The Supreme Court Eyes Online Sales Taxes

Let's hope the High Court gets it right.

If you think internet companies aren't paying any taxes for online sales and that's killing bricks-and-mortar retailers and states' budgets, you, my friend, have been duped. Nothing could be further from the truth. The internet isn't a tax-free zone, nor is the lack of revenue the issue with state budgets. There is, however, a battle about whether state and local governments should be allowed to collect taxes from out-of-state companies.

A 1992 Supreme Court decision, Quill Corp. v. North Dakota, reaffirmed a previous decision that a business must have a significant presence in a state before that state can require it to collect sales taxes. That means a mother selling handcrafted goods on Etsy doesn't have to collect sales taxes from her consumers unless they are physically located in her state. However, Amazon collects sales taxes from customers in all 45 states that have a statewide sales tax because of its vast distribution network.

Most state lawmakers want to see Quill overturned, allowing them to force out-of-state companies to collect sales taxes on their behalf. This argument was just heard by the Supreme Court in the case of South Dakota v. Wayfair Inc. If the states were to win, they would be able to reach into the pockets of that mom selling her paintings on Etsy, even though she may live on the other side of the country, didn't elect other states' officials, and never agreed to those states' tax laws.

More tragically for consumers, tax competition among states would also be lost if Quill were overturned. Under the new regime, online consumers—no matter where they shop or what they buy—would lose the ability to shop around for a better tax system. Without the competitive pressure and the fear of losing consumers to lower-tax states, lawmakers would not feel the need to try to rein in their sales tax burden. It's that pressure, which limits their tax grabbing abilities, that these lawmakers resent and want the Supreme Court to put an end to.

Some of them probably hope that more revenue would alleviate the need to put their financial house in order. They would be wrong. According to the Kaiser Family Foundation, 33 states faced shortfalls in fiscal 2017 and/or fiscal 2018, even though revenue collection has been growing in most states. That's because the more states collect in revenue the more they spend.

Besides, states are overestimating the revenue they'd get from the taxes. Internet sales are still a small share of overall sales, and taxing them wouldn't make much difference. According to a 2017 report by the Government Accountability Office, online sales represent less than 10 percent of retail sales. Also, the 100 biggest online retailers already tax roughly 90 percent of their sales. Desperate lawmakers shouldn't expect to collect any more than 2 to 4 percent of total state and local government tax revenues this way, according to the GAO, were Quill to be reversed.

A reversal would, however, jack up compliance costs for small online retailers, which, unlike Amazon, tend to have razor-thin profit margins. Imagine suddenly having to enforce taxes for the nation's 12,000 tax-collecting jurisdictions.

Talking to NPR on the morning of the South Dakota v. Wayfair hearing, a Republican state senator from South Dakota, Deb Peters, laughed at the notion that anyone would get hurt. According to her, free software provided to online retailers by the majority of desperate states would make that cost zero. This is questionable. As an eBay representative noted on NPR in response that morning, "in Minnesota, blankets are taxable, but baby receiving blankets are not taxable. In Texas, deodorant is taxable, but deodorant that has an antiperspirant is not." Tax software isn't that precise, and compliance would still have to be handled on a case-by-case basis. Repeat this for thousands of items and compliance is definitely not "free."

There is a lot to be lost in the Wayfair case. If Quill were to be overturned, compliance costs could skyrocket for many retailers, and good principles of taxation would be thrown out the window. Healthy tax competition is at stake. Let's hope the highest court in the land makes the right decision.

Comments

[Chipper Morning Baculum]

OT: American Vandal moves to England.

[risozu]

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[yeviwam]

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life.

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[Scarecrow Repair & Chippering]

When I was a kid, I read about some California legislative committee trying to tax unhealthy snacks but not healthy food. This particular argument was about those peanut butter/cheese and cracker combos from vending machines. They finally settled on snacks being fully prepared, while if there was a little plastic spreading bar and separate peanut butter/cheese and crackers requiring purchaser preparation, it was food.

My company gets a 140,000 line data file every month for taxes in the US, and I'd bet a paycheck that if you were to very strictly audit the taxes we calculate, half would be wrong in some detail or another. The district boundaries vary all over the map, the type of goods varies, there are tax holidays, some jurisdictions have amounts beyond which a separate tax rate applies.

