Internet Sales Tax Laws

Bill Could Solve 'Compliance Labyrinth' Facing Some Businesses After SCOTUS Online Sales Tax Ruling

The legislation would exempt sellers who gross less than $10 million in annual sales from owing taxes to other states.

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Ingram Publishing/Newscom

Chris Heitman, the owner of a successful auto racing supplies business in Wisconsin, is getting hounded by out-of-state revenue officials trying to collect sales taxes for online transactions. Reason detailed his plight earlier this month.

After years of congressional inaction on the question of whether internet retailers should have to pay state-level sales taxes, the U.S. Supreme Court last year upheld a South Dakota law allowing the state to collect taxes from businesses that make at least 200 transactions or do $100,000 of gross sales into the state. That decision, in Wayfair v. South Dakota, set off a mad scramble in other states to set similar standards for taxing out-of-state businesses. States are eyeing a windfall of revenue by targeting online sellers like Heitman—New Jersey, for example, plans to collect $3 billion in sales taxes this year from businesses outside the state—in what can be described literally as taxation without representation.

For Heitman and other owners of small and mid-sized businesses, that means having to get up to speed on tax codes in 45 different states. (The five other states have no sales tax.) It's not as simple as looking up what rate to pay; state sales tax codes are notoriously complex.

This week, Heitman emailed to tell me about a "tremendously complicated and expensive compliance labyrinth" he's encountered in Kentucky.

Heitman says his business made $1,500 in profit on roughly $38,000 in gross sales over 299 transactions in Kentucky during 2018. Because the number of transactions is high enough to trigger the new post-Wayfair standard, he owes sales taxes to the state. It's going to cost at least $750 to having his accounting firm prepare the 17 pages of tax forms the Kentucky Department of Revenue sent him, he says, and that's not counting the expense of actually paying the tax itself.

"Tax compliance costs will ensure an actual net loss on Kentucky sales," he writes. "We would be better off putting a notice on our website saying that we can no longer ship any orders to Kentucky."

It's Congress that must ultimately address the chaos created by the Wayfair ruling, as this is plainly a question of regulating interstate commerce. You'd rarely lose by betting against congressional action, but a bipartisan bill introduced Wednesday offers a glimmer of hope for entrepreneurs like Heitman.

The Online Sales Simplicity and Small Business Relief Act, introduced by Rep. Jim Sensenbrenner (R–Wisc.) and cosponsored by Reps. Jeff Duncan (R–S.C.), Anna Eshoo (D–Calif.), and Zoe Lofgren (D–Calif.), would ensure that states cannot require remote online sellers to collect sales tax retroactively on transactions made before January 1, 2019. That gives small businesses at least the rest of this year to adjust to the Wayfair landscape, freeing Heitman from having to pay taxes to Kentucky, and any other states, for sales made during 2018.

More importantly, it would exempt sellers who gross less than $10 million in annual sales from owing taxes to other states. That's a much higher threshold than the 200 transactions/$100,000 standard created in Wayfair, and it would mean that Heitman's $38,000 in Kentucky sales would remain tax-free.

That exemption would be repealed, the bill says, if states agree to a simplified sales tax compact that is approved by Congress. In the long term, that's probably the best way for states to collect remote sales taxes. Rather than having to comply with all sales tax rules in 45 different states, a simplified compact might see all states agree that cross-border sales will be taxed at a single, flat rate.

Until a compact like that exists—and it likely won't exist unless Congress gives states a strong incentive to agree to one—Sensenbrenner's bill would protect small and mid-sized online businesses from being hounded by out-of-state taxmen.

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  1. Heitman emailed to tell me about a “tremendously complicated and expensive compliance labyrinth” he’s encountered

    “The tax code is broken”, DUH!

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      1. Did you pay sales tax?

      2. Reason: Can you faggots do something about the spammers?

    2. Here is the deal people. Washington State has 726 special sales tax jurisdictions with local sales taxes in addition to the state sales tax.

      That is one state.

      Good luck with this!

      1. Exactly. This decision exposed how messy and outdated online taxation is.

        Congress needs to fix this with some uniform and simplistic tax method or whatever to make it easy on small businesses. Its what the Interstate Commerce Clause is for. Otherwise, states will go after each other throats to get this tax revenue.

        Sometimes the SCOTUS decisions making it so everyone is impacted by crappy laws is the correct one.

        Notice how fast Congress (bi-partisan too) is bringing this issue to the forefront. I bet small business groups have been yelling at their Congressmen.

