Supreme Court Rules in Internet Sales Tax Case (2 Viewers)

[Toy Soldier Brigade]

I assume you mean NJ?

Total gross sales per year.

 

[Toy Soldier Brigade]

There is a minimum gross sales amount per state per year. That article says nothing about actual numbers. Someone who says does 250 thousand in sales for the entire US will not be expected to pay an account to file taxes in over 800 different tax zones in the US. If that were the case 95% of the small businesses on the internet would have to close.

 

[Warrior]

This situation should have been addressed by Congress a long time ago, they were too busy voting in pay raises and taking vacations to bother dealing with this.

It's now up to them to set the limits on this; if every ECommerce retailer is subject to collecting sales tax on every transaction from jump, that would be an accounting nightmare, so it's up to Congress to set a number, a million a year for online sales would be a good starting point.

The way they move, this will take 10 years to finalize, I'll be retired on a beach by then.

 

[jazzeum]

State taxes are a state matter. Congress has no authority to legislate in this matter.

 

[Warrior]

State taxes are a state matter. Congress has no authority to legislate in this matter.

This from an on line article on the subject;

"There are still many unknowns. The ruling upheld a South Dakota law that exempts sellers with $100,000 or less in sales in the state. Other states are free to set their own thresholds, and it's not known what they might be or how long it would take for all the states to weigh in, says David Campbell, CEO of TaxCloud, a provider of tax compliance software. It's also not known if Congress might set a uniform ceiling that all states would have to adhere to."


Read the last line in the paragraph; CONGRESS might set a uniform ceiling that all states would have to adhere to.


That sounds like Congress has the authority to legislate in this matter.

If all the other states follow along with what South Dakota is doing, ie, retailers are exempt who have less than 100,000.00 in sales in their state, I suspect a lot of smaller companies will be off the hook.

Time will tell; I'd deal with it once it is put in front of me, nothing I can do about it until then.

 

[jazzeum]

Congress can legislate on uniformity but that’s where it ends. They do not have the right to set the taxes and if they do so, states will file lawsuits.

 

[Warrior]

Congress can legislate on uniformity but that’s where it ends. They do not have the right to set the taxes and if they do so, states will file lawsuits.

I watched a panel discussion on this subject, I forget which network was broadcasting it and one of the panel members blamed this on Congress for not putting legislation in place to nip this in the bud.

I guess he's some no nothing bozo then.

 

[jazzeum]

Without knowing what you saw or who’s talking and whether that person is a constitutional lawyer or not, I really can’t comment on your post.

 

[jazzeum]

Although a bit technical, you might find this column from Dorf on Law interesting, Congress, the Dormant Commerce Clause and the Wayfair Case.

Michael Dorf is a constitutional lawyer at Cornell.

Congress has had numerous opportunities to legislate on this matter. Since the President approved of the outcome, I don’t see this taking place anytime soon.

 

[Warrior]

Although a bit technical, you might find this column from Dorf on Law interesting, Congress, the Dormant Commerce Clause and the Wayfair Case.

Michael Dorf is a constitutional lawyer at Cornell.

Congress has had numerous opportunities to legislate on this matter. Since the President approved of the outcome, I don’t see this taking place anytime soon.

Yeah, that column gave me an ice cream headache about 10 seconds in.

Regardless, your point is the one I tried to make, ie, Congress has had numerous opportunities to legislate on this matter and did not, so now here we are.

 

[jazzeum]

If it makes you feel any better, I had to read it three times. Commerce Clause cases are difficult.

 

[tdubel]

I am curious to see how they handle ebay. That will be an interesting one. My gut tells me eventually any/all sales tax states are going to go after Amazon and Ebay for sales made on their site. What I mean is they will tell Amazon and Ebay you are responsible for the collection of the tax. SO, eventually, when you use check out on those sites, a tax will be shown. Think about it, who has the deepest pockets? The States or a Court will eventually say - it is Amazon or EBay's sale, therefore, they have to charge and collect the tax. IN the end, the buyer will be screwed and there will be less spending to save a dying segment of retail.......................

TD

 

[jazzeum]

Tom,

Amazon already collects taxes, at least they do from me. It's possible they only collect taxes in states they have locations.

Brad

 

[Warrior]

I am curious to see how they handle ebay. That will be an interesting one. My gut tells me eventually any/all sales tax states are going to go after Amazon and Ebay for sales made on their site. What I mean is they will tell Amazon and Ebay you are responsible for the collection of the tax. SO, eventually, when you use check out on those sites, a tax will be shown. Think about it, who has the deepest pockets? The States or a Court will eventually say - it is Amazon or EBay's sale, therefore, they have to charge and collect the tax. IN the end, the buyer will be screwed and there will be less spending to save a dying segment of retail.......................

TD

I agree; the tax will be calculated at the time of purchase based on where it is being shipped, Ebay will withhold the tax and send it to the appropriate state on behalf of the seller.

My accountant told me he does not see a scenario where the seller will be responsible for charging, collecting and submitting the appropriate taxes; if that happens, people for the most part will simply stop selling on Ebay, who wants to go through that hassle.


The two certainties in life; death and taxes.

 

[jazzeum]

I doubt Ebay will collect the tax. They're very careful to avoid liability. It will be up to each seller. Moreover, they're not sellers. They provide a service for a fee.

 

[tdubel]

I doubt Ebay will collect the tax. They're very careful to avoid liability. It will be up to each seller. Moreover, they're not sellers. They provide a service for a fee.

