay sales tax back.
When I launch a single small web app, I have to worry about everything single tax jurisdiction in the country.
I'm super not opposed to taxes, but I do think this is an area that the federal government should step in. If only to provide a standardized system for different jurisdictions to report their sales tax laws.
It seems like a very very clear use of the commerce clause and regulation of interstate commerce.
As long as the two are conflated nothing will change. Irrespective of political/personal/ideological position on nr.2) I think most of us can agree on nr.1)... (except for the bigger chains, and the FUD navigation services.
But I fully agree with you regarding the need for the federal government standardizing.
See my comment at https://news.ycombinator.com/item?id=17367669
The people who define the taxation are payed by taxes, so why not require the deliverable to include a cryptographically signed algorithm? Then all the shops can have free peace of mind:
https://news.ycombinator.com/item?id=17367669
As part of the agreement those entities without a physical presence in the state pay only a single state agency all sales tax and not have to pay tax to individual localities within the state. For each state the type of products subject to tax and the rates of tax on them are uniform across the state.
The states are also required to make available free of charge databases with boundaries and the tax rate on goods within each boundary. States must not hold any businesses liable for the under or over collection of taxes based upon any errors in their database. In addition the Streamlined Sales Tax Board of Governors certifies service providers. If a busines uses a certified service provider they are not liable for under or over collection of taxes based upon an error by the service provider. There are currently 7 certified providers. The certified service providers provide data regarding what taxes need to be collected on a transaction, will collect the tax on behalf of the business and submit it to the state on behalf of the business. Many e-commerce platforms already integrate with one or more CSPs. I imagine those that don't today will quickly do so or if large enough become a CSP themselves.
More than that. Sales tax in California can change arbitrarily, not just by county. E.g. different cities in the same county can have different sales tax. To further complicate things, shipping address may have a city on it but they might not actually "live" in that city.
E.g. in SoCal there is a city of "Westlake Village", which spans the Ventura-LA county border, which technically is a city in LA County, but technically is just a neighborhood within the city of Thousand Oaks in Ventura County.
When I last looked at this a few years ago for a project, for certain problem addresses, no one got them right. Not Macy's, not Amazon, etc.
The only real way to properly calculate sales tax is to geolocate their location.
It doesn't matter what Westlake Village wants to charge in sales tax to Amazon. In order for the sales tax to survive South Dakota v. Wayfair, it must be minimally restrictive on an out-of-state vendor. This means that it can't include local sales taxes, because an out-of-state vendor can't be expected to know about such taxes unless they do sufficient business with that locality. Note that both of the current federal sales tax laws before Congress also disallow local sales taxes in favor of state-level sales taxes.
Long story short: there will be up to 50 sales taxes that online stores must deal with.
While the outcome you describe might be a good one, I think you are greatly overstating when you read into this decision a new standard of "minimally restrictive". Major vendors already charge local sales taxes to the best of their abilities, and almost certainly will continue to do so.
This decision merely says that there is nothing inherently unconstitutional about a particular South Dakota law requiring a retailer without a physical presence to collect sales tax on behalf of the state. This does mean that a law in another state with similarly restricted characteristics is likely to survive review as well. But it doesn't (yet) create any line that says all of same characteristics must be met.
If New York City were to attempt to enforce the same law, it might find enforcement difficult, but it likely would not have constitutional impediments. If another state were to choose some wider scope, it too might well be judged constitutional. At the least, we wouldn't know until more cases have been decided: it's not yet clear how much 'stare decisis' has been thrown out here.
Instead, this case sets a standard for what is clearly constitutionally allowed, saying that there no longer a requirement of physical presence, but doesn't say much about what else would be required. It gives Congress an opening to pass a clearer national law about what the standards need to be, but doesn't create such a standard itself.
EDIT: While it is true that the dissenting opinions wanted Congress to solve this problem for them, the physical nexus rule was (and generally always has been) a construct of the Courts, and should have been struck down by the courts. Having a legislative counterpart is no excuse for letting bad decisions live.
EDIT2: Also, SCOTUS did not strike down the nexus requirement, only the specific physical nexus requirement of Quill. The dicta quoted below strongly suggests that complex sales tax system would require stronger nexus than the South Dakota regime.
"Complex state tax systems could have the effect of discriminating against interstate commerce."
"That said, South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. S. B. 106, §5. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules."
Yes, this is important to note. Still, much of logic involved in the decision makes it sound like in the future nexus may be defined quite loosely, based largely on the states' desire to collect the tax and the practical difficulties involved, rather than just being a redefinition of "substantial nexus". Consider this part:
Under this Court’s decisions in Bellas Hess and Quill, South Dakota may not require a business to collect its sales tax if the business lacks a physical presence in the State. Without that physical presence, South Dakota instead must rely on its residents to pay the use tax owed on their purchases from out-of-state sellers. "[T]he impracticability of [this] collection from the multitude of individual purchasers is obvious." [[cite]] And consumer compliance rates are notoriously low.