        1. The simplest fix is to just overrule the Supreme court, (Congress has jurisdiction over interstate commerce) and declare that states can’t tax interstate commerce.

          1. That would be a boon to me living 15 minutes from CT and 25 minutes from MA.

          2. You need to understand that this ruling is only affecting private transactions (businesses get audited) in states where the seller does not have a nexus. A state has the right to tax its residents when they purchase goods. The question is does a state have the right to make make a 3rd party in another state collect and submit the tax. Each state may have hundreds of taxing jurisdictions. Washington has 726.

            I posted this lower in the thread:

            If a state has passed a tax on the sale of goods, private transactions with businesses in other states have always been subject to such taxes. When the tax is collected and submitted by the seller it is referred to as Sales Tax. When the tax is reported and submitted by the buyer, it is referred to as Use Tax. Sales and use taxes are the same thing, differentiated by the party that reports and submits the tax.

            The problem is pretty obvious. Private parties do not usually submit use tax when the state has no way to know that such a transaction has occurred. Prior to this, businesses could only be required to collect sales tax in states where they had a physical location. The states were forced to rely on in-state consumers to report use tax when they bought from out-of-state sellers which was not happening. The state audits in-state businesses for use tax compliance, so this issue is all about private parties.

          3. This Congress?

        2. The scariest words in the English language: “Congress needs to fix this….”

          Congress needs to adjourn for several years, then reconvene temporarily if we find that we miss them at all.

      2. And different rates in different jurisdictions are not the end of it. Different items are taxed differently.

        In Illinois, “Candy,” as defined as a preparation of sugar, honey, or other natural or artificial sweeteners, in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces (but not including any preparation that contains flour or requires refrigeration), is taxed at the higher general merchandise tax rate (6.25 percent)–candy that includes flour is a food, and taxed at 1%.

        In Georgia, “Food and food ingredients and prepared food sold and served to pupils and employees of public schools as part of a school lunch program.” are exempt.

        In some states, wigs are taxable, unless they are needed for medical reasons (e.g., hair loss due to chemo).

        In Maine, For the period of July 1, 2011 to June 30, 2033, all sales of aircraft are exempt.

        New York City imposes an 8 cent tax on sliced bagels. Unsliced bagels are tax exempt.

        1. Colorado: The state taxes retailers of food, meals or beverages a tax on”nonessential” food-related items, including napkins and bibs, utensils and straws. Paper cups and disposable containers are considered essential and are not taxed.

          Connecticut : Adult diapers go untaxed. Children’s diapers, on the other hand, are taxed.

      3. Right, I came in here to say this.

        For Heitman and other owners of small and mid-sized businesses, that means having to get up to speed on tax codes in 45 different states.

        It’s not even that simple. Many states have county by county sales taxes, and some of those sales taxes don’t apply to everything.

  2. The Online Sales Simplicity and Small Business Relief Act, introduced by Rep. Jim Sensenbrenner (R?Wisc.) and cosponsored by Reps. Jeff Duncan (R?S.C.), Anna Eshoo (D?Calif.), and Zoe Lofgren (D?Calif.), would ensure that states cannot require remote online sellers to collect sales tax retroactively on transactions made before January 1, 2019.

    You mean the SCOTUS stops playing part-time legislator to stupid old Congressional laws and makes it so the tax laws affect all online shoppers. Then Congress does their job and in a bi-partisan manner serves up tax rules that are easy to understand and keep small businesses from being burdened by greedy state tax collectors?

    This is definitely Trump’s fault!

    1. “You mean the SCOTUS stops playing part-time legislator to stupid old Congressional laws and makes it so the tax laws affect all online shoppers. ”

      Actually, the way it went down was that the SCOTUS started playing part-time legislator, resulting in tax laws applying to people who weren’t in the states that levied them.

      1. SOUTH DAKOTA v. WAYFAIR, INC., ET AL. was decided in a way that let the stupid existing online interstate commerce laws and prior SCOTUS precedent hang in the wind.

        Its Congress’ job to fix this mess of tax laws in the Age of Online Shopping.

        1. I guess the dormant commerce clause was dormant when that happened, or it woke up or something.

  3. It makes no sense for states to put sales tax on out of state transactions. There are fairness issues to it but allowing states to tax out of state sales puts an unconstitutional burden on interstate commerce. If the states want their point of flesh for out of state sales, they need to get it some other way like income or property taxes.