Brad,
I agree, but this is what Ebay is lobbying against. The States are already lining up to hit them like Amazon,, they are going to deem them responsible for the transaction. My S&U Guys are already prepping for what they are calling the Wayfair mess. What I think (and I am getting it from our team) is that the States are going to try and deem Amazon and Ebay as the responsible transaction party whether they warehouse the goods or not.(Amazon is already still fighting this part with their 3rd party sellers), Have them collect the tax b/c they are big enough to do it and then go from there. End of Day, the Buyer will be paying sales tax on 99% of internet transactions.

The sad thing is -the original Quill Case was the right answer and made a lot of sense regardless of our digital age. IN MY OPINION this decision is going to get the High Tax States what they want - the ability to tax every service, transaction, goods, digital item, you name it they want to tax it because they have run out of revenue options. What is going to be interesting is when you have a Delaware Seller who is going to say - I sold the item in Delaware (No Tax), the title passed hand in Delaware and the buyer is responsible for arranging shipment. This is where it gets interesting for other States to prevail as a transaction in Delaware is NON taxable, If the seller can legitimately say that they only sold the item and title passed at that point there will be no tax. Now here is how it would work - Buyer has a UPS account. Buyer pays for the item to a non tax State. Buyer has UPS pick up at buyers cost. It is the buyers item the minute their UPS account is contracted for the shipment. This is what was formerly the "Alcohol shipment" loophole. As a Maryland Resident, I use to purchase Wine direct by doing this. I had to stop when Maryland passed a law saying it was a felony to Ship Alcohol directly to a consumer. The same premise applies - I took title in a State where it was legal to do so. What I am also not telling you here is that your Resident State may have an archaic Statute that says "Use" tax - if that is the case, you are supposed to pay a use tax on eligible transactions regardless of where you bought it.

Bottom line - this case is going to do nothing but cause a bigger mess. The Citizens of the US should organize a Nationwide Boston Tea Party ^&grin

Tom

 

[theBaron]

Yeah, "eBay" will not collect sales taxes, but leave it to the merchants. That's already what happens. Some merchants include it. For example, I have bought things from sellers who are located here in PA, and they have tacked on our 6% on purchases by other PA residents.

It is the same situation as for a show. For our show, for example, we are not responsible for collecting the tax on sales at our show. Individual merchants are responsible for that. And the Commonwealth's Department of Revenue has approached some merchants to follow up on sales tax. I see no reason why that process won't continue. The Supreme Court's ruling just clarifies the powers of the states to pursue collecting.

Prost!
Brad

 

[jazzeum]

Tom,

If the states try to deem them responsible, this will obviously be litigated and I'm sure ebay would request a TRO, one of the grounds for which (although they differ from state to state) are irreparable harm (as well as a showing of likelihood of success on the merits). However, ultimately the buyer pays the tax, which is the way it works if you go to a store and buy something. That's point number one.

Point number 2, your title and shipment questions. This could get a little complicated because now we are discussing Article 2 of the Uniform Commercial Code (law in all 50 states, with very few variations from the uniform text), which applies to the sale of goods and specifies when title passes and who is responsible for shipment and so forth. In a true commercial context, these items are spelled out in the contract. Here a seller may specify these terms in their listings and so on. Under the UCC, unless otherwise agreed, title and risk of loss pass at delivery and if the seller has tendered goods conforming to the specifications (or the listing, in the eBay case), the seller has no further liability.

 

[jazzeum]

For the benefit of those who care to read, this is the Quill case: Quill Corp. vs North Dakota.

Quill basically held that although ND may tax out of state companies deriving benefits from selling products in ND (the International Shoe case, a seminal case that we all learned in law school and is gospel -- "minimum contacts"), to do so would offend the Commerce Clause; states are not permitted to interfere with interstate commerce, unless Congress has spoken on the matter, which it had not.

The Commerce Clause is found in Article, Section 8, Clause 3 of the United States Constitution:

The Congress shall have Power To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;​

The Commerce Clause is the basis for many U.S. statutes regulating business such as the Sherman Antitrust Act.

 

[Warrior]

Yeah, "eBay" will not collect sales taxes, but leave it to the merchants. That's already what happens. Some merchants include it. For example, I have bought things from sellers who are located here in PA, and they have tacked on our 6% on purchases by other PA residents.

It is the same situation as for a show. For our show, for example, we are not responsible for collecting the tax on sales at our show. Individual merchants are responsible for that. And the Commonwealth's Department of Revenue has approached some merchants to follow up on sales tax. I see no reason why that process won't continue. The Supreme Court's ruling just clarifies the powers of the states to pursue collecting.

Prost!
Brad

If Ebay does not collect the tax, then it should revert to whatever ceiling is set as far as liability, ie, as it currently stands in the present situation, you as the seller are not required to charge sales tax on the first 100,000.00 in sales.


So sellers will have to track their sales to every state and when the number goes about the ceiling, then they have to start charging sales tax.


Or maybe it will be set up on Ebay where you do not have to charge sales tax until your yearly sales go over a certain number; as it stands now, you do not get a 1099 from Ebay until your sales go over 20,000.00 per year; any number under that, you do not get a 1099.

As a seller, you should report any income you make on Ebay, I certainly do, I declare every dime and get taxed on those sales.


You're taking a chance not reporting the income in the event of an audit.


This gets messier by the minute.


GEGJ Supreme Court, the US taxpayers say thanks.