There are some tax-free zipcodes meant for consulate and trans-shipper use. Europe has a lot of little jurisdictions which are tax free. Look up Busingen Germeny, which is actually wholly inside Switzerland. Italy has two towns on the northern shore of a lake which straddles the Swiss border; they are tax free because theonly access is by boat or road through Switzerland.

Nobody gets all this shit correct. The simplest solution would be to always tax by the seller's location, but the Supreme Court scotched that. If I travel to Fargo and buy something from a store, I pay the seller's tax; the seller doesn't ask for my driver's license and tax me accordingly.

[DaveSs]

I used to work at a company that prepared and remitted sales tax returns for several large companies (service providers, not retailers) that had physical presence all over the country.

In short, everything you said is true and then some.

The way States, Counties, and Cities currently collect sales tax is with the expectation that the sellers are brick and mortar retailers with a specific physical location within a tax jurisdiction.

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[Chute_Me]

Lost in all this discussion is the fundamental injustice by which state governments conscript merchants to become tax collectors. I am an internet merchant, not a tax collector. I have no special skills or comparative advantage in collecting taxes and I did not voluntarily enter that line of business ... also known as organized crime.

[Rhywun]

If you aren't prepared to correctly handle the taxes of 14,000 different jurisdictions, perhaps you don't deserve to be running a business.

[MSimon]

Size matters.

[Don't look at me.]

Why should any state get a slice of the action every time some item changes hands?

[Kroneborge]

Actually of all the tax systems I think a sales tax is probably the best.

Property tax means you can never really own property just rent it from the government. IE you are forced to participate in the broader economy to keep your property.

Income tax they get all into your financial life.

Sales tax you only have to worry about if you sell goods on the open market. This seems the least oppressive to me.

[loveconstitution1789]

If the government was gutted to a bare minimum for the fed and states, taxes would be super low.

I agree that tying taxes to property is a huge mistakes because if you dont pay the government can say that they can seize your property. In reality is eminent domain which they would still have to pay you but they could seize that to pay the taxes.

If you don't pay taxes, they can seize your assets anyway which would include property.

A mix of different taxes just hits the largest swath of population.

[Kroneborge]

One possible solution of course would be a law that requires sales tax simplification in order to tax online sales taxes. IE you would have to conform to national standards of goods definitions, and have a uniform rate for the state.

Now you go from 12,000 to 50. That a bit easier to manage.

[DaveSs]

Eliminate local options
No special tax districts
Single rate for ALL goods (including those that commonly also have an excise tax because they are 'bad' for you).
And did not require an enumeration of gross sales by City/County
And did not require anything more than annual filing unless you had exceeded a significant gross sales threshold
And did not require any annual registration fees and other similar things.

Then it would probably be doable for out of state retailers, though even then governments would likely still find a way to muck it up and make it a huge burden.

[Juice]

A reversal would, however, jack up compliance costs for small online retailers, which, unlike Amazon, tend to have razor-thin profit margins.

Um. Amazon has thinner than razor thin profit margins.

[Rhywun]

That is what I figured too.

[Earth Skeptic]

Easy peasy: convert sales (sellers') tax to buyers' tax.

That keeps the political pressure where it should be, motivated by the buyer who votes for their own city, county, and state reps. And it avoids all the complications that vendors face, knowing and satisfying the mystical 12,000 tax-sucking entities.

Yeah, I know this is an unworkable fantasy, unless we all transact without cash and trust some third parties (credit cards? Paypal?) to tally and pay our buyer taxes. Or maybe the feds could tap their internet tracking data and send each of us a(nother) tax bill.

Oh, never mind.

[James Pollock]

"Easy peasy: convert sales (sellers') tax to buyers' tax."

Yeah, we have this already, and it's called "use tax".

You DID pay your use taxes this year, right?

[loveconstitution1789]

As someone who sells online as a 3rd party seller with Amazon, the politician's schemes are utter Bullshit. Taxes are already complicated which why I don't charge any and let the buyer figure it out. Profits can be razor thin already because I mainly sell surplus items of value rather than sell masses of merchandise as a business.

As is pointed out in the article, its a scam by high tax states to put their oppressive tax scheme burdens on out-of-state sellers who cannot have a say throwing those high tax bums out of office.

Furthermore, the US Constitution prohibits taxes on exports and imports from state-to-state without Congress' approval.
Article, I, section 10:
No state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing it's inspection laws: and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of the treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.

