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Supreme Court Rules States Can Demand Outside Online Retailers Collect Sales Taxes

A blow against federalism, tax competition, and small businesses trying to expand.

Wayfair websiteRichard B. Levine/NewscomToday the Supreme Court overturned past decisions and ruled, 5–4, that states may potentially demand that businesses that don't have actual physical presence within their borders still pay sales taxes on what they sell to residents who live there.

The ruling in South Dakota V. Wayfair overturns two previous Supreme Court precedents (Quill Corp. V. North Dakota and National Bellas Hess V. Illinois) that limited states' ability to charge sales taxes on goods that were shipped to customers in the state if the businesses did not have any physical presence in that state. Consumers themselves could be ordered to pay sales taxes, but of course, compliance was extremely low.

South Dakota believed it was losing millions of dollars per year in tax revenue and passed a law requiring out-of-state vendors to charge and submit sales taxes to the state if they reached a threshold of selling $100,000 worth of goods or 200 or more separate deliveries into the state. South Dakota petitioned the Supreme Court to vacate its previous precedents so it could demand online vendors like Wayfair and Overstock.com (defendants in the case) to pay the sales taxes.

The majority agreed, in an odd combination of judges that defies ideological analysis. Justice Anthony Kennedy wrote the majority decision, joined by Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito, and Neil Gorsuch. The dissenting opinion was written by Chief Justice John Roberts, joined by Stephen Breyer, Sonia Sotomayor, and Elena Kagan.

The majority justified the decision partly because, as online commerce has grown, these precedents now unfairly punish companies who are based within a state when compared to those who are situated elsewhere. The majority accepted the argument that their previous precedents actually created an uneven tax environment:

In effect, Quill has come to serve as a judicially created tax shelter for businesses that decide to limit their physical presence and still sell their goods and services to a State's consumers—something that has become easier and more prevalent as technology has advanced.

Worse still, the rule produces an incentive to avoid physical presence in multiple States. Distortions caused by the desire of businesses to avoid tax collection mean that the market may currently lack storefronts, distribution points, and employment centers that otherwise would be efficient or desirable. The Commerce Clause must not prefer interstate commerce only to the point where a merchant physically crosses state borders. Rejecting the physical presence rule is necessary to ensure that artificial competitive advantages are not created by this Court's precedents. This Court should not prevent States from collecting lawful taxes through a physical presence rule that can be satisfied only if there is an employee or a building in the State.

This ruling pretty much ignores the idea that states can make themselves more desireable for businesses to locate there by, say, lowering their taxes. There may be some severe and unbalanced consequences for smaller businesses attempting to try to navigate extremely varied sales tax laws when selling goods. Big vendors can (and most already have) done the tech work to make compliance possible. But as Veronique de Rugy warned in April, this ruling today could jack up compliance costs for small online retailers, requiring them to calculate the demands of 12,000 tax-collecting jurisdictions.

In a statement in response to the ruling Erik Jaffe, appellate attorney for the Competitive Enterprise Institute (which submitted a brief supporting the online vendors), lamented, "In allowing states to extend their taxing authority beyond their borders, [the court] passed up an opportunity to reassert the horizontal federalism principles of the Constitution. Rather, adopting mistaken notions that state sovereignty extends beyond state borders and that the purchasing power of state citizens are assets belonging to the state, the court fundamentally subverts federalism."

CEI is calling for Congress to fix the problem with legislation that would stop states from demanding taxes from businesses in other states. Normally, you'd think a Republican Congress would jump on this, but have you heard about President Donald Trump's crusade against Amazon and its founder Jeff Bezos?

Photo Credit: Richard B. Levine/Newscom

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  • Just Say'n||

    Justice Kennedy: Just making it up as he goes along

    Kennedy is about as principled as the ACLU

  • Just Say'n||

    "Judge Kennedy, Congress really really wants to allow states to tax businesses in other states."

    "Well that violates previous precedent, including ones in which I voted with the majority, but what the heck. By the power of Justice Kennedy, I shall amended the Constitution so that Congress may avoid the politically difficult prospect of having to vote on this legislation!"

  • damikesc||

    Which is why I laugh when I hear "Stare decisis is important".

    Because it could not be less important to SCOTUS.

  • perlchpr||

    Dude, stare decisis is critical. Like when you're driving down the freeway and then all of a sudden there's a random engine block in the middle of your lane, you have to go around that shit...

  • loveconstitution1789||

    That dude needs to retire. He is like RBG in that he thinks the USA cannot function without him.

    Ironically, the USA cannot function as well with him either.

  • Modus Pwnens||

    I am beginning to suspect RBG is an immortal. Seriously, she was already old when she was appointed 20 years ago.

  • Citizen X||

    Christ, what assholes.

  • Cathy L||

    Where's Ross Ulbricht when you need him?

    Oh. Right.

  • Mr. Grendell||

    Hey, listen, in that other thread, where you insisted John apologize to jcw, I proved you were wrong about the google results.

    Are you also going to apologize, like you insisted John do?

  • Cathy L||

    No, because you were the one who was wrong. Learn to Google better.

  • Mr. Grendell||

    And yet, I posted a link and you posted a buttpluggian excuse.

  • TuIpa||

    Had to get one more round in, lightning is real bad now.

  • Cathy L||

    Yes, you posted a link that proved you're a moron. Thanks for that.

  • bafiesta||

    This ruling is great news for Libertarians. The government should not be allowed to favor one kind of business over another. By charging sales tax for purchases at local retailers but not for internet purchases the government was heavily tipping the scales. Now all these businesses will have to compete based on who can provide the most value at the lowest price.

  • Cathy L||

    By charging sales tax for purchases at local retailers but not for internet purchases the government was heavily tipping the scales.

    Yeah, great job having any idea what this case was about.

  • Citizen X||

    No, he's right. This whole "Internet" fad is going to blow over any day now.

  • loveconstitution1789||

    Its only good for spreading hate speech anywho.

    BURN THE INTERWEBS! BURN THE INTERWEBS!

  • Leo Kovalensky II||

    You see, it's a series of tubes....

  • BYODB||

    ...invented by Al Gore...

  • Mr. Grendell||

    Hey, listen, in that other thread, where you insisted John apologize to jcw, I proved you were wrong about the google results.

    Are you also going to apologize, like you insisted John do?

