Supreme Court Rules States Can Force Online Retailers to Collect Sales Tax

But what qualifies as a "small seller"?
It depends on the state's tax laws. The state here, South Dakota, exempted businesses with less than 100K in sales, but there's no reason they had to. It will be interesting to see if there is any effect on small eBay sellers.

Congress could act to change all of this, such as to exempt small sellers nationwide.
But they probably won't.
 
I'm already paying NewEgg and Amazon taxes. This really hurts people who are disabled and on a fixed income.. I need to upgrade in a year or two.. When I built this last rig they didn't have the tax, I figure it'll take an extra 2 months of saving to cover it. I'm not particularly against taxes though, I just wish I could tell them where to put the tax I pay. Like, put mine into infrastructure. Fix the bridges and potholes!

You mean instead of them paying people to put things where the sun don't shine?
 
This ruling will mainly level the playing field between Amazon (who has little to no B&M) and Wal-Mart (which has it everywhere).
Everyone else was always screwed in the long-term anyway.
 
This won't help small town brick and mortar stores in the slightest, they still can't pay employee wages and they can't offer the same variety that online and large corporate retailers do. If anything this issue has been pushed by large corporate interests like Wal-Mart and Amazon to hamper up and coming online retailers. If things were really about "leveling" the playing field, then this would have been done years ago when online retailers were just gaining traction, and the huge draw to purchasing online that everyone was chanting was "no taxes"... this should have been nipped in the butt waaaay back then. It wasn't resolved because waaaay back then the same corporate interests that are pushing for the collection of taxes now are the same ones that had everyone chanting against them in the past...

Now that everyone has to collect a tax, suddenly selling your goods through Amazon and letting them deal with 50 different versions of sales tax, labor, and legal laws and paying their "small fee" is a lot easier. Convenient how this works in favor of large corporate interest regardless of the verdict... one way they don't allocate resources to the collection of sales tax, the other people pay them because they can't afford or don't want to deal with all the legal crap. Amazon and like minded interests win regardless.

If you think corporate interests are shady, try being a small time successful business in California that just so happens to be in violation of a tiny CalOSHA standard... fines usually range from 50k to 250k depending on the severity, how many times you've been fined for it before, and if the inspector is in a bad mood that day. Most business can't afford the "acceptable" equipment to be compliant 100% of the time so are either going broke trying to stay compliant with the law or going broke paying fines... Either way it pushes smaller businesses towards closing out being bought out by larger corporate interests that can afford to be 100% compliant and can afford fight the state on equal terms in a legal battle.

Edit: I should also add, its usually corporate interests that push for the new standards, usually to sell a product they make or a service, and states are usually more than happy to agree because its more fine money for them and promotes the ideology of a "Safer Working Environment".
 
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Not that it has any real bearing on the issue at hand, but I would think that if you have the money to spend $1200 on a single graphics card, you probably can afford the sales tax. For most, that is a luxury expense.


A "luxury expense?" From who's perspective? Who's definition? ..... hardly. So using your logic, taking your girlfriend to a high-end steak house would be a luxury expense for you?

A luxury expense would be a $50,000 car. A $500,000 house perhaps. A $15,000 diamond ring. a $20,000 vacation. Those are "luxury expenses"

$1,000 isn't shit.

Ummm no, this is a huge misconception. If you've ever paid attention to people with money, especially when they talk about their wealth and how the build it, maintain it will always tell you this ... the key to having money is to not spend it if you don't have to.

Shopping on newegg is a case of ... not having to pay tax. Of course that could be changing now.

"It's easier to keep the money you have than to replace it" that's another golden nugget I tell people

It's absolutely ridicules and preposterous to assume that if someone spends $10,000 dollars, they should have no issue paying another $1,000 in taxes.

A lot of you dudes are very clearly "amazon brainwashed" or something.

I bet most of you could change your buying habits and end up saving $2,500 to 5,000 annually and a lot more in some cases.
 
"This might help local business compete better"

You sir would be wrong. As someone that works in tax consulting as a career, this will do nothing but hurt small to medium size businesses.

To put this in perspective, there are 70,000+ jurisdictions in the US that impose a sales or use tax in some way or form. Each one has their own rules as far as
1) Who the tax applies to
2) What the tax applies to (e.g. in Texas, fresh groceries aren't taxed)
3) Who has to file a return
4) Who has to pay the tax (buyer or seller).

If you think any small to medium size business can keep up with that - think again. They will be overburdened with rules and compliance for paying this and filing returns. This will HURT small business, and help BOOST big business - because they have no problem keeping up with this legislation. They have software (that I implement) that keeps up with all these laws that release updates on a weekly/monthly basis.