[BYODB]

Yeah, the Commerce Clause has been expanded out into a truly terrible and bullshit animal, but at it's core the original intent was a good one. It's also why interstate borders are generally the most free.

[The Last American Hero]

The brick and mortar guys enjoy police and fire protection, education for their kids and programs to keep the homeless population from sleeping in your doorway (unless you live in Seattle or San Francisco). It makes sense for them to pay the tax. An online retailer 3 states away enjoys no such benefits, so why should they be collecting a tax? In addition, the brick and mortar guys (or their employees) can vote these pols in and out of office. The out of state guy has no such power.

Deputizing a company doing business 3 states away to collect your taxes is bs. If you want to start auditing and collecting use tax from your citizenry, go for it.

[Killer Kowalski]

There is no tax software on the planet AT ANY PRICE that will be able to keep track of the monthly changes to tax rates in over 10,000 jurisdictions - because it's not just states, it's counties and cities and even "special assessment districts" that have their own versions of what constitutes the current sales tax. And what isn't mentioned in the article is how many of those jurisdictions want the right to retroactively audit any business anywhere that MIGHT ever have made a sale to someone there. Regardless of the ethical issue of taxation, the logistical nightmare if this decision goes the wrong way will be an incomprehensibly monumental clusterf-ck.

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[AD-RtR/OS!]

Seeing as how the Congress has weighed-in on this issue twice in the last few decades, it would be imprudent for the Court to assume they know more than does the Nation's elected representatives (but it wouldn't be the first time), and it certainly could, in today's atmosphere, generate a response from those elected members that they Court may not appreciate.
These are, after all, Interesting Times.

[Jim82]

Lost in all the hysteria is the fact the YOU are ultimately responsible for paying the taxes that YOU owe. YOU. Not your employer, and not the store where you spend money.

But the government knows that YOU are fundamentally dishonest, a liar, and cheat and a thief, and YOU will never send in the proper amount of taxes owed on an honor system, because YOU are fundamentally a liar, a cheat, and a thief.

So the government forces your employer to collect the taxes that you will not willingly remit.

If you live in New York City and decide to spend a $1,000 to buy a guitar on reverb.com, or a hunting rifle on gunbroker.com, and the seller lives in California, are you really going to send the state of California an extra $72.50 next April? C'mon man! If you are in California and you bought the item from a NYC business, are you going to remit an extra $88.75 to New York if they don't know how to bill you for it?

99+% of the buyers on the Internet will not willingly remit the taxes due to the various state and local jurisdictions. This make those people CRIMINALS in the eyes of the law. But how do you catch them?

So you are not sending in the state and local sales taxes due on that Beatle's vinyl CD you bought on eBay? Legally, that is your obligation. Congratulations, you have joined the evergrowing ranks of the underground criminal society!

[jelabarre]

I've thought it would be far simpler to require internet vendors to collect tax on the location they do business from. It shouldn't be any different than you walking into their store to buy something. If you're in Cape Cod, would the shopkeeper be expected to collect NYC sales tax, or Seattle, or San Francisco sales taxes?

Not only would it simplify tax collection, it would *also* create competition between sales-tax jurisdictions, where they'd all start competing with each other to bring in mail-order companies, and force the high-tax localities to rethink their taxes or risk losing companies.

Which, of course, is *exactly* why it won't happen.

[James Pollock]

"I've thought it would be far simpler to require internet vendors to collect tax on the location they do business from. It shouldn't be any different than you walking into their store to buy something"

Except, of course, that I'm not walking into their store. In fact, have very likely never set foot in the state. And MY state doesn't HAVE a sales tax.

Never mind the situation where the order is taken in one place, processed in another, and then fulfilled from three different warehouses plus a drop shipment from the manufacturer. Why are there four different tax rates attached to my order?

[mpercy]

If this were to be the case, I'd expect online retailers to "move" their businesses to Montana, or Delaware, Alaska, New Hampshire, Oregon. Then they could be honest when saying their customers owe 0% sales tax.

[Harun]

I know a bit about this matter.

1) The software does work pretty well. Amazon uses it and 3P sellers can use it for a fee.

2) Some states are smarter than others. Pennsylvania just wants its straight 8% cut from out-of-state vendors and tells you the local options are not required. SC is...amaze balls complicated and unhelpful. Filing per county, with tiny amounts. Crazy.