  • Just Say'n||

    Easy. It's over

  • Mr. Grendell||

    No, it isn't, she made a stupid fucking excuse because she doesn't know how to use google search properly. Which, I guess, now that I think about it, does mean it's over because it proves she has the integrity of a Buttplug.

  • Chipper Morning Baculum||

    Is anyone else tired of people hiding behind new usernames?

  • Mr. Grendell||

    Tell us more Cathy.

  • Libertymike||

    Yes.

  • TuIpa||

    I've actually been arguing with myself because I'm bored, but we have a huge thunderstorm here, so I shut down the computers I was using and it's just too hard to switch between Cathy and Mr. Grendell.

  • Leo Kovalensky II||

    You only posted that just now to increase your web traffic. I'm on to you Mr. Gus.

  • SRoach||

    School's out.
    Or that's my suspicion.
    Be grateful. This could be your opportunity to educate young, liberty-minded, newcomers.

    Or, you can pretend like this is 4chan, and run them off. Your choice.

  • Just Say'n||

    I don't see any mention of "congress" in your comment. Strange

  • Longtobefree||

    Who? What?

  • Sometimes a Great Notion||

    Granting more power to the government to collect taxes is definitely not a libertarian position. Just wait until states and municipalities start playing games with this and create an online sales tax that is 50% higher then the retail sales tax under the idea that they are loosing out on jerbs.

  • bafiesta||

    Yes it is. Libertarians should NEVER allow government to favor one set of businesses over another. This broadens the tax base and allows states to lower the sales tax rate while still collecting the same amount of revenue.

    Internet retailers are here to stay they do not need the be subsidized by the government.

  • damikesc||

    The decision is God awful. California should have zero say on taxes I pay on purchases.

    Internet companies, by and large, are SJW shitholes. If they are hurt, that is a good thing.

  • SRoach||

    I wonder how many people will be opening PO boxes, and LLC's, in low-tax jurisdictions.

    I live close enough to a state border. Maybe I should go price a decent mailbox in that neighboring state.

    Nah. Not worth it. Probably.

  • Longtobefree||

    Broadens the tax base? WTF?
    The existing tax base is all the residents of the state that make purchases.
    The new tax base is all the residents of the state that make purchases.
    All that is changing is that out of state businesses have to perform state functions for states that they have no presence in. At their own expense; that is to say, the expense of all of their customers, regardless of state of residence. So yes, TX residents will see price increases to cover the costs of collecting and remitting sales taxes to South Dakota.

  • Unemployed Armenian Tranny||

    Bullshit. The Libertarian postion is to stop States from taxing businesses in the first place, thus securing said equal treatment of businesses.

  • Gaear Grimsrud||

    "allows states to lower the sales tax rate"

    Yeah I'm pretty sure they'll rush right into lowering taxes.

  • Modus Pwnens||

    They can't tax out-of-state vs in-state transactions at different rates, under other SCOTUS rulings that this one did not overturn. In theory they could charge higher taxes on online transactions, but they would have to apply equally to in-state businesses.

  • Illocust||

    And you think they won't? The people whofill their pockets are the local brick and mortar stores. Prepare for your online shopping to become a lot more expensive.

  • Modus Pwnens||

    They certainly could, though nothing stops online businesses within a state from also making political contributions to protect themselves.

  • Arcxjo||

    "They can't tax out-of-state vs in-state transactions at different rates, under other SCOTUS rulings that this one did not overturn" yet.

  • Unemployed Armenian Tranny||

    No, but you can offer a tax deduction to businesses for employing residents of your State. Easy loophole.

  • Longtobefree||

    Of course, this is not about granting more power to tax. No one has questioned the right of a state to tax its own citizens. But it has turned out that some citizens of a state do not comply with the requirements to report and pay tax on some of their purchases. It is to avoid the effort necessary to enforce their own laws that the states want to have the courts step in and create a slave pool. For a history lesson, wander through the arguments made when mail order first began to impact sales tax collections.
    This is about one state forcing residents of another to perform a tax collection function for the state they do not reside in. As an exercise for the posters, under what conditions could a state require a human citizen of another state to perform a state function for the state where they do not reside, and where they cannot vote? To what extent, if any, does the thirteenth amendment apply? For extra credit, work in the phrase "no taxation without representation".
    Your response should be less than 1500 characters, because the squirrels say so.

  • Gaear Grimsrud||

    It's a lot like forcing employers to collect taxes in our "voluntary" income tax scheme. I think they figured out that confiscation generates a lot more income then expecting everybody to voluntarily write a check. And when the state can force a third party to collect taxes for them they save tons of dough that they can pay themselves fat pensions with. It's a win/win situation.

  • CE||

    The current laws aren't favoring anyone. They prevent states from taxing businesses outside their borders. How is tossing out that obvious rule good news for libertarians?

  • Unemployed Armenian Tranny||

    OR....they could just tell the States they are not resident in to go fuck themselves, and collect your own god-damned taxes.

  • Get To Da Chippah||

    What a terrible ruling. If states can now do this, then potentially so could counties and municipalities?

  • ||

    What part of 'free trade' do you not understand?

  • DRM||

    Yes. Under Federal constitutional law, counties and municipalities are purely organs of state governments, able to wield any powers of the state the state chooses to delegate to them.

    So, the Supreme Court has ruled that if a business in Hawaii sells to someone in Coosawhatchie, South Carolina, it must collect the 6% sales tax for South Carolina, the 1% general sales tax for Jasper County, a 1% sales tax for the school district, and a 1% sales tax to pay off local transportation bonds.

    Of course, someone in this community can pay 7% by driving across the state line that Jasper County is on and buying at a brick-and-mortar retailer in Effingham Country, Georgia, said brick-and-mortar retailer also legally free from the costs of having to calculate and collect sales taxes based on where the customer is from. This is what bafiesta above claims constitutes the government "not favoring" one class of businesses over another.

  • SRoach||

    So, what's to prevent a group of friends from leasing a mailbox from the nearest UPS store in Effingham County and ordering from Hawaii? Where is the break-even point, because, shortly, someone will be offering mailbox service for just less than that.

    It's been traditional for malls to set up just outside of city limits, to avoid city sales tax, (and then for the city to annex them, anyway). I could easily see pack and ships cropping up in abandoned gas stations along the highway.

    Of course, when you factor in the cost of gas...
    ...But then, there are plenty of idiots who will drive far enough for a one-cent difference in price at the pump to completely negate the price difference.