This won't help small town brick and mortar stores in the slightest, they still can't pay employee wages and they can't offer the same variety that online and large corporate retailers do. If anything this issue has been pushed by large corporate interests like Wal-Mart and Amazon to hamper up and coming online retailers. If things were really about "leveling" the playing field, then this would have been done years ago when online retailers were just gaining traction, and the huge draw to purchasing online that everyone was chanting was "no taxes"... this should have been nipped in the butt waaaay back then. It wasn't resolved because waaaay back then the same corporate interests that are pushing for the collection of taxes now are the same ones that had everyone chanting against them in the past...

Now that everyone has to collect a tax, suddenly selling your goods through Amazon and letting them deal with 50 different versions of sales tax, labor, and legal laws and paying their "small fee" is a lot easier. Convenient how this works in favor of large corporate interest regardless of the verdict... one way they don't allocate resources to the collection of sales tax, the other people pay them because they can't afford or don't want to deal with all the legal crap. Amazon and like minded interests win regardless.

If you think corporate interests are shady, try being a small time successful business that California that just so happens to be in violation of a tiny CalOSHA standard... fines usually range from 50k to 250k depending on the severity, how many times you've been fined for it before, and if the inspector is in a bad mood that day. Most business can't afford the "acceptable" equipment to be compliant 100% of the time so are either going broke trying to stay compliant with the law or going broke paying fines... Either way it pushes smaller businesses towards closing out being bought out by larger corporate interests that can afford to be 100% compliant and can afford fight the state on equal terms in a legal battle.

This guy knows.
 
A "luxury expense?" From who's perspective? Who's definition? ..... hardly. So using your logic, taking your girlfriend to a high-end steak house would be a luxury expense for you?

A luxury expense would be a $50,000 car. A $500,000 house perhaps. A $15,000 diamond ring. a $20,000 vacation. Those are "luxury expenses"

$1,000 isn't shit.

That all depends on who you talk to. Considering many recent reports that most Americans do not have enough savings to weather a $500-$800 emergency expense, if you asked them if they had $1200 for a graphics card to play computer games, they would probably view that as a luxury expense. Another perspective is right in line with what you were mentioning about a $50,000 car, or a $500,000 house, etc. You could get by with a $10,000 car. You could get by with a $150,000 house (this is a generalization, I know!). My point is that you do not NEED the most expensive thing out there. The most expensive items are usually considered luxury items. Be that a car, a house, a vacation, a diamond ring, etc. A $1200 graphics card is absolutely a luxury expense when a $300 graphics card will do you just fine. Do you need a luxury car that can go 0-60 in 2 seconds? No. Do you need a graphics card that can give you 60 FPS on a 4K monitor? No. That a luxury. I don't care how you want to slice it.

Just in case you want to educate yourself on what exactly a luxury good is, please read this simple ARTICLE. Then you might realize a high-end graphics card is exactly that.
 
Technically true, but thats not the point. The State is still getting a cut of the business' revenue. Without the tax, stores could have a lower, more competetive price, or they could raise prices and collect that healthy margin for themself.

As for the matter of location, that is a sticky issue. You could theoretically have an shipping address in a low-tax state and have everything shipped there, then forwarded to you in bulk, if you order alot of stuff online.


How do you figure?

The business either collects the tax revenue and passes it on and has no effect on the business' earnings, or it doesn't collect the taxes and passes nothing on because the customer's state can't require the business in another State to collect the revenues. Either way, the tax revenue moneys itself is not part of the businesses earnings, it's not part of their bottom line. Not unless they are collecting and not passing it on, or failing to collect but paying anyway, (not too likely).

Regards State Sales tax, the State levies a tax against an individual's purchases, not against the business.

And as for the location, I can have a billing address and a shipping address and where the goods are shipped to has no bearing on the taxes.

Now I am not addressing competition here, I am merely addressing the taxes themselves. Yes, their total price will be lower without the taxes, I'd argue so what, a B&M can't compete anyway. Besides, most pricing is set by the manufacturer, rebates from the manufacturer, when did you ever see BestBuy sell a TV at a cheaper price than an online seller unless it was because BestBuy worked a pricing deal. Usually what happens is BestBuy uses it's sales clout to order special version of products with a different set of features that is technically a different model and sells for a different price.

I experienced that with an ASUS Gaming Laptop. It came with a downgraded monitor and custom RAM layout at a cheaper price. Turns out the lower resolution was just fine with me and BestBuy's RAM setup meant I didn't have to remove the keyboard to get to the four RAM slot.

There was also a special version of the laptop for Newegg as well.
 
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Well I'm going to make sure nothing I order online is coming out of a state with bloated welfare and pension budgets: California being a prime example. This ruling makes my purchasing habits extra political/ideological.
 