3) Amazon already has stopped fighting and appears to be moving towards a model where they collect taxes for sellers. (They opposed this for a long time...) My theory is that they want to help Chinese sellers comply with the law. If they didn't collect sales tax for them, the Chinese sellers wouldn't do it themselves. In the Uk, they just passed a law that stopped this practice. I was mind-boggled how Chinese sellers could manage to sell products without the 20% VAT but UK sellers checked them out, and yes, they got away with it.

4) Once Amazon has decided to collect taxes (WA state and RI demanded they do it, and Amazon complied...) they will start to support this move - as its a barrier to entry to competitors.

[Harun]

You should see how protectionist people get when they realize the foreigners get way better deals than they do.

Chinese sellers don't need to comply with many regulations, and are beyond the reach of US authorities. Must be nice.

Get caught? Oh, start a new company.

[James Pollock]

Tell that to ZTE.

[Longtobefree]

We went through all this decades ago with mail order companies. Al that has changed is the total volume of money traveling through out of state vendors due to Al Gore's internet.

But I do still have a very old history book with a couple of chapters of what can happen when there is taxation without representation.

[Galane]

There's also the cost of submitting sales tax payments. Some States require a business to have a sales tax number. Do they expect every business selling online to obtain 30+ such numbers or equivalent?

They're all ignoring the damage this will do to small businesses in their own States. State A wants businesses in State B to collect and remit sales taxes for purchases made by people in State A.

But the opposite is also true, Businesses in State A will have to collect and remit sales taxes to State B for purchases made by people in State B.

Then there are the five states with no sales tax at all. This tax plan gets them NOTHING, it's all downside for them.

To the residents of any State where politicians are pitching this idea as a 'win' for you, it's not. It's going to be a burden on you and your business, same as it will be for everyone else.

[mpercy]

But State A and B will both need to hire a few hundred more tax collectors, auditors, etc. thus increasing the size of government. They'll consume all that out-of-state revenue just collecting that revenue.

[David Peters]

It is a pity that Ms. de Rugy feels competent to discuss a tax law that she has not read.
As a former employee of the California Board of Equalization, I was taught that the Sales Tax is _on_ the seller, who is permitted to collect reimbursement from the buyer. Various exemptions written into the Sales and Use Tax law cover sales in interstate commerce. Over the years, the law has been modified to contradict itself with regard to shipping into various tax districts in California with local taxes.
The Use Tax on the hand _is_ on the buyer. This insanity was enacted during the Great Depression at the demand of banks and others who refused the levy of a sales tax (e.g. on checks) but did not quibble at the thought of taxes, just not on them.
Removing the reimbursement exemption for taxes on sales in interstate commerce removes a tax subsidy, that was granted to encourage sales by making sales to out-of-state customers cheaper than in-state purchases.
To truly level the playing field, California (and all other states with a similar exemption) merely need to cancel the exemption, thus ending the fiction that the tax is on the buyer.

[Liberty Lover]

Amazon wants this, it will shut the little guy down. The small time Internet seller doesn't have the resources to collect sales taxes from all fifty states. Amazon does, so Amazon wins, you lose.

[mpercy]

Here's an extreme sales-tax issue I outlined elsewhere.

Assume California passed a $10/gallon gas sales/use tax. Obviously Californians near a border with another state will quickly start crossing the border to get their gas, thereby avoiding this tax.

California starts gently reminding its residents to report and pay the use tax on the gas that they "imported" in their vehicles and 5-gallon cans. But they just don't do it.

California could resort to stringent audits with stiff penalties. But that would rile folks up even more and they're already mad about this $10/gallon gas tax.

California could set up border inspections...you must stop and have your gasoline levels checked before you leave the state and stop and pay taxes on any excess you have in your tank upon your return (even California realizes it's futile to try to tax you on gas that you used outside the state). That'll go over well...

Or, California could try to force gas stations over the border to check licenses of their customers so that they can charge Californians the tax and remit it to California. Where does California think it finds the authority to do this? There is none.

[mpercy]

This is basically the situation today with online/catalog sales. People just don't pay the use taxes they legally(*) owe. States don't want to go down the audit and penalty route, nor do they want to do border controls to inspect for incoming untaxed merchandise. So they want to force out-of-state businesses to do the dirty work for them.

(*) Right or wrong, at least a sales/use tax is levied on state residents.