    Huh. I just found a nearby town that has a sales tax that is only 60-some-odd percent of what I'm paying normally, AND it still has a post office. General Delivery looks like an option.

  • Citizen X||

    I wonder how many folks have Etsy or eBay accounts that now meet the criteria to have to collect sales tax.

  • Just Say'n||

    Damn it! There goes my online crochet business

  • Citizen X||

    I read that as "online crotch business" and it made a lot more sense.

  • Citizen X||

    Of course, then you might run afoul of SESTA...

  • Get To Da Chippah||

    I read it as online croquet, for some reason.

  • Chipper Morning Baculum||

    Well, as long as it's not crotch croquet, because that sounds painful.

  • Chipper Morning Baculum||

    Well, I didn't know I did, Red Tony, but yes.

  • Just Say'n||

    No, you're right. That's what I meant. Stupid spell check.

  • NoVaNick||

    Speaking of crotch business-I could now see the SC allowing states to tax or restrict access to online porn.

  • SRoach||

    Well, hopefully, Etsy and ebay (and Amazon, etc) will offer tax calculation and collection as a a Value Added Service, to keep people from shifting to a platform that does, and to entice a few standalones to move to their market over shouldering the tax collection headache by themselves.

  • Fist of Etiquette||

    CEI is calling for Congress to fix the problem-

    Bwahahahahahahahahahahahaha...

  • BestUsedCarSales||

    They will petition Trump to pass an executive order.

  • Flinch||

    This congress? Zero chance of that happening. I don't think they can find the restroom without a lobbyist pointing the way.

  • SRoach||

    I have it on good authority that the whole of congress is a restroom.
    Oh, sorry. The whole of congress is a cesspool. My mistake.

  • Modus Pwnens||

    This decision doesn't seem to allow Congress to limit states' ability to collect sales tax from out of state retailers. It characterizes it as part of a state's fundamental sovereign powers.

  • Gilbert Martin||

    "In effect, Quill has come to serve as a judicially created tax shelter for businesses that decide to limit their physical presence and still sell their goods and services to a State's consumers—something that has become easier and more prevalent as technology has advanced."

    It was not a "tax shelter" as it is the consumer buying the goods who owes the taxes - not the company selling the goods.

    What the states do - and the federal government as well (payroll taxes, etc.) is force private companies to be their unpaid tax collectors. Companies should sue both the states and the feds for violating the 13th Amendment. Forcing companies to work for the benefit of governments without compensation is slavery.

  • Get To Da Chippah||

    Maybe companies should just bill states and the feds for 'tax collection services rendered' for an amount equal to the tax they collect for each government entity.

  • ||

    Forcing companies to work for the benefit of governments without compensation is slavery.

    I always assumed this was why sales taxes were percentage-based. As long as the percentage isn't 100% the companies are working for their own profit and merely paying for the privilege of doing business in the state.

  • Gilbert Martin||

    Two private parties conducting business isn't a "privilege" created by any state government.

  • ||

    Two private parties conducting business isn't a "privilege" created by any state government.

    I didn't mean to indicate an acceptance or endorsement of the practice. Just that it's auspiciously not slavery because they're keeping some profit and the portion they're not keeping is like licensing and rental fees.

  • Gilbert Martin||

    The company is not keeping any profit related to the sales tax.

    The profit they make is the difference between their retail price and the cost per unit. That is the profit they would make regardless of whether the state charged a sales tax or not - or even if the state government existed at all or not.

    The retail price is the 100% and then the tax rate is added on to that. The tax has nothing to do with any license or rental that is benefiting the company selling the goods.

    It is slavery because the companies are simply being forced to the do the government's accounts receivable collections for them for no compensation. There is no private party that can get away with that.

  • BYODB||

    Absolutely, and on top of that companies will charge more than they otherwise would to help defray any expenses incurred in complying with 50 states tax scheme's all at the same time.

    It's lose/lose for consumers and business.

  • Gaear Grimsrud||

    Actually, in the State of Illinois at least, retailers do keep a small percentage of sales tax as compensation for accounting and filing returns. Comes nowhere near actually covering costs for small businesses but it does exist.

  • Unemployed Armenian Tranny||

    In the same way that allowing Slaves to have a small garden to grow their own vegitables, when they aren't picking my cotton, makes them not Slaves, I suppose.

  • BYODB||

    I'd say you nailed it Gilbert.

  • Zeb||

    Yeah, if the states want to collect taxes, they need to figure it out on their own. Not enlist every business in the country as their tax collectors.

  • Unemployed Armenian Tranny||

    State ISPs in 3...2...

  • SRoach||

    Hmm. Delaware is notorious for their tax scheme. How do you think they feel? As I understand it, there are a lot of businesses incorporated in Delaware to take advantage of their very generous corporate tax rate.
    Individual citizens, and brick-and-mortar stores, not so much.

  • loveconstitution1789||

    The net effect will be companies moving out of high tax states even more.

  • BYODB||

    I don't think that logically follows since this ruling effectively means the state you're actually based in doesn't matter. You have to comply with the entire nations varied tax code regardless of where your physical presence is.

    Essentially this ruling is saying 'damn it, we didn't mean for this to create a freer market'!

  • Unemployed Armenian Tranny||

    No he's right. If I suffer high State taxes taking a chunk out of my sales, and now have to suffer other states taking thier cut, I am even more incentivises to create headroom in my profits by miving to low-tax States.

  • loveconstitution1789||

    I should have expanded that to mean physical presence to lower what companies spend in high tax states and lowering online selling to people in high tax states to starve the the states that have high tax rates.

  • Chipper Morning Baculum||

    Well, so much for Gorsuch.

  • Just Say'n||

    Did you look at the split on that ruling? It literally makes no sense. It's like the Supreme Court is just trolling everyone now

  • Chipper Morning Baculum||

    Yeah, I am starting to get a mancrush on Sotomayor.

  • Flinch||

    Good luck with that - I can't stand chuchifritos.

  • Modus Pwnens||

    RBG must have punched the wrong hole on her butterfly ballot.

  • Sometimes a Great Notion||

    You won't give him 1 mulligan?

  • SRoach||

    One? Obamacare individual mandate.
    Are you asking for another one?

  • SRoach||

    Oh. Whoops. That one was before his time.

  • SRoach||

    I got Gorsuch and Roberts conflated. Sorry.