This might be good change socially, but it feels more like the court is pushing a policy change rather than offering a reinterpretation of the constitutional requirements. In this part of the logic, there's no change of the interpretation of nexus (since it's based on only the customer's failure to obey other existing laws), and yet it's used as justification for why the state has a right to demand action from an otherwise out-of-jurisidiction company. Same nexus (or lack thereof), but different constitutionality.
While one would hope for a balance between burden and benefit, I think it points to a much more inclusive concept of nexus. In the absence of a clear national law, until there is a case showing the limits in the other direction, I'd guess that states will pass more and more inclusive laws on who is required to collect on their behalf. We'll likely end up in a situation where a multitude of state laws technically require most retailers to collect, but selective enforcement means that only the large (or unpopular) players are pursued. I didn't like this previous approach of on-the-books but unenforced use taxes, but I'm uneasy about this outcome too.
That's not even the half of it. Grocery vs. non-grocery changes the rate. Some services that are tax exempt in other states are not in Tennessee.
And in Tennessee, you have the state level of 7%, and the ability for it to rise up to 9.75% based on a whole lot of inter-dependent local tax overlays.
The 2.75% difference comes from county, state, school district, transportation district, and "special purpose district" levies. All of which are optional to levy and voted on at the local level, and which may or may not overlap with each other to "stack" up to that cap at 9.75%.
Avalara, which is the de-facto owner of the sales tax calculation software space, has a good write up[1].
[1] https://www.avalara.com/taxrates/en/state-rates/tennessee.ht...
These days, the structural advantages larger businesses have are huge. Many of them are on feedback loops.
There're reasons we will soon see several companies pass the $1trn mark, reasons that aren't economies of scale.
From they very start of Quill they said: "we ruled that a "seller whose only connection ... is by common carrier ... lacked the requisite minimum contacts with the State." So the issue was: how substantial does the seller's contact have to be?
The court ends this decision by saying "the first prong ... asks whether the tax applies to an activity with a substantial nexus with the taxing State... sellers who engage in a significant quantity ... are large, national companies ... undoubtedly maintain an extensive virtual presence." So the issue remains: how substantial does the seller's contact have to be?
The underlying logic of the law hasn't changed, they just fixed some imprudently broad language referring to a physical presence.
So I doubt the SCOTUS abandoned one bright-line rule for being flawed in favor of another bright-line rule that equally fails to address the underlying issue of substantiality (e.g. imposing a "single-sale" rule).
Small businesses will just ignore this because there will be no enforcement unless you are operating at a scale large enough (millions in taxes) to justify enforcement.
My thoughts were that if you bought something from a store it would be x% more expensive with sales tax than purchasing off of amazon and having it delivered without needing to pay sales tax.
This way both have to charge the same sales tax and the difference in price will simply be down to the costs relating to owning a store.
In 10 minutes I was able to file and pay all the sales taxes to several state, dozens of California counties and a handful of cities that charge additional taxes on top.
There is zero economic gain from more complex tax rules. Further, the software does not absolve you of liability. At best they may agree to cover it, but that's unlikely and they can also go broke if they get it wrong.
Its not surprising that one US right wing think tank thought the UK with its "socialist" NHS and higher income tax was a freer place to business.
Yes there is. States compete with each other and this prevents any one of them from having laws that are much crappier and more oppressive than average because when that happens businesses and people leave.
Not as unusual as you would think, given that it is a basic principle of both the EU (despite what Eurosceptics would have you think) and the US.
There’s a case to be made for variation, but that ain’t it.
[1] https://en.wikipedia.org/wiki/Tiebout_model
There is already a precedent with DMV data sharing agreements, and some states will collect sales taxes for others as well.
I'm having a hard time coming up with an example where this makes any sense. Can you elaborate?
http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/prio...
It’s a big deal for cars — without this people in NYC metro would have a hard time otherwise.
Actually, the federal government should oblige each member state to provide the algorithm, and sign it cryptographically and have it expire every X fixed time interval, and have signed algorithms for the current and next time interval, so that software can automatically fetch and stay up to date.
Then the "business opportunity" of navigating FUD evaporates. Currently any such enterprise charging for such a service can spend a fraction of their budget lobbying against harmonization...
Since it would be an obligation of the states to the federal government, these algorithms (provided by each member state) should be hosted on a fixed federal government site.
Time to start a petition?
What is the most convenient format for this layered geographic data? Are the tax district boundary polygons already otherwise available as open data? What do localities call these? Sales tax tables, sales tax database, machine-readable flat files in an open format with a common schema?
How much tax revenue should it cost to provide such a service on a national level?