[mpercy]

Brick-and-mortar Main Street vendors in Delaware have no obligation to collect and remit Maryland use taxes for Marylanders frequenting their stores. Even if the Marylanders are jumping across the state line to take advantage of Delaware's 0% sales tax. Even if the Marylanders then fail to report and pay their state's use taxes.

Internet vendors should continue to have the same right to not be forced into acting as a tax collector proxy for some state in which they do not have a physical point-of-presence.

While I suppose tax-and-spend supporters would like it, I think many people and Main Street vendors would be offended at the notion that a state like, let's say New York, could force a brick-and-mortar store in, say, Orlando, FL to quiz customers so as to ferret out the New Yorkers and collect the NY sales tax on any items purchased that might be possibly taken home to New York (and then subject to NY use taxes). But it would put the Orlando brick-and-mortar store selling to a New Yorker in the store in sync with what they want an Orlando online vendor to do for New York customers.

[mpercy]

Internet vendors are NOT "not paying taxes"

Bear in mind that what are being discussed are sales taxes, which are paid by customers.

Businesses merely collect and remit these taxes. They are forced to act as proxy tax collectors because it is more efficient for states for force a few thousands of businesses to account for their sales than it is to force a few million citizens to do so individually (which is already a proven utter failure as per use taxes). And states want to force vendors located outside their state to fall under the same laws.

Please bear that in mind before going of on a "these online corporations are skipping out on taxes they owe! mom brick-and-mortars are carrying their load!" chain of thought.

If this changes, brick stores would operate under one set of state sales laws, plus the federal laws. Internet stores would be subject to 50 sets of state sales laws at the same time, plus federal laws. That's NOT a "level playing field".

[TJJ2000]

I'm with jelabarre - Make the states compete.

States that are concerned about the omission of online sales tax can pass new legislation either specifically for their 'state' online retailers or just apply it to income tax. In no way should this become a federal matter.

The ONLY reason this is even an issue is because sales tax is ADDED to the retail price-tag AFTER the sale. Unlike state income/business tax which is hidden INTO the price-tag. So really, what's the difference?

The workers and most of the administration of said state company and/or function of a company VOTE in that state. The manufacturing, packaging, billing and all other items are operated in that state and supposedly used some state resources - thus if a tax must be collected it should be taxed on the entity within THAT STATE instead of some other state.

[geo]

The part of the issue that most commenters here do not understand is that many of these tax jurisdictions require a PERMIT to collect the sales tax as a merchant, and require quarterly reports to go with that. Some even charge a fee for the permit. California is an example of this. I spent months trying to get a California Sales Tax Permit from the Board of Equalization and finally had to go in person in order to get them to issue it. The problem: I did not have an address in the state of California!" and they refused to mail the forms out of state. Now imagine doing that for forty-four states, and trying to keep track of the paperwork. Keep in mind, most sales taxes are based at the County and even Municipal level, so there are hundred of variations. My fear is that this mess is going to be settled by instituting a Federal Sales Tax that can be used to pay all these little tax fiefdoms. The best solution would be to eliminate ALL sales tax.

[Tionico]

This insane tax grab needs to be crushed and buried. Some states, amongst them Washinton, have no coerced middlers like Amazon to collect sales tax pno every sale shipped into that state, no matter its origin. I've checked into it, and i see no way a small business can properly and accurately report these sales on their business and sales tax reports, and the accounting to figure out what got sold where and through which channels will be an intolerable nightmare.

The Constitution prohibits any taxes, imposts, levies, duties, be imposed on goods moving between states. I suppose our best hope is that Justice Gorsuch will see this aright, and make a strong case that sways others to vote against levying the taxes.
I see in my own state a small fraction of MY tax dollars wasted in so many ways, and want to scream. If any businessman conducted his own enterprise thusly he'd not be in business very long. But with the government, We the Sheeple are the bottomless pit of revenue for them to waste.

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[Scarecrow Repair & Chippering]

Making excuses why businesses should spend a fortune collecting taxes for government is a sure sign of a statist.

Fuck off, slaver.

[Get To Da Chippah]

The interaction between MA and NH is even more stark.

NH - No sales tax, no income tax
MA - both

As both states are geographically small, it's common for MA shoppers to go to NH, especially for larger purchases like furniture. A tire retailer was sued by MA to collect MA sales taxes on purchases by MA resident who went out of state to purchase tires.

http://www.cltg.org/cltg/clt2009/SJC_sales_tax.htm

The state lost.

