Any word on how this effects eBay?
There are big merchants.
There’s also Aunt Betty selling off estate items from her parents home. Is she supposed to charge sales tax on every old aluminium pan and dinner plate sold?
This will depend on your local laws. Many jurisdictions have exemptions for casual or occasional sales. Something like an annual garage sale would fall under this exemption. I would think Aunt Betty and her auctioning off estate items would similarly be exempt, but I am not an expert in tax law.
Nitpick. It will now depend on EVERY LOCAL LAW in the country if the state decides to allow it. So, before, Aunt Betty had to ask her friend at the city building. Now she needs to buy Quartz’s software (hey, I’m not upset with him for making a buck, but that’s the point: we’ve increased the cost of commerce)
Well, of course. If the states decide to change the rules about what is exempted, yes, that would happen. I’m not sure if this case has anything to do with it. They can do it regardless of this ruling, no?
No, prior to this ruling in order for State A to require a seller to collect and remit sales tax, the seller had to have a physical presence in State A.
The South Dakota law only applies to sellers who do more than $100,000 worth of business in South Dakota. But that was only done to try to win on a fallback position if needed. Now, a state can collect on anyone who sells to a state resident online or by mail order if it chooses to pass such a law…even one against Aunt Betty.
Another question comes to mind: What if a state without a sales tax now decides to impose it ONLY on internet retailers? Let’s pretend that they tax all internet retailers whether in-state or out of state so as not run into a Privileges and/or Immunities clause violation.
Is that now legit? It seems as if the Court’s commerce clause jurisprudence is upside down.
Well, I thought the Aunt Betty question was somebody doing an estate sale in their own tax jurisdiction. I wasn’t thinking of online sales for that hypothetical. But if that was meant (and I now see the mention of eBay), then I see the point. (Practically, though, I assume this will not be policed at all, just as paying of use taxes is rarely enforced for individuals.) Of course, practical matters aside and assuming legal ones, there really should be some straightforward centralized method of assessing, accounting for, and remitting sales taxes on internet sales.
The simpler answer was what they did before under Quill. If I’m not in your state, then you can’t impose your varying and sometimes brutal requirements on me just because I mail a package into your state or accept a payment by credit card through an interstate transaction. Those are federal functions (and damn me if I ever say that again 
) almost at is core, but for some reason individual states can now impose this interstate burden.
Thinking about this; it could be quite a burden on a state to try to prosecute every mom & pop internet retailer in 49 other states.
Collecting from anyone other than very large retailers may cost them more than they take in. If so, then it seems likely that they would follow SD’s example of only taxing businesses with some large amount of sales.
I suppose what’s needed are laws that will allow third parties (CC companies, Paypal, etc.) to file the paperwork and collect and remit the taxes, taking the red tape burden off of the sellers. Or perhaps the 50 states could create some sort of compact (constitutional?) forming a single entity that collects and distributes the taxes.
This is not a new problem. I’ve been building systems since the 80’s that include consumer sales (catalog, phone, internet, etc.) for companies with nexus in many/most states and there are multiple services that handle both the tracking/calculation and remittance.
Yes it’s a cost to doing business, but so is paying an ISP for your website or paying for electricity.
So get Ebay to handle the taxes. For a fee, of course.
Exactly. I am not allowed to collect the sales tax without first having a sales tax permit. Now it seems I will need about 10,000 sales tax permits to collect for everyone instead of just a single permit (or two) for my locale.
As far as I know that software only determines the right amount to collect. I am in Nevada. So if I sell a digital good to someone in Johnson county Texas, your software can collect the right amount. But then I need to get a sales tax permit number for both Texas and Johnson County so that I can submit it properly. I doubt your software will apply for 10,000 different sales tax permits for me.
My company may just decide to only sell 199 transactions in South Dakota per year and post a “allowed sales remaining” on our site for each state.
Why? Just let a payment processor handle it.
If that’s allowed, sure. And even then, it could get costly fast. In some places, a sales tax license costs money. What if the payment processor has to purchase a separate license for each taxpayer? Say you have a small business, and you send maybe a dozen orders to Connecticut each year. Does your business need its own separate $100 sales tax license, just to pay a few bucks in sales tax?
These are all answerable questions, in time, but they’re questions that should have been answered first through some kind of legislative process.
An interesting note. At least in my state (PA) my business does not have to charge sales tax, we just have to pay it.
In the early days of my business, >99% of my sales were not taxable. I had one or two ancillary items that were taxable. When I purchased those items wholesale it was a tax exempt purchase. When I sold the item I’d owe the state 6% of the sale price.
I could tack that on to the sale price and collect the tax from the purchaser (what almost everyone does). Alternatively, I could not charge the purchaser and just pay the tax due out of my own pocket, which I did at one point.
The rules on who has to pay state/local sales tax, etc. seems to be up to the individual states now.
Hopefully:
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The state law just requires state sales tax to be paid, no local sales taxes. That cuts the number of jurisdictions to attend to down a lot.
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That a certain business size/level of activity (per year?) in the state is required before the forms/filing stuff kicks in. So someone selling a couple things a year on eBay doesn’t have to worry.
This requires state legislators to be rational. So forget it.
Even then I don’t see an easy way to fully implement something like point 2. Someone does penny-ante sales to a state for 11 months and then in December makes a very big sale. How will that work concerning the older sales???
My fear is that it will work like Ohio’s municipal income tax system does for people like plumbers who do lots of small amounts of work in many cities over the course of a year, except on a much bigger and more confusing scale:
“Ohio, unlike any other state, grants each municipality broad autonomy to determine what is in its income tax base. The local ordinances defining these hundreds of distinct income tax systems exceed a staggering 16,000 pages. This complexity creates an extraordinary compliance burden, as employers, especially contractors of varying stripes, must track their employees’ location by hour, by jurisdiction to properly comply with the differing tax codes of all the localities in which they conduct business. A northeast Ohio electrical contractor once filed 221 W-2s for 19 employees, along with 39 business returns, most having a tax due of $5 or less.”
I am really surprised that such a liberal board is having such a big problem with a ruling that is the biggest boost to local brick and mortar stores since the invention of the internet. For decades, local stores have been putting up with unfair competition from online retailers. In addition, the loss of tax revenue to the states has caused real shortfalls in the state budgets and seriously affects the ability of the states to provide for their citizens, all at the benefit of online retailers.
Sure, it adds to the paperwork you need to process if you have online sales, but if you don’t like it, open up a storefront, deal only with your state and local tax laws, and shut down your online presence. Frankly, I doubt many will take that route. Instead, they will find a way to deal with the law and the states will begin receiving revenue they have been losing for years. And, local brick and mortar stores may see an increase in sales, which would be a boost to local economies in towns and cities throughout the nation.
Yes, this is really a good thing for everyone. Quite surprising considering the current administration and makeup of the SCOTUS.
Well, this liberal doesn’t particularly like sales taxes (at least as they get implemented in the USA) and doesn’t want to enable states to rely on them even more. The most unfair and regressive state tax systems are the ones that rely on sales taxes. And any of these states that were crying poverty over their sales tax revenue could have just…taxed something else! Which they largely should have been doing anyways because the sales tax-heavy states have shitty regressive systems that need major reform.