Well I'm going to make sure nothing I order online is coming out of a state with bloated welfare and pension budgets: California being a prime example. This ruling makes my purchasing habits extra political/ideological.

You mean like South Dakota where this law originated?
 
I'm glad. I see all of the high school kids looking for jobs, but the big box places are hurting.
 
This doesn't bother me, you got to pay your sales tax. Online may have to come in cheaper than B&M and maybe either eat the cost of shipping or increase the minimum for free shipping. I will go to a store if I need something immediate and the price is right. I will order large items online and have it delivered.
 
Any idea if and how this will impact eBay? If you sell or buy something will they charge sales tax?
 
How do you figure?

The business either collects the tax revenue and passes it on and has no effect on the business' earnings, or it doesn't collect the taxes and passes nothing on because the customer's state can't require the business in another State to collect the revenues. Either way, the tax revenue moneys itself is not part of the businesses earnings, it's not part of their bottom line. Not unless they are collecting and not passing it on, or failing to collect but paying anyway, (not too likely).

Regards State Sales tax, the State levies a tax against an individual's purchases, not against the business.

Wrong. You're just too inept to understand the concept that the customer has the choice of saying "Hmmm, I can buy this at Target instore for $99.99 + $10 in tax, or I can buy it online from Amazon for $99.99 with no tax applied". Which one do you think the customer is more likely to choose? That is the problem, it DOES have a bearing on what customers decide to purchase - and thus it affects the profits of the corporation AND the amount tax collected by the state.

And as for the location, I can have a billing address and a shipping address and where the goods are shipped to has no bearing on the taxes.

Uhhh... Wut? I work in sales tax - the destination in which you are shipping a product to is the point of taxation (general rule - certain states base it on other factors such as TX and IL). Billing address generally has no affect.
 
Any idea if and how this will impact eBay? If you sell or buy something will they charge sales tax?

Depends - Per this law - the general rule on if they must collect sales tax is if they sell $100,000 or more in that state on an annual basis, or have over 200 transactions in that state on an annual basis....

So I would think you would not see any changes on eBay for your typical small to medium size seller. But who knows at this point.
 
This the end of tax "free" internet purchases. I am surprised it took taken this long. States been losing billions a year in taxes.

It won't. The overhead of a lot of these online stores is so much lower. Prices even with tax online are generally lower and easier to find bargains.


One of the challenges (coming from first hand experience) is after collecting the proper amounts, making payments to each of the proper taxing bodies and submitting the proper paper work (or electronic forms) - Having to do this for many states and keeping the accounting of it all will add to the bottom line for online companies... More than that it can impact smaller companies much greater than Amazon, Walmart, etc...
 
Depends - Per this law - the general rule on if they must collect sales tax is if they sell $100,000 or more in that state on an annual basis, or have over 200 transactions in that state on an annual basis....

So I would think you would not see any changes on eBay for your typical small to medium size seller. But who knows at this point.
Ok thanks. Good to know
 
The only brick and mortar shops I visit anymore outside a grocery store are MicroCenter and Home Depot. If B&M shops think this is going to bring customers back in, I think they're sorely mistaken.

Brick and mortar stores while interested only one part of the push. States themselves are pushing for this. More of the types of goods we buy every day are online, or digital and states want their revenue. So there are a few options, 1 the most near sighted option is to try and get online retailers to pay sales tax to every state. The other options which would be better IMO are to move the taxes over to something like property tax. This is going to be an absolute nightmare for small businesses. BTW I bet Chinese importers wont be paying
 
It mattered enough to you to bash on California, which had nothing to do with this case.
It has everything to do with this case. How could it not given the nature of the case and its ruling?
 
Well I'm going to make sure nothing I order online is coming out of a state with bloated welfare and pension budgets: California being a prime example. This ruling makes my purchasing habits extra political/ideological.

It has everything to do with this case. How could it not given the nature of the case and its ruling?

You're just moving the goalpost now. Your original post shows exactly what you meant. The fact that South Dakota is the farthest from what you originally describe is proof that you just wanted to bash on California and blue states.
 
Any idea if and how this will impact eBay? If you sell or buy something will they charge sales tax?

We have no idea yet. The ruling today simply allows states to start writing / implementing their own laws to collect sales tax on internet purchases. The changes to internet sales tax wont be immediate, but I imagine most states will fast track internet tax legislation anxious to cash in on their new vast revenue $tream. Additionally, we have no idea if Congress is going to set any new rules in light of this ruling. This is going to be a tedious process and likely a real bumpy ride.