  • jph12||

    Both Thomas and Gorsuch issued short concurrences explaining their votes and neither should come as a surprise. The Dormant Commerce Clause is a judicial creation that rests on dubious grounds for originalists, which is why Thomas suggests the entire doctrine should be scrapped (Scalia also wasn't a fan). Gorsuch doesn't go that far, but points out that the Dormant Commerce Clause typically prevents states from passing laws that discriminate against out-of-state companies

  • Longtobefree||

    Well, this is the poster child for discriminating against out-of-state companies. They have to expend resources to collect and remit taxes to a state the provides them zero government services. They have to expend resources to monitor the legislatures and regulators in that state to remain in compliance.
    In state companies get the benefits of police and fire services, and roads to bring customers to their front door.
    And oh, by the way, those extra expenses get passed on to ALL customers, not just the enslaving state.

  • jph12||

    No it isn't. The poster children for discriminating against out-of-state businesses are things like the laws that prohibited out-of-state wineries from shipping directly to customers while allowing in-state wineries to do it.

  • Modus Pwnens||

    I believe those laws were struck down, were they not?

  • jph12||

    Yes, because they are the types of laws that the poster children for laws that discriminate against out-of-state businesses.

  • bafiesta||

    The online retailers get the benefit of roads in the ship to customer location. How do you think they get their products to their customer doorsteps?

  • Devastator||

    It wouldn't be such a big deal except small companies can't possibly keep up with 12000 different tax districts and paying taxes to them. At the very least congress should require states to set a requirement that states must establish a set tax rate per state rather than the nebulous tax rates that make up our countries odd ball tax system.

  • bafiesta||

    Software can do this very cheaply.

  • Homple||

    Pretty sure some internet entrepreneurs are working on this as we speak.

  • Iheartskeet||

    There already exists a cottage industry around sales taxes. Companies that were domiciled in multiple states already have this issue...and solutions already exist. None of that will make this easy to comply with.

  • albo||

    Exactly. Some Silicon Valley asshole will be a billionaire asshole some day for inventing affordable sales tax software.

  • Echo Chamber||

    It screws small businesses operating in the long tail of demand and using the internet for viability.
    But what do they contribute? More consolidation, less choice coming.

  • SRoach||

    I'm not sure I read this correctly.
    Businesses don't pay sales taxes on things purchased for resale. There was a time I worked in retail, and on several occasions, I or someone else would go to the local big box store to buy something we were out of. We were always instructed on how to use the tax-exempt card when we did.

  • Iheartskeet||

    Nope.

    Its not a matter of just calculating a different % for each jurisdiction. Within each jurisdiction some things are taxed, other things aren't, and some things are taxed at different rates, not to mention various other exceptions. Software generally is not going to be able to make all those legal determinations.

    THEN you get audited, which can be a motherf***er. And time consuming. And 90% of the time results in some obscure finding and more $$. $$ that is usually impractical to collect from the end customer...so the business pays it.

    Big companies will figure it out. Small ones will struggle. Consider this another barrier to entry...my bet is Amazon isn't particularly upset about it, in their heart of hearts.

  • loveconstitution1789||

    You point out even more flaws with allowing states to do this.

    Another is my state has two 'tax free' days and the software would have to keep track of those tax rules too.

    States should be forced to deal with their own residents and get the tax from them. The court completely dismissed the states not wanting to enforce their own tax laws on their residents. They want companies to do it.

  • Modus Pwnens||

    And the software gets updated immediately whenever a water quality district board in Randomville, Oklahoma votes for a change to the sales tax?

  • Iheartskeet||

    I'd say generally it does, because simple rate changes are the easy part. The hard part is when they change they TYPES of products subject to different rates etc. etc. That is a royal pain in the ass to keep up with.

  • Modus Pwnens||

    Really, how does that work? Does the software vendor have legal teams scouring the minutes of board meetings for every one of the 12,000 or so tax jurisdictions in the US, every day?

    this is even assuming it's some sort of subscription service that comes with automatic updates.

  • Iheartskeet||

    I don't know how the sausage is made, but yes, sales tax compliance sausage is indeed made.

  • SRoach||

    Shouldn't matter. Those things don't go into effect overnight.

    Yeah. This will be about as smooth as mine, or my parents GPS, (they still have a dedicated unit.)
    Just a few days ago I drove along a stretch of road where the GPS-listed speed limit, and the posted speed limit were not the same, and it wasn't a construction zone.

    To enforce this, the states need to be made to make it easy and transparent to do. A web-hosted, COMPUTER PARSEABLE, document listing all the different sales taxes, any exceptions by well-established categories, etc.
    If it's written in conversational english, such as "On Tuesday, the 26th, we will have a statewide tax holiday. The holiday covers any articles of clothing in childrens sizes, as well as school supplies" it shouldn't be allowed.
    Something like a .CSV that uses codes taken straight from the import tariff schedule, along with dates, maybe.

  • Modus Pwnens||

    Except they have no incentive to make it easy for out of state retailers at this point. They can approach it with the comply or go to jail approach they approach everything else with.

  • Longtobefree||

    After 45 years in the software business, I can respond with authority to the "cheaply" part of your comment.
    The response is "BULLSHIT!"

  • loveconstitution1789||

    Exactly. Whole companies empiresare created off tax complexity.

    Im talking about you, H&R Block.

  • Modus Pwnens||

    Imagine the chaos that would ensue if we simplified the tax codes. There would be people whose college and even graduate degrees would become worthless overnight.

    I'm all in favor of creative destruction, but this is a case where the government doing something that makes sense would torpedo large sections of the economy and put legions of people out of work.

  • Iheartskeet||

    Indeed it is insanity. Even if rates were different, but the states could just agree on WHAT was taxed, and agreed to one rate for all products, it would be infinity easier.

    There is this group:
    http://www.streamlinedsalestax.org

    Notable non-members: California, New York and Louisiana. All of which I've been through audits by. All of which I hate with a smoldering white-hot passion. Fortunately, my career has moved on from that.

  • Rossami||

    No, it can't. Calculating the tax rate is easy. Mapping your products to the thousands of wildly contradictory definitions of what is and is not taxable in each jurisdiction - that's not something any software can do for you.

  • Iheartskeet||

    ^This X infinity

  • markm23||

    And when map software often directs drivers down a non-existent road or even a boat ramp, just figuring out which jurisdiction a particular address is in can be a nightmare.