    1. It makes no sense for states to put sales tax on out of state transactions.

      Except that, akin to open borders, lacking it reveals their regular sales tax to be a regional or native tax.

      1. Sure. And states have the right to tax their own. They do not in my opinion have the right to tax people not present within their state.

        1. They do not in my opinion have the right to tax people not present within their state.

          The argument is that they aren’t, right? They’re compelling out-of-state merchants to collect local taxes on their behalf.

          I freely admit to being a bit on the fence in this case. I’d rather “give” or recognize some states the ability to tax in this manner rather than turn it over to the federal government to regulate interstate commerce because I feel that (e.g.) Heitman’s customers have a better chance of fixing things in KY than all of the similarly-situated customers across the US have at changing theirs.

          I also think it would more tightly associate bullshit like the NCAA pulling out of NC because of transgender bathroom policy or refusing to do business with IN because of the RFRA. Instead of allowing some of that cost (to both parties) to be diffused out at the federal level and then redistributed back down state-wise.

          1. The argument is that they aren’t, right? They’re compelling out-of-state merchants to collect local taxes on their behalf.

            And that is taxing and regulating people outside of their jurisdiction and effectively regulating interstate commerce, something states are not supposed to have the power to do. I think the negative interstate commerce clause has been too long neglected by the courts.

            1. I think the negative interstate commerce clause has been too long neglected by the courts.

              I don’t disagree with this, but given the context I feel like this is hoping for morons to spontaneously enlighten themselves. We’re here because they fucked up interstate commerce *because* they can’t fathom how to unfuck it.

        2. In theory, if I drive from South Carolina to North Carolina, and buy something there, and bring it back into South Carolina, I’m actually supposed to pay the state sales tax on it. Or such is my understanding.

          It would have been much simpler if the Court had just stuck with the position that states can’t tax interstate commerce.

          1. Its not the SCOTUS’ place to legislate tax laws.The courts are not supposed to fix bad laws. The courts are supposed to void the laws as unconstitutional or unlawful and send the back to the legislators to fix.

            Congress created this wacky situation where states can tax outside their jurisdiction. Congress needs to fix it.

            1. I’m don’t see what Congress created. The precedent was states cannot tax an entity outside of their boundaries. Some states tried to get around it with passing a use tax, which nobody paid. States kept picking on this until they found a court to rule in their favor. I would have preferred if the court ruled that the state at the point of sale could collect the tax. If I’m out of state and make a purchase I pay the tax there. This would open the door to my local state demanding I pay the tax to them. Some states also argued they were protecting local brick and mortar stores. That makes the tax a tariff and that’s unconstitutional. SD vs Wayfair was a lousy ruling.

            2. But it most assuredly IS the Supreme court’s place to rule when states legislate tax laws on things they’re not constitutionally entitled to, like transactions that aren’t taking place inside the state.

            3. But it would be SCOTUS’s place to say:

              “Um, yeah, see, whatever the state wants to legislate, a retailer in another jurisdiction is in another jurisdiction, not that state’s. New York cannot make laws that govern people in Oregon, and Congress cannot give New York such jurisdiction. The only state that can make laws in Oregon is Oregon.”

    2. “It makes no sense for states to put sales tax on out of state transactions.”

      They aren’t out of state transactions. They are cross state transactions with one party in the transaction living in the state.

      1. You know what is another word for “cross state transactions”? Interstate commerce. The states have no jurisdiction over them and should not be able to tax them directly.

        1. The states have no jurisdiction over them and should not be able to tax them directly.

          But, this facilitates a state of crony corporate populism where a state like CA can incentivize everyone from everywhere to come to their state and work undocumented and off-the-books for the promise of $15/hr. to undercut the local production and sale of widgets in OR, TX, and NV (*and* enforce regulatory standards on them by the conventional legislative/regulatory channels).

        2. If a state has passed a tax on the sale of goods, private transactions with businesses in other states have always been subject to such taxes. When the tax is collected and submitted by the seller it is referred to as Sales Tax. When the tax is reported and submitted by the buyer, it is referred to as Use Tax. Sales and use taxes are the same thing, differentiated by the party that reports and submits the tax.

          The problem is pretty obvious. Private parties do not usually submit use tax when the state has no way to know that such a transaction has occurred. Prior to this, businesses could only be required to collect sales tax in states where they had a physical location. The states were forced to rely on in-state consumers to report use tax when they bought from out-of-state sellers which was not happening. The state audits in-state businesses for use tax compliance, so this issue is all about private parties.