For the immediate future, things will remain the same but not for long. Few things stir politicians to cooperate and fast track laws like vast new sums of tax money to collect. I expect hastily crafted bills to warp through the statehouses to start collecting as fast as possible. I suspect most states will make amendments and adjustments to their collection laws for small businesses and individuals "after" they start initially collecting. Truly bummed out about this ruling but knew it was only a matter of time. I raise a family of 5 on a modest fixed income. This will definitely impact my spending and force me to tighten the belt even more. I foresee a lot of small U.S. internet businesses getting crushed as people will simply buy directly from free trade agreement countries like China instead (no tax & lower cost) while others return use B&M businesses more. Per usual, big business and government (virtually the same entity) make out like bandits and everyone else collectively pays for it.
 
Hmm, I wonder if churches are tax exempt from buying stuff?
If so, anyone like to start a church w/ me, we can call it the Church of Reason and Reality.
 
For us, it means the death of use tax, for businesses it means taxation without representation.
 
Most schools pay sales taxes ..the only true exempt are Prime Contractors for the Federal Government .

CA has had this thing where they state a 6% blanket internet tax vs B&M .. so the retailer seems to be collecting as much as possible and keeping the difference ..which I think is baloney as if they are paying 6% then they should only be collecting 6% .

The bigger retailers like Dell & Amazon have been identified by the CA BOE and were paying taxes accordingly (6%) before the decision , so it will be B&H that will no longer have an advantage over the competition (like Amazon before) .

Kenny
 
$1,200 video cards from Newegg ... yeah, add a $120 more dollars to that shit. Or, a new $2,000 system, yeah, $200+ in taxes.

This is seriously gonna cost PC builds more money

unless you have a fed tax ID like I do ...

Actually you were supposed to pay sales taxes on those PC builds anyway. Purchases made online in most states require the consumer to self-report the purchase and pay sales tax. However, without a good way for the states to enforce this, most people just skimped on paying sales tax. This ruling makes it easier for states to collect that sales tax as it puts the duty of reporting the taxes and sales on the business (it's easier to chase around a dozen businesses than each of their twelve dozen customers).

Icpiper said:
I need to find the State with the lowest internet sales tax rate and become a digital resident of that State.

Delaware, Montana, Oregon, and New Hampshire have no sales tax, so there you go.

Sales tax is typically charged based on ship-to or delivery address not the state of residence or billing address. Not all states are this way but many are.


At the end of the day, people should have known that this 'free ride' was never going to last. I'm honestly surprised it took this long for the hammer to come down. I personally don't mind it as one of the most common things I hear from customers and clients is "well if I buy it online I won't have to pay sales tax" which, again, is untrue. You still owe the tax, you just didn't pay it (and if the state ever audited your purchases god help you).
 
The business either collects the tax revenue and passes it on and has no effect on the business' earnings, or it doesn't collect the taxes and passes nothing on because the customer's state can't require the business in another State to collect the revenues.

It absolutely does affect earnings. Whether they charge for tax or not affects the price of the merchandise, which is going to affect the bottom line.

If you had to raise prices by 10% due to increased supply costs, that would absolutely affect earnings. Taxes do the exact same thing.
 
This ruling will most definitely crush most small online businesses. As a small business owner, I will tell you that I could NEVER afford to keep compliant with more than 50 different tax systems. I cannot keep up with that many systems and I doubt most accountants could. Thankfully, I do not own an online retail business. If I did, I would sell it as quick as I could or make preparations to shut the business down. Most small retailers will easily surpass $100,000 in sales each year. My business pays more than $30,000 each year just to lease a space. Then we need to cover utilities, supplies, taxes, licenses, compliance costs, payroll and etc. I suspect most small online businesses find themselves in the same boat of costs. So in other words, if they do not make at least $100,000 each year in sales, they will not stay in business. That law applies only to South Dakota. Now just try to predict what other states and territories may do. Now, also imagine when cities and counties want their cut. Someone mentioned earlier about the United States having more than 70,000 localities and states that each have their own tax, and regulatory systems. Imagine a small business trying to deal with that reality. I foresee small online retailers selling out to the big businesses that can handle those compliance costs, paying to use Amazon's services to sell their goods, heavily restricting the markets they sell their goods to or shutting down. This ruling only benefits big business and big government.
 
The sales tax argument by the states has always been framed as "leveling the playing field for B&M stores", though everyone knows it's about revenue for the states. The fairness argument was just a smokescreen.

This.

The purpose of a sales tax (basically a use tax), is to pay the costs that the business causes the state. (Roads, sewer, police, etc)
An internet business in another state does not cause the same costs as a B&M store.
The delivery company (UPS, etc.) DOES create a cost to the state when they deliver the orders, but they already pay other state taxes.

The law that this court case stemmed from only applied to larger resellers.
I'm sure states like California will apply it to ALL sales, even Ebay, and end up destroying small businesses all over the country.
 
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