  • CE||

    Yeah, the compliance burden isn't a burden anymore.

  • I am the 0.000000013%||

    I haven't written software in this realm for a couple years, but the last time I did some states offered a web portal where you could provide the item you purchased and it would send you back a JSON formatted detail of all the taxes you owed. A single item can have a lot of taxes for a lot of categories depending on use, jurisdictions, item, etc...

    Regardless of the complexity, once you have some standardization in the JSON object, it gets pretty easy.

    It's still horrendously wrong, and it's an incredible waste of productivity.

  • Unemployed Armenian Tranny||

    I'm still waiting for someone to tell me how and with what authority a State can make and enforce tax-collection demands on non-residents.

  • Modus Pwnens||

    Impressive that you were able to work a shot at Trump into a completely unrelated story.

  • Chipper Morning Baculum||

    It is the job of libertarian reporters to criticize a sitting president at every opportunity.

  • Just Say'n||

    Yes. And it is the job of Reason to promote, rather than critique media narratives.

  • Just Say'n||

    And that's what leads to the impression of disparate treatment

  • Modus Pwnens||

    A job they discovered they had at 12 PM EST on 1/20/2017.

  • Pro Libertate||

    A somewhat surprising decision. This will likely prod Congress to act--compliance with these laws, especially for smaller companies, will be a bear. There are uniform sales tax bills out there, I believe.

    I'm not sure how I feel about this, though I will note that this may hit the economy in the solar plexus. And there will be additional unforeseen consequences.

  • Echo Chamber||

    Example I heard was that Snickers and Twix are taxed at two different rates somewhere in Illinois. Something about one of them being made with flour. Not sure if it was GMO flour or not

  • Pro Libertate||

    New York has some kind of funky tax on shoes.

  • I am the 0.000000013%||

    Well, many shoes do have a certain funk so you might as well tax it.

  • loveconstitution1789||

    There is some cut bagel and uncut bagel tax difference, IIRC.

  • Modus Pwnens||

    This will likely prod Congress to act--compliance with these laws, especially for smaller companies, will be a bear.

    Smaller companies don't have lobbyists and consulting gigs waiting for retired Congressmen. Amazon has to be laughing their asses off at this, as they were already collecting sales tax on most purchases so it has no effect on them.

    Big business and big government are best friends.

  • AustinRoth||

    So what is the argument against this ruling? A sales tax is a tax on a purchase. If the seller is a store, then the business is required to collect that tax and remit it to the state. Why shouldn't the same rule apply to online sellers? That is the equitable solution.

  • Chipper Morning Baculum||

    Because the sale is happening in a state that has no sales tax.

  • bafiesta||

    From any common sense perspective the sale happens at the buyers shipping address.

  • Chipper Morning Baculum||

    No, the sale happens when the seller accepts the offer from the biyer.

  • AustinRoth||

    There was never a question of WHERE the sale occurred - it is indeed the shipped-to address.

    Under Quill (the previous ruling), if the seller had "a significant physical presence" in the buyer's state, it did indeed have to collect the tax and remit that did not change.

    What changed is only the "physical presence" requirement. Without that change the buyer was supposed to submit the sales tax to the state.

    The worse outcome would be that states could force sellers to report all sales in their state to them, then dun individuals. That wasn't really feasible 25 years ago when Quill was d coded but certainly is now.

    I prefer this ruling.

  • Libertymike||

    So, you prefer decisions informed by classic progressive catechism.

  • Rat on a train||

    Under Quill (the previous ruling), if the seller had "a significant physical presence" in the buyer's state, it did indeed have to collect the tax and remit that did not change.
    Because, in that case, the seller is considered to be in that state.

  • Modus Pwnens||

    The worse outcome would be that states could force sellers to report all sales in their state to them, then dun individuals. That wasn't really feasible 25 years ago when Quill was d coded but certainly is now.

    And how would they do that without having jurisdiction over the seller? What consequences could the states threaten to enforce reporting compliance?

    If anything, this ruling is what makes that possible. Now a state can audit out of state sellers for tax compliance, and any seller who refuses will be in defiance of a federal court ruling.

  • Longtobefree||

    You present probable cause to a state court that an individual, John Doe (him again?), has failed to report and remit sales taxes on an out of state purchase. The court issues a subpoena for the sales records of company A that involve John Doe. If the sales records show that there was a purchase that old John did not report, you put his ass in jail, and/or fine him.
    Of course, it is much easier and cheaper to get the supremes to enslave every business in the country to become your unpaid tax collector.

  • Zeb||

    This ruling really sucks for states without sales tax. Now businesses that have never had to have the overhead for collecting taxes will have to add that to their businesses. Maybe won't be a big deal for companies in states with sales tax, but for those without it will create significant hardship.

    If the states want the taxes, they need to collect them their own damn selves.

  • TuIpa||

    Why is it always idiots supporting stupidity that bring up "common sense"

  • DRM||

    Seriously, where the buyer's shipping address is? In that case, an auction house that allows bids by phone is conducting its auction in, and thus under the regulations of, wherever the high bidder happens to want the goods shipped. So a New York auction house selling to a wealthy French citizen who phoned in his bid from Hong Kong suddenly discovers, after the bidding is complete, that their sale took place in Jamaica? That's common sense?

    No, by any "common sense perspective" the sale would happen in one of where the transaction is recorded (the location of the seller's ledger), the payment is processed (the location of either the seller's register/terminal or the credit card company's computer), or where the goods being bought are located (the seller's stockroom/warehouse) at the time of the exchange of money for goods (that is, the "sale"). Not where it happens to be shipped after the sale is finalized.

    Further, by any "common sense perspective", a state has no jurisdiction over a non-resident physically outside its geographic jurisdiction, so the putative "location" of the sale still couldn't make a seller entirely outside that geographic area subject to the state's jurisdiction.

  • Modus Pwnens||

    Immediate reasons off the top of my head:

    - the state has no lawful jurisdiction over an out-of-state seller
    - the usual justification for the sales tax, ie that the state is providing infrastructure and govt services the business needs to operate, does not apply
    - an out of state seller does not have any way of influencing the state's taxing laws

  • Libertymike||

    Permitting the states to impose sales taxes on all retailers, irrespective of their location, is, axiomatically burdening interstate commerce.