    3. Except they always have, until we started doing most transactions electronically, the states did not have many good ways to prove noncompliance with the tax. The innovation here is attempting to hold out of state businesses responsible for collecting the sales taxes.

      Despite the weird distortions of it by Wickard, this is exactly the sort of situation the Commerce clause exists for.

    4. They could solve all sorts of sales tax problems if they would just apply it same as brick-and-mortar sales tax — by the seller’s address. If I show up at a store to buy something, they don;t ask for my driver’s license so they can determine the right tax.

      Do the same — every store that sells something applies the same tax to everybody, based on where the store is.

      There are two problems to solve. One is the political opposition — states hate having to compete tax-wise, and stores would put tremendous pressure on politicians to lower the tax rate so they could get more out of state sales. Can you imagine how much more tax Amazon would have to pay?

      The second is also related to Amazon. A lot of states right now are taxable by Amazon because they have warehouses and distribution centers there. Those states would kick like hell at no longer getting tax. They would demand that the tax be based on where something was shipped from rather than where the HQ is. That in turn would be opposed by Washington, loathe to lose all that HQ tax (which they do not get now). But this is just a minor point and no more work for Amazon as far as calculating tax. Worst problem would be reporting the tax at purchase time based on where the product is shipped from. That might require some back end changes because they’d have to determine the warehouse at click time rather than ship time.

      1. The states like NY and CA would be against that since it would make the lowest tax state a haven for internet businesses to set up in, even if it makes the most sense, you are going to get a lot of resistance to it.

        1. That’s what I said in point one.

        2. NY has a line (59) on their tax form IT-201 that relates to sales tax on things you ordered out of state. Entering a value is required. They also have a minimum amount you can enter based off your income. This is not that new. NYS wants taxes for products you bought out of state. It seems that this legislation would usurp NYS’s ability to continue this fuckery.

          1. Also, NYS may audit your credit card transactions looking for sales tax to collect.

          2. They also have a minimum amount you can enter based off your income.

            Sounds like fraud, extortion and armed robbery. What if I didn’t order anything online? They’re charging a sales tax on a non-sale.

            1. You can enter 0.

              They expect you declare something. But if you don’t want to calculate what you owe you can use the minimum amount.

              But fraud, extortion, and armed robbery is something government, especially NYS, is good at.

      2. Living in Washington on the border of Oregon, retailers DO waive sales tax for Oregon residents after they show a license. I have a feeling this is simply businesses on our side of the river trying to compete, though, not a government mandate.

    5. It should have been up to Congress all along, they can allow it, ban it or make rules on how it can be administered. It actually looks like the current bill is pretty reasonable.

      I don’t see why Amazon should have an up to 10% advantage over local businesses, or even another mail order business in the state. Other than the fact that I don’t like paying any tax if I can help it.

    6. State with sales taxes generally have use taxes as well, which are supposed to be paid on anything that you purchased out-of-state and imported. No one ever pays them, which is why states felt the need to try to force vendors in other states to become proxy tax collectors for them.

  4. “We would be better off putting a notice on our website saying that we can no longer ship any orders to Kentucky.”

    I would. If your KY customers don’t like it, tell e’m to contact their state legislators.

    1. Sure but isn’t that cutting off your nose to spite your face? You want all the customers you can get.

      1. Even if you are losing money on each one!

        1. Not then, true.

        2. “Even if you are losing money on each one!”

          Yeah, we’ll make it up in volume!

          1. You beat me to it.

        3. You’ll make it up in volume.

    2. If your KY customers don’t like it, tell e’m to contact their state legislators.

      And/or their suppliers relatives in IL, IN, OH, TN, VA, and WV.

      1. Yep. Without going into detail, there are things which are not legally shipped to CA, so ‘friends in other places’ can help.

  5. Here is a radical idea. Have a single national sales tax that occupies the field and preempts all forms of state sales tax. That way everyone pays the same rate to the feds and there are no added complexities for doing business across state lines. Then take all of the money and ship it back to the states based on some formula that gives them a fair percentage of the revenue based on how much was collected from sales in their state.

    This would do a couple of things. First, it would end all of this nonsense and make the national market more open like the founders intended. Second, since Congress wouldn’t see any of the money, it would be loath to ever raise the tax and would pretty much lock in all sales taxes at a reasonable level and keep states from totally screwing people.

    1. Here’s a better idea. Ban all sales taxes. They are awfully regressive and enable extensive privacy violations by the state in attempting to enforce them. Just ban them.