MA also routinely has 'tax free weekends' to keep MA shoppers in MA, at least for a few weekends.

[albo]

Drive down route 202 in southeastern PA into sales-tax-free Delaware. You can tell you've crossed the border when the modest retail and residential areas along PA 202 turn into the riot of strip malls and big boxes along Delaware 202.

[RoyMo]

Of course there is that bridge toll which really cuts down on casual shopping, unless you live in Tri-Cities but Umaltilla is hardly a shoppers paradise. I notice that Oregon stores are not very conveniently located for cross border shopping expeditions.

The really impressive border is Idaho, though it isn't so obvious. WA has far more generous welfare but it really reams you on every fee they can come up with. So unless you are really poor or pretty rich Idaho is the better deal. On the plus side for WA, middle class California retirees don't tend to stay on the WA side for long when they move up here. You can tell by looking at property prices on each side of the border.

[BYODB]

Live in southern Washington, shop in Oregon, especially larger purchases like auto, furniture and the like.

You know you still have to pay those taxes, right? Especially on the large purchases? I'm not saying it's a good thing, but this isn't a valid way to evade taxes if you want to comply with the law.

[The Last American Hero]

WA gets you on the sales tax when you register your vehicle.

And you are out of compliance with use tax laws, especially if you make large purchases.

But other than that, you almost had a point.

[Longtobefree]

two merchants, doing business from different floors in the same building
In that scenario, how is the onlline seller NOT paying taxes, either through rent or directly if they own the facilities?
You, and the other 'unfair' position are ignoring the state services the brick and mortar stores get from the state; police and fire protection, sidewalks to their door, streets and parking lots etc. And in ALL cases, the companies do not PAY the sales tax, they collect it. The consumer is the one liable for the tax; the brick and mortar stores collect it as a inconvenience for the state.

[Chuckles the Snarky Piggy]

Quite a lot og bullshit there. The biggest is thinking you can buy a car in Oregon and not pay tax to Washington. WA can and will audit Oregpn businesses that make a single sale within its jurisdiction, I have personal experience with this.

OR auto dealers collect sales tax based on the address where you license the vehicle. And WSP target vehicles with OR plates to enforce compliance.

[mpercy]

If they were both operating in the same building, selling to the same customers, then they'd both have to collect the same sales tax.

But they're not.

In the internet case, the "store" is probably (Amazon excepted) located entirely in another state and has no operations at all in the first state. If the customer got in his car, drove to the store in the other state, bought his stuff, and drove home, he'd have had to pay the sales tax in the remote state (which might very well be 0%).

But he'd still owe the use tax in his home state for the imported goods. Failure to pay that is on him, not the remote business. It's not the remote businesses job to figure out the traveling customer's home-state taxes.

Internet ordering is akin to the traveling customer, but he paid someone else to drive over and pick up his stuff and bring it to him. Paying the use tax is STILL his legal responsibility.

[Scarecrow Repair & Chippering]

No jackass, I did not defend tax cronyism. I pointed out that the statist solution is always the worst possible solution. If they are going to collect sales tax, there are some ways worse than others, and statists always choose the most bureaucratic one because it gives them the feeling that they are doing the right thing, because if it were simple, anybody could do it, and then the statists wouldn't be needed.

[Rhywun]

NYC used to have periodic "tax-free clothing" weekends. Eventually they just stopped taxing cloting period (but only under a certain price, like $100 or so).

The moral of these tales is that the scum running these places KNOW their tax regimes are punitary but they soldier on because the people who own them, the public sector unions, demand it.

[James Pollock]

" A tire retailer was sued by MA to collect MA sales taxes on purchases by MA resident who went out of state to purchase tires.... The state lost."

The state should have lost. They sued the wrong party. An out-of-state retailer is out of their jurisdiction. An in-state retail customer, however, is not.

I've lived most of my life in a state that doesn't have sales tax. Things cost what the pricetag says it costs. Retailers don't have sales-tax collections costs, and neither does the state.

[MSimon]

So you get to collect the tax an pay a fee to the collection agency?

And if I'm selling on line does it automatically calculate what the customer owes?

Do you charge the customer the tax + fee or just the tax?

Can you add a fee for collecting the tax and the fee?

[Arcxjo]

I shouldn't have to patronize a private company to remain compliant with tax law, Nancy.

[Rhywun]

I work in an industry that is heavily regulated by the government. In fact, the more regulation, the more work I have to do to keep up with it.