  • Flinch||

    Bags of campaign cash work pretty well - I think Willie Brown had good success there during his time in the California legislature for example. But, funny how things go full circle: have we arrived back to taxation without representation? Meanwhile... think of companies having to file dozens of quarterly tax payments every year. I say ugh, but the accountants just may have had an orgasm with this ruling.

  • Iheartskeet||

    Those reasons seem pretty weak.

    Bottom line: Buyers, who reside in the state, pay the tax. Not the retailers.

    The buyers retain all of the conditions above, and can (and do) affect tax policy. Unfortunately, they have a bad habit of voting themselves tax increases.

  • Modus Pwnens||

    Bottom line: Buyers, who reside in the state, pay the tax. Not the retailers.

    That's exactly what was happening before this decision. States charged online shoppers use tax on online transactions.

    You can't plausibly argue that this does not impose a regulatory burden on businesses the state would normally have no jurisdiction over. AND it opens the doors to state auditing of businesses they would normally have no jurisdiction over.

  • Iheartskeet||

    One of us has a profound misunderstanding of this, and I think its you.

    Generally, some online retailers, if they are domiciled in a state, indeed charged buyers sales tax. Others that aren't domiciled, did not have to. Now, buyers will pay a tax either way.

    For sure this is a huge regulatory burden. You make it sound like thats out of line or unusual, but if you were domiciled in a state (IIRC having one employee or office qualifies, even if the rest of you company is elsewhere) you'd already be subject to this burden. I don't know what you mean by "jurisdiction"...the business sold something to a person in that state, so you've by definition agreed to all kinds of shit, regulatory wise, once you do that. I wish it weren't so, but it is.

  • Modus Pwnens||

    You make it sound like thats out of line or unusual, but if you were domiciled in a state (IIRC having one employee or office qualifies, even if the rest of you company is elsewhere) you'd already be subject to this burden.

    For a face-to-face transaction, the seller collects the sales tax according to its own location, not the buyer's location. So that is relatively simple; a seller may have to collect different levels of tax on different items, but there is only one rate for each of its items regardless of who buys it.*

    For the relatively unusual case of an in-state online transaction, it has become customary to base the sales tax on the ship-to address, but that makes no sense to me. It should be based on the seller's location within the state, as with face-to-face transactions.

    However, even with the buyer location determining the tax, a business only has to deal with the tax laws in states it is physically present in. If your business has branch offices in 50 states and DC, then you're probably big enough to deal with the burden better than a business with one location would be. That doesn't justify the burden, just means it's not as bad as the burden SCOTUS lays on every online business in the country with today's ruling, making them responsible for 12,000 sets of tax laws.

    * nonprofits don't pay sales tax, but that's a whole other ball of wax

  • jph12||

    "For the relatively unusual case of an in-state online transaction"

    That's not unusual at all. Amazon, for example, has distribution centers in states including over 85% of the population. All of those sales were already considered in-state online transactions. Not to mention websites associated with stores like Walmart, Target, Best Buy, and the like.

  • Modus Pwnens||

    That's not unusual at all.

    It is if you're a small business. Amazon, Walmart, Target, BB, etc can afford to deal with expansive regulations like this.

    Big business and big government are best friends.

  • Modus Pwnens||

    Generally, some online retailers, if they are domiciled in a state, indeed charged buyers sales tax. Others that aren't domiciled, did not have to. Now, buyers will pay a tax either way.

    Sigh. As stated before, in states which chose to enact use taxes, buyers were required to pay a tax either way already. Buyers who did not remit use taxes to the state were subject to prosecution.

  • Iheartskeet||

    I understand...as I've mentioned elsewhere, this seems like a triviality, or a loophole, and beside the major point of the ruling.

    How often have you paid use taxes you owed ? The states will simply move to collect this like they do for every other sale. For sure, collecting use taxes is impractical. I can't say I would welcome more aggressive state use tax collection, and paying it, filing paperwork etc etc seems like a lot more hassle than the retailer doing it.

    Unless, of course, you are suggesting we all break the law.

  • Modus Pwnens||

    So making the state do something impractical is unconstitutional, but making online businesses do something impractical is OK.

  • Iheartskeet||

    Well, its a pain in the ass, but its hardly impractical for an online business to deal with. For the state, I think it is all but damn near impossible without quite intrusive changes.

  • Zeb||

    I am suggesting we all break the law. Well, all you suckers in states with sales tax, anyway.

  • Longtobefree||

    Which is what makes this so perfect.

  • Iheartskeet||

    AustinRoth, much as I do not like this ruling, I agree with you. Technically, there is no reason an online retailer should get a tax break that a brick-and-mortar retailer doesn't get. Same reason I don't like some industries receiving a subsidy and others not.

    That said, I wish a threshold could have been set...say $10million in sales or so, below which online retailers are exempt. For a small business just getting stated, this is another in a long long list of goddamn pains in the ass. Of course, such a thing isn't the SCOTUS' biz.

  • Modus Pwnens||

    there is no reason an online retailer should get a tax break that a brick-and-mortar retailer doesn't get.

    It's not a tax break. B&M retailers don't pay sales tax, they merely collect it on behalf of the government.

  • Iheartskeet||

    Its a tax break to the buyer, based on buying from A instead of B. Simple as that.

  • Modus Pwnens||

    No, it's not. The state can charge use taxes for out of state purchases, collected directly from the buyer.

  • Iheartskeet||

    Do tell. Why oh why do we have a SCOTUS case on our hands if no states were missing out on taxes ?

  • Modus Pwnens||

    Because the states don't want to go to the trouble of collecting the use taxes, and would rather offload that task to businesses over which they do not have any natural jurisdiction.

  • Iheartskeet||

    Because there isn't any practical way for states to collect use taxes. So, yeah, they are offloading it, just like they offload it on any other retailer.

    This amounts to a distinction without a difference. Or perhaps, a trivial technicality.

  • Modus Pwnens||

    So your argument is that because it's useful for a state to force someone to act on their behalf, they should be given the power to do that?

  • loveconstitution1789||

    Politicians was as hidden collection of taxes as possible.

    If states had to issue notices and prosecute residents for not paying taxes, the bad press would cause politicians headaches. This alleviates those particular headaches.

  • Iheartskeet||

    Hmmm. Well maybe. Or, if they were stymied collecting sales/use taxes, they'd up property and income taxes. I haven't yet seen difficulty in raising taxes drive down government spending or intrusion. It seems those are in separate orbits.