      1. They are very regressive. I am not sure they result in any more privacy intrusions than income tax. But, that goes to the larger point that really, taxes should take the form of import tariffs and land taxes. If you did that, the government would have no excuse for being involved in your private life at all. The ownership of land is a matter of public record. And it has forever been the case that you forfeit a huge portion of your right to privacy when crossing a border. If we just had property taxes and tarriffs, we would have a much freer country.

        1. ^ Absolutely.

        2. How the fuck is a tax that that increases the more you buy regressive? Particularly when most states exempt food and rent.

          1. Well, Chuckles, it works like this.
            The industrious hardworking discriminated against poor pay a larger percentage of their income in sales taxes, because everything they make gets spent on stuff almost immediately. The evil filthy conniving rich on the other hand, can buy food clothing and shelter and still have money left over they do not spend, and they do not pay sales tax on what they do not spend. So they pay a lesser percentage of their income in sales taxes. That is what the democrats are supposed to be against, but they all favor sales taxes.

            1. The industrious hardworking discriminated against poor pay a larger percentage of their income in sales taxes, because everything they make gets spent on stuff almost immediately.

              The poor spend most of their money on food and rent, most purchases of which are sales tax exempt, which I mentioned, but it seems you ignored. Clothing, also a necessity, is taxed, but wiser people allocate only an appropriate amount of their budget for clothes. Overall, the poor should be spending a smaller percentage of their income on things that are actually subject to sales tax.

              Consumption taxes are equally applied, progressive when combined with exemptions for necessities, and actually tax something that government is supposed to facilitate, trade. They allow for the wise to avoid taxes by being frugal.

              I will agree that sales taxes are a tax on stupid. When Jethro the mechanic pours money into his monster truck, he pays a higher percentage of his income in tax than Jeffery the stockbroker does when he buys a Porsche. But, IMHO, that is a glorious feature and not a bug.

              1. But they are less prone to distortions (note I did not say immune), and they don’t allow you to punish the kulaks like they deserve, so we use the loaded word “regressive” instead of proportional, just like we use the loaded word “progressive” (when it means anything but) to describe a graduated income tax the so rightly punishes the productive.

                Extend it further and you realize that fixed prices are also regressive, which is why capitalism is an evil which must be banished in our time.

        3. Furthermore, everyone pays property tax one way or another if a state has property tax. Property owners pay and pass on costs to renters if they rent/lease their property.

        4. Why? Why do you single out one particular asset for taxation? This is little better than sin taxes. Broadly speaking you can tax income, wealth, and/or consumption. Limit it to that level of specificity and call it a fair day.

      2. What about states like Washington, Texas and Florida, with no income tax , but rely mostly on sales taxes.

        You aren’t going to tell me an income tax is less of a privacy invasion than sales taxes are you?

      3. “extensive privacy violations”

        Not anywhere close to the privacy violations entailed in the income tax.

        I can walk into a store, buy items, pay cash, and walk out. The collected the sales tax and I didn’t have to give up any privacy at all, no name, no income, nothing except some greenbacks. Often don’t even have to speak.

    2. How about no.

      Your prediction about Congress and tax rates is wrong. Prodded by greedy states, the rates would be high–and impact everyone. And expecting a rational agreement on “fair” distribution? Not likely.

      1. So you think Congress is going to take the political hit associated with raising taxes when they don’t get to spend the money? Really? Is that your final answer? Maybe in bizzaro world. But in the real world, no Congress creature of any party is going to vote to raise taxes that he then cannot spend to benefit his cronies.

      2. Prodded by greedy states, the rates would be high–and impact everyone. And expecting a rational agreement on “fair” distribution? Not likely.

        I don’t know the full detail of John’s plan, but I think there are some unstated assumptions:

        1. Income tax disappears. Some may question John’s libertarian bona fides, but they’d be stupid to question his fiscal conservatism. I’m almost certain he doesn’t mean tax both income and sales at the federal level.

        2. (or 1b.) Massive simplification and/or reworking of the tax code.

        Given those two assumptions, individuals come out largely ahead as they can avoid taxation by avoiding consumption and, at worst, the tax system is no more unbalanced, unfair, and dominated by ‘greedy states’ than our current system.

        1. Without at least 1 (and I don’t see how you’d do 1 without 2), I’m leaning pretty heavily towards, ‘Fuck no.’ also.

          Even with 1 and 2, I think (and I believe John agrees) we’d still need to prioritize a healthy dose of ‘Fuck you, cut spending.’ as well.