Doesn't make it right.

[Rhywun]

I'm saying that public sector unions are the single more powerful force in certain areas in electing compliant Democrats who then reward them with unsustainable pay and benefit increases. Those increases are used to justify the punitive sales and income taxes that these areas charge.

[Don't look at me.]

Clothing free tax weekends would be better.

[DaveSs]

Except that it isn't elementary school calculations. Its a calculation based on bureaucratic rules that are open to multiple interpretations.

Is an Oreo a cookie, baked good, or food?
How about a Twix, or Kit-Kat

If you purchased the same item in the same town from five different stores that each use a different PoS system its entirely possible you will be charged five different tax rates based on the interpretations made by the legal teams of the PoS companies.

That's not even considering special tax districts that may be as small as a single shopping center.

[Rossami]

So, Michael, you think this is all so easy - when are you going to start your own business and prove it?

You keep mouthing these platitudes that just prove to the rest of us that you have zero real-world experience with the things you think you're talking about.

But maybe we're all wrong. Maybe we're all dinosaurs who are too stupid to run a real business in the modern age. You should be able to open your own shop and run us out of business, right? Put up or shut up. If you think this is easy, go do it yourself.

[Earth Skeptic]

Not necessarily. Have you looked at real people lately?

[DaveSs]

Multiply the tax times the price. This is about selling not buying.
The problem is figuring out what exactly the tax rate is, because contrary to what you believe there are in fact bureaucratic interpretations.

That is again, setting aside special tax districts whose boundaries, while apparent to City Hall are not so apparent when you are selling to a customer across country (or trying to set up a PoS system to support online commerce)

Only 14 states tax food. And if you sell food there's only one jurisdiction per store. Call City Hall.
Are you suggesting that food can't be bought online? Cause I sure as hell buy non-perishable food online.

The PoS, like the rest of this is hysteria and/or urban legends. Like the rules being subject to bureaucratic interpretation. And Oreos, Twix and Kit Kat --- puh-lease.

I live in Iowa, they don't tax food. Yet when I go to the grocery store there are a number of things I purchase to EAT that surprisingly get charged a sales tax. Yogurt with dried cranberries in it, taxed. Plain yogurt, untaxed.

You speak of things you do not know, or willfully wish to ignore.

[loveconstitution1789]

Some state tax different food based on whether it is processed food or fresh food and therefore tax free.

[loveconstitution1789]

If the tax system was as easily as you incorrectly said, there would be no tax attorneys, tax preparers, tax agents, or tax planners.

[MSimon]

Because I can.

[MSimon]

Well see. Parceling the tax collected out to 14,000 jurisdictions is going to require a collection agency if you are a small business.

You couldn't figure that out?

[BYODB]

You heard it here from Hihn first: Unions have no power in blue cities. Believing they have any power is akin to believing that Obama was born in Kenya and was a secret Muslim.

I almost wonder if this is Michaei Hihn or some such, since this seems insane even for him.

[BYODB]

Wow, so someone who works for the government and gets more work when regulation increases should lobby the government to reduce regulation.

You don't use what's commonly referred to as 'logic' do you?

[Don't look at me.]

Nature loves variety. Playboy has spoiled you.

[BYODB]

Oh? How so, since you're explicitly 'electing people' to change regulations to be less burdensome on someone who explicitly profits from increased regulation.

Thanks for clarifying that you don't use logic though, not that I needed that clarified.

[BYODB]

It's not the opposite of what I said, you're just too illiterate to understand what I said. So, unable to use logic and no reading comprehension.

If you elect people to change the regulatory scheme to be less burdensome, but your job only exists because of those regulations, what would you expect to happen to the job you're in?

Or, like sanity, do incentives not matter in your universe?

[BYODB]

No one said anything about ROI except you.

[James Pollock]

The "public-sector unions require high sales taxes" theory will have a tough time with Oregon.

[James Pollock]

Washington, until recently, charged sales tax every year for vehicle registration. Oregon charged a flat $30/year for vehicle registration. So a LOT of people in SW Washington had cars that were registered in Oregon. So the Washington State Patrol started looking at all the cars crossing the Columbia, looking for the ones that crossed into Oregon in the morning and into Washington in the evening, and writing tickets.
Eventually, Washington changed its car registration fee structure.