    I think sales taxes are the least damaging way to tax, so I wouldn't be for anything that drives them to more intrusive methods.

  • SRoach||

    You misspelled persecute.

  • IamNotEvil||

    I looked into how to pay use taxes on internet purchases one year. Here's what I found.

    Download form
    Fill form out with item, purchase price and date
    Attach receipts or other proof of purchase
    Mail to tax department
    4-6 weeks receive form that has tax due amount
    Remit tax due amount and signed form back to tax department.
    4-6 weeks receive receipt from tax department for personal records.

    You'll note that this was all snail mail, no internet or web forms(no phone line either). Also there was no option to estimate or prepay tax due. Additionally this all has to be accomplished before filing income tax forms.

    So guess what happened.

    I would bet that if they just put an option on the income tax forms to estimate sales tax due from online sales they would get 75%+ of what they think they're missing.

  • Iheartskeet||

    Why ? For the most part, no one knows if you don't pay it. Making it easier won't encourage people to pay something that they have a 99.99% chance of getting away with out paying.

  • IamNotEvil||

    Two reasons,

    First 95% of people are not aware that use taxes are a thing, if it shows up on tax forms then most will put something down as a simple CYA.

    Second if you make enough people aware of ALL the taxes that the government takes, then maybe we can get them invested enough to demand change. (or realize that all the 'free' stuff isn't free)

  • Iheartskeet||

    Sir, I admire your faith in humanity. Carry On !

  • SRoach||

    My state does this. There is a spot on the annual income tax form reminding residents we're obligated to pay use tax, (or as I think of it, the Sears and Roebuck tax,) and allowing users to use the standard estimated amount rather than calculate their own.

  • Longtobefree||

    The taxes are still in effect and due to the state.

  • AustinRoth||

    Setting a threshold is truly outside of SCOTUS role.

    In this specific case, South Dakota did set thresholds ($100k revenue or 200 distinct sales). I think most other states will follow suit with some threshold (though California or NY wanting rvery penny they can get wouldn't surprise me)

    And I never said I liked it, just that I agree with the reasoning.

  • loveconstitution1789||

    High tax states will then complain they are missing out on taxes because their exceptions are too high.

    I refuse to collect taxes for a state that I do not live in or have a business. Let them sue me in my state with a local jury and I will get a win every time.

  • jph12||

    They won't sue you in your state with a local jury. They will sue you in their state under their long-arm statute.

  • SRoach||

    I can see it now.
    "Proceed to Checkout"
    "Enter address"
    "Oh, I'm sorry. We do not ship to your state due to its byzantine tax code. Please call your representative. From your shipping address, we calculate that would be Congressman John Doe at (xxx)-xxx-xxxx."

  • AustinRoth||

    Not an unreasonable scenario, especially for smaller companies for states they have low sales.

  • CptNerd||

    Either this, or Amazon sets up a new service in their AWS umbrella to small businesses that will claculate the tax owed, especially if the small business uses AWS for its web store.

  • Quo Usque Tandem||

    Best finish buying all the online stuff I think I'll need for a while.

  • Flinch||

    Let the mess begin. I don't know enough about the law, but I do have a longstanding question: where does e-commerce actually take place? A company might be formed in one state, have headquarters in a second, a sales center in a third and... then there's the consumer, who might be traveling at the time away from their home state. This opens the possibility of 5 states making a claim of a sales tax? And what if I buy something online overseas? This thing isn't over by a longshot, as states themselves will return to SCOTUS for further confusion followed by democrats trying for the most regressive tax under the sun [pondered by Pelosi years back]: the dreaded VAT, which is a proven small business killer and will wreak havoc on the time tested distribtorship model that has served the public pretty well. When the superbig corporations are "shifting inventory", there is no taxable event which makes distribtors uncompetetive without some major restructuring. Kiss readily available cars and heavy machinery inventories goodbye: backhoes, tractors, etc. - things might not even get put on a ship without an end user on the hook with a purchase agreement.

  • Fist of Etiquette||

    Meh, how many online shoppers in South Dakota? Online retailers could refuse to do business in the state. Voters will be happy to get to go to brick and mortar businesses to get their goods and Amazon won't have to be tax collectors for a state in which they don't reside.

  • Pro Libertate||

    Next up, expanding income tax nexus.

  • Longtobefree||

    Damn right. If anyone has thought of California during the year, they owe income taxes.

  • loveconstitution1789||

    STOP giving states ideas the Supreme Court will allow.

  • loveconstitution1789||

    STOP giving states ideas the Supreme Court will allow.

  • Rat on a train||

    DC proposed allowing jurisdictions to tax income based on the place of employment not residence.

  • Modus Pwnens||

    The decision also effectively overturns stare decisis, at least in cases where the precedent limits state power. From page 4 of the decision:

    Stare decisis can no longer support the Court's prohibition of a valid exercise of the States' sovereign power. If it becomes apparent that the Court's Commerce Clause decisions prohibit the States from exercising their lawful sovereign powers, the Court should be vigilant in correcting the error.

  • AustinRoth||

    And we have a winner in the "Most Hyperventilating Response to Mis-Reading the Opinion" category

  • Mr. Grendell||

    You?

  • Modus Pwnens||

    Please enlighten me on how I'm misreading it.

  • AustinRoth||

    The quoted section was an explanation and justification as to why, in this specific instance, they choose to ignore stare decisis and overrule Quill.

    It was not the establishment of a new judicial philosophy that will be broadly applied.

    Only Thomas would ever support something like that!

  • Modus Pwnens||

    That's wishful thinking. The language does not seem limited to the particular facts of the case. It is a very general statement.

    If a precedent does NOT prohibit the state from exercising its lawful sovereign powers, then there is no reason to invoke stare decisis; if it does, then today's ruling says stare decisis has no bearing. Therefore stare decisis is a dead letter, at least in the case of precedents that in any way limit state power.

    e.g. if some future court decides that handguns are not actually protected by the 2nd Amendment after all, they can dismiss any stare decisis concerns by invoking this ruling.

  • AustinRoth||

    That is being taken out of context. Read as part all the language on stare decisis it is quite clear they are referring to this case in specific.

    I stick with what I said before - only Thomas would go that far on stare decisis, and furthermore there is absolutely no way The Notorious RBG would have signed off on this opinion if it meant what you believe it does.

  • Libertymike||

    The court's decision is informed by progressive considerations.