        2. My plan would be to have one national sales tax to replace all state and local sales taxes. It would not have any effect on federal taxes or revenues that currently exist.

          1. “It would not have any effect on federal taxes or revenues that currently exist.”

            Not yet. Just wait.

    3. Tweaked a bit, that is a good idea. Treating different tax bases at different levels of government as their own pigeonholed funnel, has been a problem ever since Santa Clara v Southern Pacific. Either you get entities at that local level that are able to turn the tax system into a crony-driven one or you get states that end up imposing a compliance/coercion burden on everyone and their grandmother.

      As usual, I tend to like how Switzerland deals with that. They have no interest in actually ‘equalizing’ tax rates/bases across the entire country (their feds want what they want and their cantons want what they want and there’s no reason they need to compromise that) – but they have a big interest in reducing the compliance burden. So they view all the different tax bases (sales, income, wealth/property) as just a tax base. Their feds and cantons and municipalities work behind the scenes to come up with a single tax return that is customized by municipality. Each taxpayer entity (corporate, individual, etc) only needs to file a single tax return with financial statements that basically follow GAAP. The cantons actually do the collection – and based on the behind-scenes rules/rates send it down to munis or up to feds.

      Course you can’t actually do that with sales tax cuz it is collected at point-of-sale. And I’m certain Americans are too dumb to have a debate about sales tax v VAT tax.

    4. Here is a radical horrible idea.

      FTFY

      A national sales tax? Alaska runs a surplus and refunds a dividend to residents. You want to send their money to DC and hope that it comes back?

      1. It would be a national sales tax that replaces the local sales tax. Pay more attention to what I am actually saying. And yes, it would have to come back. That is the whole point of the plan. If you want to say that they would change it and keep it all, well maybe but that just means my plan wouldn’t happen not that it would be a bad idea if it did.

      2. Also, the feds have been block granting to states for decades. So, yes the money does come back. A Senator who fucked his state and kept all of the money in Washington, wouldn’t be a Senator very long.

    5. In other words, let’s turn sales taxes into a kickback scheme!

      US Senator adjusts John’s sales tax formula to favor his/her state
      State legislators use the sales tax money to fund projects
      Those projects benefit the legislators, who use their proceeds to help re-elect the US Senator
      Rinse and repeat

      1. Damn you, John, you threw a slow pitch that even chemjerk could hit. Any time my position aligns with the idiot bellowing in the town square, I am required by common decency to stop and consider it carefully.

        1. No I didn’t. He as usual doesn’t understand what is going on.

          1. Of course Pedo Jeffy doesn’t understand. He’s focused on open borders and importing child molesters so he can have more violent kiddie porn.

      2. State legislators use the sales tax money to fund projects
        Those projects benefit the legislators, who use their proceeds to help re-elect the US Senator
        Rinse and repeat

        And that is different from local sales taxes how? Legilslators impose taxes and then spend the money to benefit themselves and their cronies. That is called government. It would occur no more in my system than it does in any other one.

  6. In most states I have lived in it’s the responsibility of the person living in that state to pay the appropriate sales tax. Out-of-state online retailers should only have to mail receipts to the appropriate tax authority in state x and let them collect their own taxes.

    1. Even that would be a bit Labyrinthy, in as much as there aren’t just state sales taxes, but also county and city sales taxes.

      1. Even that would be a bit Labyrinthy, in as much as there aren’t just state sales taxes, but also county and city sales taxes.

        Disagree. States *could* make it retardedly labrynthian of course, but it would/could be straighforward and top down. Receipts go to states, and the states sort themselves out with regard to county and local taxes. Counties wouldn’t want to keep tabs on the thousands of merchants across thousands of other counties and would likely prefer just to get one number from the state.

        1. Again, this is not about merchants who are already subject to audit by the state for use tax compliance. It is about private party transactions. Send those receipts to the state and you are advocating for the state to go out and collect tax from every individual who orders a hand-made blanket off Etsy.

          I kind of like the idea. If they send the sheriff to collect the taxes, it’ll be just like in Robin Hood.

          “I’m going to cut your heart out with a spoon!” – sure you are, Snape…

      2. Presumably, the state affected would have to do that part. It wouldn’t be Labyrinthy, just burdensome.

    2. “Out-of-state online retailers should only have to mail receipts to the appropriate tax authority in state x and let them collect their own taxes.”

      No, they shouldn’t.