States, Counties, Cities, 'Tax Zones'(?) could be required to host tax.state.us.gov or similar with something like Project Open Data JSONLD /data.json that could be aggregated and shared by a server with a URL registry, a task queue service, and a CDN service.
While the Bitcoin tax payments bill passed the Senate and House in Arizona, it was vetoed in May 2018. Seminole County in Florida now allows tax payment with crytocurrencies such as Bitcoin:
https://cointelegraph.com/news/us-seminole-county-florida-to...
> According to a press release, the county will begin accepting Bitcoin (BTC) and Bitcoin Cash (BCH) to pay for services, including property taxes, driver license and ID card fees, as well as tags and titles. The Seminole County Tax Collector will reportedly employ blockchain payments company BitPay, which will allow the county to receive settlement the next business day directly to its bank account in US dollars.
This could also help reduce the costs of tax collection and possibly increase the likelihood of compliance with the forthcoming tax bills!
https://news.ycombinator.com/item?id=17367669
If: i)your accountant messes up due to negligence or worse, ii) you get audited, and iii) it turns out you owe far more than you thought, then you are liable to the Govt for the extra amount owed. The accountant may be liable to you for professional negligence, damages etc. Your damages against the accountant are not the extra amount owed (because it is what you should have paid in the first place), but losses caused by the mistake. In the above scenario, the Gov't may assess a "penalty" and/or "fee" for late payment of taxes, but those fees are usually waived and/or extremely nominal. In the above-scenario, criminal liability simply does not happen. The above is not legal advice.
Usually, small shops can ignore stuff like this until they get a bill from an authority, or get big enough for it to matter. As long as they save money for estimated tax liability (approximately equal to their local tax rate), they are fine.
I get that being subject to regulation or taxation is more burdensome than not being subject to it, of course that's the case. But it does not follow that requiring sellers to pay sales tax is unduly burdensome.
If the underlying complication of tax is the problem, fix that.
They would only have to pay sales tax in one tax jurisdiction, the one in which they are physically based and in which they can vote to change those taxes.
> But it does not follow that requiring sellers to pay sales tax is unduly burdensome.
What follows is requiring sellers to track and remit sales tax in some 10,000 jurisdictions is burdensome.
I suppose we should continue that state of affairs, because heaven forbid we hurt the mom-and-pop online stores... Which make up a tiny fraction of overall commerce, compared to physical mom-and-pop stores.
Who said anything about internet stores being required to support all locations? Nothing is stopping an e-commerce outfit from restricting sales to a particular state, or county, or city, and simplifying their tax situation considerably. And brick-and-mortar chains with multiple locations already have to deal with these rules.
I don't see the "huge disadvantage" you're talking about.
Engineers are clever. Sure that might be true, but now that cleverness is going to be wasted building tax compliance solutions which aren’t even close to being “not much of a burden.”
The smallest possible correct program implementing a tax calculator is going to be a LOT bigger than the smallest possible correct program for controlling a 60's era manned flight to the moon. The latter is more complex in other ways, of course.
Complexity can be "deep" or "wide". software for rockets is "deep and thin complexity", but calculating hyper-local minimal tax bills is extreme "wide and shallow complexity".
Orrrrr a couple of companies will step into this problem space, solve it, and everyone will offload their tax compliance to those companies, in exactly the same way that we don't all waste 1,000,000 engineering hours on the arcana of banking and credit card networks and just offload that concern to payment gateways with nice APIs.
This is already the way it works in most of the world. HN is showing its provincialism by convincing themselves this is some kind of impossible-to-solve problem.
Sent from someone outside of the US
Because the more I learn about Amazon and their warehouse employees, the less I've been shopping on Amazon.
Having choice is a good thing.
It would have been interesting to see how differently retail sales would have grown, especially Amazon, if they were required to wrangle with local sales tax in all the places they sold into.
Additionally, most locations have a Use Tax that's identical to local sales tax, so it's transferring the legal burden onto the buyer. Almost nobody does this.
1: It's not a new or internet-specific tactic either - many car dealerships advertise "No City Sales Tax!" and are barely on the other side of the city limits.
And going down this road, p2p barter on the internet of any kind might be subject to a tax regime soon.
e.g. If I buy a sandwich I do not give my name and address to the deli.
I have no problem with sales tax. I have a problem with states getting a cut of transactions that did not result in transfer of money to an entity within their borders.
Sales taxes generally follow the location where the money was received, not where the goods were used. If I buy something at a brick and mortar store then I'm subject to the sales tax where that store is located. Why should the state of buyer be getting a cut of the transaction when the state of the merchant is the one that is responsible for the environment in which that commerce happened?