There was a bit of a to-do a few years back, because something like 3000 RVs were registered to the same address in Oregon. Some entrepreneur had set up a business registering new RVs in Oregon (no sales tax) for out-of-state buyers.

[BYODB]

What does liberty as a first principle have to do with flat taxes? That seems like a 'fairness' issue rather than a 'freedom' issue. I would assume a libertarian tax scheme would be 'no taxes that are involuntary', but they could take any form.

[James Pollock]

So, a proposed solution would be that states can collect sales taxes from out-of-state sellers if and only if they adopt a standardized tax scheme. If states want to cling to their own loophole-filled system, they can, but they can't impose it on out-of-staters. If they want to collect taxes, they have to make it as easy as possible to calculate the tax.

Maybe add it to the Uniform Commercial Code (which isn't uniform, but comes pretty close).

[Chuckles the Snarky Piggy]

Its not crazy, its true, Oregon likes to hide their taxes as fees, but it is in the top 10 for tax burden and 1 out of 8 employees in Oregon "works" in the public sector according to the OR employment dept.

[MSimon]

A collection agency collects things. Says so right in the name.

[mpercy]

In Washington, a candy bar containing flour (a Milky Way Bar or Kit Kat) is not taxed, while one without flour (a Milky Way Midnight Bar or 3 Musketeers) is. The only way for a consumer to know what's taxed before heading to the checkout counter is to read the ingredient label and the state's definition of "candy or candy-like products."

In Texas and other states, wigs and hairpieces may or may not be taxed, depending on whether the customer has a medical need for the fake hair (e.g. cancer treatments) or just wants a different look.

In California groceries are exempt. Candy is considered a grocery, but soda is not considered a grocery. Prescription drugs are exempt, but OTC drugs are taxed. California's detailed descriptions of what is and is not taxed is a 46-page document.

[mpercy]

One thing about Amazon is that they have physical locations on most states, which under Quill renders them liable for collecting sales taxes for customers in the states in which Amazon has physical point-of-presence.

This is not true for other online retailers, many of which have exactly one physical location and should be able to tell tax authorities in other states "No, I'll not be your tax collector. Talk to your citizens who are not paying their use taxes on goods they purchase from me."

[mpercy]

Is your local deli an "online retailer"?

[Ride 'Em]

It may not be over 50%, can't say to this but union wages and benefits are the most likely single largest expense for many state and local governments. In California pension and other retirement costs are grossly under funded even though they consume up to 17% of money spent in the current year. The states have done a great job of underfunding retirement benefits. I first saw this with Ella Grasso, governor of Connecticut, who to balance the budget, extended the average length of service to retirement used in the calculation that determined that year's contribution in the budget. On these pages that is one aspect of the calculation that I have never seen discussed.

R-L < Zero

[Ride 'Em]

Sort of like a rose is a rose by any other name. The poster's point is that using an agent or software or bothto calculate the tax owed and paid to each taxing government would add a layer of cost to the transaction and who would pay for that. My guess would be that it would be baked in into the cost of the item sold. Thereby causing an inflationary effect. So, the taxing districts benefit even more. Higher price, higher sales tax, cheaper dollars make debt cheaper.

Many times I think you are more intent on ridiculing the poster than answering his/her concerns.

[TJJ2000]

The problem is -

Your views are centered from the buyers perspective. Which is fine; The solution would be lobby YOUR state government for dismissing sales tax and replace funds through business/income tax. Problem solved.

All products aren't "equal" - but a multitude of choices as libertarians well know is the closest to "best" as one can get and federal legislation that forces "equal" always ends up in waste and inefficiency.

The same principle applied to sales tax. Make the states compete for the best tax plan. If your business is going under due to YOUR state's tax plan it makes no sense to try and force other states to follow the same FAILURE.

[Gary T]

I have been reading your tireless responses to other arguments on this, and still can't quite understand what you are trying to say.

Is that the gravamen of your argument? "but brick and mortar is NOT screwed?"

Are you saying that because a brick and mortar store has to charge 6% sales tax, and an out of state store does not have to charge 6%, that we must force the 0% store to charge sales tax, in order to make sure the B&M store is not 'screwed' ?

Why is that? Because of some existential 'fairness' proposition?

The B&M store is screwed because it chooses to live and do business in a state that that has decided to impose those taxes, as do the owners and other residents who elect legislators who enacted those laws to impose such taxes.
They are screwed by their own participation in it.
The 0% tax business is not, because of the same reasons.