      It’s simply insanity that State A can now somehow impose laws on private entities wholly residing in State B. FOr now it’s sales taxes, but if State A can force private entities in State B to collect and remit taxes, to be subject to audits and penalties, what prevents State A from imposing other laws on private entities wholly residing in State B?

      California has laws regarding how chickens can be raised on farms in California. Can they force those standards on chickens in Ohio, just because some of them might get sold in California?

      Can Georgia say to California: we issued a concealed carry permit to some of our citizens, so must honor those permits?

      Can Massachusetts start demanding that brick-and-mortar stores in Delaware (which has no sales tax and attracts a lot of Bay Staters) check ID for all their customers and collect Massachusetts sales taxes for those visitors?

  7. One thing about judges, strict constructionists or not, they never met a fee or penalty that wasn’t a tax, and a tax no matter how unconstitutional to be constitutional. Thanks Gorsuch and Alito.

    1. That and the interstate commerce clause only goes one way. It only gives the feds power, it never restricts the feds and certainly would never restrict state power to tax and regulate.

      1. The Interstate Commerce Clause has inherent restrictions for the federal government.

        Intrastate commerce does not fall under federal jurisdiction. It only involve commerce.

    2. Not sure why you’re blaming Gorsuch. The Obamacare “penaltax” came pre-Gorsuch. Is there some other case he was in on that you’re thinking of?

      1. Is there some other case he was in on that you’re thinking of?

        He had a mom and she ruled on a case once. Fuck him. /sarc

      2. South Dakota v. Wayfair, Inc.The majority opinion, Kennedy, Thomas, Alito, Ginsburg, and Gorsuch,

        1. Superficially, SD v. Wayfairs seems like a tax creation scheme but the point was to expose horribly complex and stupid taxation schemes that fall directly under the federal Interstate Commerce Clause.

          At this point, John Roberts being on the other side of the decision illustrates Gorsuch picked the better position.

  8. The attraction of sales taxes is that akin to frogs in the pan over the fire, people pay them without noticing (at least until a big ticket purchase, where the line item for sales tax can be four figures or more). Make people pay all their sales taxes in a one-time payment at year end, and we might see more push-back.

  9. Or we could let federal and/or state governments hold all our money, decide what we can spend it on (and where to source the supplier), calculate the byzantine taxes, and divide up the citizenry carcass.

    1. That’s really not far off from current practice…

  10. I hope New Jersey is not expecting to actually collect that 3 billion dollars.

    1. They’ll collect every bit of it, even if it costs them 4 billion to do so!

      1. The Unicorn really gets it!

        Here’s hoping your farts can provide the clean energy we need to get us back to an ice age.

  11. Even Jareth the Goblin King would have trouble finding his way in the compliance labyrinth.

  12. That Wayfair v. South Dakota ruling was wacky. Kennedy, Thomas, Ginsburg, Alito, and Gorsuch were in the majority. Roberts, Breyer, Sotomayor, and Kagan dissented. I can’t make sense of that breakdown at all.

    1. Roberts wants to preserve most precedent more than do his job and strike down unconstitutional or bad laws.

      Roberts also wants to keep the SCOTUS out of politics as much as possible. While this seems like a wise goal, the fact is that the SCOTUS main job is to resolve national disputes. This means that almost by definition that the cases that the SCOTUS takes are national disputes and therefore very political.

      John Roberts was a horrible pick for Chief Justice of the SCOTUS.

    2. helps to start with “John Roberts likely secret moron”

  13. Maybe congress could pass a law that prevents collections of sales taxes for online sales. Very low regulatory overhead.

  14. Ban sales taxes.

  15. Legitimate question, please forgive my ignorance:

    If I have an online business that is centered in State A. Do I pay sales tax to State A for all of the transactions that I engage in? That is where I get confused here. Obviously in a brick and mortar shop, it doesn’t matter where the buyer is from. It only matters where the seller is located in determining sales tax.

    For on online store, shouldn’t it be the same way? Regardless of where I happen to ship the item to, MY BUSINESS is in State A. Therefore, the sales tax should be assessed on that basis.

    1. That’s the way the court should have ruled.

      1. Yup. And let CA and NY whine all they want about tax competition.

    2. Do I pay sales tax to State A for all of the transactions that I engage in?

      No. Sales taxes are due to the jurisdiction where the product is delivered or, if it can be determined, where the product will be used. Previously, you had no responsibility to collect and submit sales taxes to a state where you did not have a physical presence. It was the responsibility of the buyer to report the purchase and pay use tax.