If I live in MA and drive to NH and buy fireworks then MA has no claim to tax the transaction because it's obviously the environment of NH that made that commerce possible at all (you can't buy fireworks in MA). What if I live in CA and want to buy some special paint or cleaning product not for sale in CA so I drive to NV to buy it? What if I want to buy a widget and my home state taxes it and some other state subsidizes it (not necessarily at the retail level, the tax/subsidy could be anywhere in the supply chain) so much that I drive to the other state. In that case my home state still has no claim to tax the transaction since it happened out of state. What if the price is so much better elsewhere I'll be willing to pay shipping from half was across the country? How does the fact that the a 3rd party (shipping company) is responsible for getting the goods to their address change the situation? Does the fact that the transaction originates online affect anything?
I have no problem paying state sales tax as long as it goes toward the state of the merchant. The state of the merchant is responsible for creating the environment that facilitated the commerce. They should be the ones getting a cut.
Edit: I genuinely would like to know what the reasoning of those who disagree with me is. I see no good that can come from allowing states to exert authority on businesses outside their jurisdiction.
Except in the case of living close to a border (which is a bit of a hack), you generally live, work, and pay sales taxes in the same jurisdiction in which you vote and receive services.
You're right that it forces states to compete with each other, which is great.
Your example runs completely counter to your stated narrative. Your example is one in which you live and collect services in one place, but refuse to pay taxes to support your chosen lifestyle by instead "supporting" with your dollars a system you don't want to live under.
Apparently you DO have a problem with sales tax.
On top of that, lately it seems more challenging not to be an oligopoly if you have customers in Europe and/or the US.
I suppose this represents an opportunity for startups to help other startups to manage compliance and payment.
https://stripe.com/docs/orders/tax-integration
I'm not a fan of the ruling but I would expect the answer to your question would be: "No because you aren't forced to buy the product from a retailer in that state"
Right, and before this decision, it was that person's responsibility to remit. Now it is the business's. So the burden of remittance has shifted to the disenfranchised party.
And the party paying the tax has not shifted. The party paying the tax votes on representation.
Technically the business is "the party paying the tax", in the sense that they are the party sending money to the government. If I drop ten dollars on the counter and sprint out of a store carrying an item that costs ten dollars plus tax, the store is still responsible for paying tax on that item to the government.
The laws of various states place many restrictions and requirements on businesses who want to sell to their citizens. This is just another one of those.
[x] Taxation
[ ] Representation
Most of the coverage I've seen downplays it, but it should be noted that the question is not whether tax is owed on these out-of-state internet purchases, but whether the retailer should be required to collect it and submit it to the state. Currently, the purchaser is (in 45 of 50 states) legally required to pay a "use tax", but most Americans (98%?) are blissfully unaware of this requirement, or have simply decided not to pay it. This is pure illegal tax evasion, based on the (correct) assumption that enforcement is lax and risk of punishment is low: https://www.npr.org/sections/money/2013/04/16/177384487/most...
Rather than attempting to enforce these existing laws against their residents (unpopular and difficult), states believe it will be easier to get compliance from retailers. Until this decision, it was unconstitutional under the Commerce Clause for a state to demand this collection unless the retailer had a "substantial nexus" in the state, generally defined as a physical presence. Post-decision (pending new national laws created by Congress) all retailers are fair game. The particular South Dakota law in question has requirements as to volume of purchase, but this is not a principle of the decision.
Beyond the implications for internet retailers, this is an interesting counter-example to the Supreme Court tradition of "stare decisis" (to stand by things already decided). Apparently, everyone on the court agrees that earlier decisions that produced the physical location test were poor precedent. Usually, the court is very reluctant to revisit these decisions, but in this case, the majority justices decided to abandon precedent and explicitly call the earlier decisions mistakes. The dissenting justices, despite conceding that "Bellas Hess was wrongly decided", felt that the court was better off sticking with the flawed precedent than changing things up now.
Personally, whether or not this is good constitutional precedent, I think I agree with the dissenters that allowing local jurisdictions to make laws affecting far-away businesses who have no other local presense is going to lead to problems. Beyond just the burden of collecting confusing locally defined taxes, I fear about where else it leads. If a locality can enforce its local tax laws, what other custom crafted local laws can it enforce in return for access to customers? Can it require a business license? Should it be allowed to enforce its local environmental and labor standards as well? Is this a good thing?
This is pretty much what happens with California and car manufacturers. Even today on certain aftermarket car parts (primarily exhaust systems), there are explicit notices that they are legal anywhere in the US except California.
Obscenity, for one.
It doesn't address the LaTeX question, but this page had some interesting details on the style guide for Supreme Court opinions: https://lawyerist.com/style-guide-supreme-court/
Does your state online sales tax law have:
* Safe harbor for sellers who have limited activity
* No retroactivity
* Adheres to SSUTA
* State level admin
* Provides software
* Provides immunity for errors
If so, upheld. If not...
[1] https://blog.taxjar.com/saas-sales-tax/