      That is the core problem with this decision. Companies that have no nexus in Washington can now be required to collect sales tax based on the 726 taxing districts in Washington if they do more than $100,000 in sales in Washington. I would assume it also allows WA Dept of Revenue to audit any business that can be shown to have delivered to a Washington resident, since they can already do this to businesses.

      Obviously in a brick and mortar shop, it doesn’t matter where the buyer is from. It only matters where the seller is located in determining sales tax.

      False. If a customer can adequately demonstrate a purchase should be tax exempt, a seller should not collect sales tax. When the product is delivered, sales tax is due to the jurisdiction where it is delivered.

      MY BUSINESS is in State A. Therefore, the sales tax should be assessed on that basis.

      Sales tax is a tax to be paid by the purchaser, not the seller. The sellers location is irrelevant.

  16. Still no answer to the question “Exactly how is South Dakota going to force out of state businesses to comply?
    Send state troopers in a swat raid? No actual cash to grab, is there?
    I would love to see FL National Guard defending an Amazon distribution center from Texas Rangers – – – –
    Is a SD state court order enforceable in AR? I know in criminal cases extradition can be REQUESTED, but what enforcement is there?

    1. In my experience, the states or other jurisdictions send a notice usually threatening either prosecution or a lien against your property. Many have the ability to directly take money out of your banking accounts. You then have to contact the state or district and explain. If you don’t, they just grab, generally an inflated amount including fees and fines. Usually defense takes days of multiple contacts and run arounds, almost always involving escalation to supervisors. In some cases I have had to approach small business organizations to even get the contact info for a regional officer or agent at all. Most recently the initial demand required me to go to another state to make my case.. I got around that and proved I didn’t owe after a small biz association from the area put me in contact with the right person. So they move against your property and then you have to prove innocence or negotiate down to the correct amount not involving large fees and penalties. I expect a number of people just pay out of fear or they shakedown method wouldn’t be applied so consistently.

    2. If they have taxing authority, they have authority to audit. They will audit and then they will file in the business’ state and obtain a judgement if business does not comply. Since this is a win-win for taxing jurisdictions (this is money that was not being collected previously), they have incentive to expedite the process. I would guess a special court. The Feds may even provide a form like they do for the Interstate Fuel Tax Agreement. If you look at IFTA, you would be surprised at how much information truckers are required to keep.

  17. This isn’t taxation without representation. Because the people being taxed live in that state, county, etc. The issue is the requirement to collect and report. Each state already has the ability to legislate how business is conducted in that state. It comes down to the definition of “conducting business.” Is me shipping something from Texas to Alabama considered “doing business” in Alabama? The ruling was yes.

    I agree it is a small business paperwork nightmare. I like the state regulations that require a high threshold of business before it takes effect. But this is just like California saying if you are going to sell mattresses in our state you have to meet our standards. If you are going to “do business” in a state you have to properly collect and report sales tax.

  18. That exemption would be repealed, the bill says, if states agree to a simplified sales tax compact that is approved by Congress. In the long term, that’s probably the best way for states to collect remote sales taxes. Rather than having to comply with all sales tax rules in 45 different states, a simplified compact might see all states agree that cross-border sales will be taxed at a single, flat rate.

    Beware any “sales tax compact”. The feds will no doubt take their cut, introducing a national sales tax, then ratcheting up the rate as the greedy New Green Dealers see some new green to grab.

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  20. If I live in Idaho with a PO Box in Montana for all my bills (credit cards), but I’m sitting at a cafe in Rome, Italy, and buy an item from a company in Texas to be shipped as a gift to be shipped directly to my cousin in New Hampshire, what sales tax do I have to pay?

  21. I don’t understand. It looks like small business owners are not represented in DC. Is there not an association like the Chamber of Commerce that lobbies for them? They face the brunt of regulations and taxes and can’t escape them by moving abroad.

  22. Once I went through Black’s Law Dictionary-5th Ed looking at the many taxes. Sales taxes were defined as an excise, a tax on the privilege of conducting business, owed by the business, collected from the buyer. Notably, owed by the business. If there’s one cure other than going back to no sales taxes on interstate sales it’s to collect the tax from the seller at the point of sale not at the point of delivery. That disadvantages states that don’t have point of sale interstate distribution points but so what? We know the real answer to that is the states aren’t really interested in eliminating the disadvantage to businesses that don’t have interstate sales reach but to get their hands on that money. Well, that’s another problem that ought to be put aside.

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