    Gilbert furnished one example, above, in his 1:09 PM post. The quoted language is consistent with classic progressive thought that anything that enables a private entity to keep more of its money is suspect. In this case, the anything is a "judicially created tax shelter."

    A second example: "Distortions caused by the desire of businesses to avoid tax collection mean that the market may currently lack storefronts, distribution points, and employment centers that would otherwise be efficient or desirable."

    Think about that. Digest it. Those words could have been penned by Tony or Joe from Lowell as, in their minds, a business' decision to minimize its exposure to the rapacious taxing authorities of states somehow constitutes a market distortion. Justice Kennedy, aka Pauly Krugnuts, thinks that with the imposition of sales taxes, companies might now think it more profitable to make the capital expenditures necessary to have a brick and mortar presence in more states that levy sales taxes.

  • Libertymike||

    Another example:

    "In essence, respondents ask this Court to retain a rule that allows their customers to escape payment of sales taxes - taxes that are essential to create and secure the active market they supply with goods and services."

    Translation: without state government, there could be no market or trading or economic activity.

    Alternative Translation: YOU DIDN'T BUILD THAT!

    The majority then proceeds to criticize Mayfair's advertising:

    "Its advertising seeks to create an image of beautiful, peaceful homes, but it also says that '[o]ne of the best things about buying through Wayfair is that we do not have to charge sales tax.' What Wayfair ignores in its subtle offer to assist in tax evasion is that creating a dream home assumes solvent state and local governments. State taxes fund the police and fire departments that protect the homes containing their customers' furniture and ensure goods are safely delivered; maintain the public roads and municipal services that allow communication with and access to customers."

    Gorsuch signed off on this progressive drivel. Trump must be proud.

  • Modus Pwnens||

    Well, if the state had its cops go to online shoppers' homes and shoot them to death, along with their families and pets, the online stores wouldn't be in business for long. So they really do owe the state something for its forbearance.

  • Iheartskeet||

    Two posts that exemplify libertarian puritanism run amok.

    Go ahead, tell us that all tax is theft yada yada yada. Jesus goddamn christ we get it. Taxes are bad. On board. Got it.

    But we DO have taxes. This is just about whether they are applied fairly. If we ARE going to pay taxes, and we ARE, then let's make it fair to all. If you want to argue why this ruling is not fair, please do so and I am all ears, but the nonsense above amounts to "drivel".

  • Libertymike||

    I wrote that the majority's decisions was informed by classic progressive catechism. Please demonstrate why that assessment is off the mark because your post manifestly does not.

    Your appeal to fairness is also rooted in progressive drivel - if the state is making things harder for A, its only fair that the state make things harder for B.

    Another example: because the taxi business is burdened with all sorts of New Deal / progressive regulations which have resulted in onerous barriers to entry, its only fair that ride share companies be required to be subject to the same.

  • loveconstitution1789||

    Gorsuch sided with the majority for state's rights and to get bad precident reversed but he fucked small business.

    It was a horrible case for him to get more state power.

    I can only hope Congress temps in and sets the interstate online commerce tax collection rules easier for business.

  • Iheartskeet||

    I think your post is silly in the extreme.

    If you can't see how bringing all these BIG PHILOSOPHICAL QUESTIONS into a nitty gritty discussion on the arcana of sales taxes isn't by turns hilariously over the top or morbidly overwrought, I can't help you.

  • Libertymike||

    If you think my post is silly in the extreme, make a reasoned argument why it is so. Just making an unsupported assertion just does not carry the day.

  • Iheartskeet||

    Now you're compounding your original silliness by giving out homework assignments.

    It appears I can't help you.

  • Libertymike||

    You are being evasive, straight up.

    The majority's reasoning is progressive catechism. You have not rebutted that at all, never mind with any substantive argument.

    I quoted several passages from the opinion which illustrate my thesis that the court's ratiocination was tied to progressive thinking. You have not even bothered to argue that the language at issue not progressive in its orientation.

    As for your assertion, "if you can't see how bringing all these BIG PHILOSOPHICAL QUESTIONS into a nitty gritty discussion on the arcana of sales taxes isn't by turns hilariously over the top or morbidly overwrought," what part of the big philosophical questions the court raised, and which I quoted, did you fail to understand?

    Additionally, it was you that broached the big philosophical question of "waaaaaaaah, fairness."

  • Iheartskeet||

    Heh, right on que. I rest my case.

  • Libertymike||

    Like cool Cal said, "you lose."

  • BYODB||

    Equality before the law is a desirable end, but it is notable that the conclusion was 'enslave the sliver of the market not already enslaved' rather than 'set the slaves free'.

    Although in fairness, no one with such a view has any chance whatsoever to be put onto the SC. Possibly ever again, if they ever were in the first place. So it's not surprising that someone who was confirmed to the SC wouldn't share that view.

  • barfman2018||

    *barf*

  • Pro Libertate||

    Looks like there might be a test for state sales tax-nexus laws:

    That said, South Dakota's tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. S. B. 106, §5. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state-level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability. See App. 26–27. Any remaining claims regarding the application of the Commerce Clause in the absence of Quill and Bellas Hess may be addressed in the first instance on remand.
  • Modus Pwnens||

    Except it's not clear if the court is saying those aspects are necessary for an online tax collection law or not. The decision gives no clear guidance on what level of "online presence" is necessary to create a nexus to a state. It just remands this particular case back to the SD state courts.

    This is going to be an absolute mess. States are going to rush to pass online sales taxes carrying the threat of draconian penalties for noncompliance, deterring anyone from appealing to the courts.

  • TuIpa||

    Did I mention Modus Pwnens is also me? I burned out my Cathy L sock.

  • Modus Pwnens||

    You are not me.

  • Rossami||

    Much as I want to be angry at this ruling, the legal reasoning in the majority opinion is pretty strong. Quill and the earlier Bellas Hess were on very weak ground. The dissent's reasoning boiled down to "we were wrong before but we should stay consistently wrong rather than be right". The dissent also fixated on the possibility that this decision will remove Congress' incentive to find a national fix because now states won't be lobbying them. What the dissent ignored is that now businesses will be lobbying instead. Either way, this is Congress' job to fix.

  • Libertymike||

    The majority's decision is informed by classic progressive catechism.

  • Modus Pwnens||

    No, it's not. How do you justify allowing a state to regulate a business that it has no jurisdiction over for any other purpose?

  • Libertymike||

    Yes, it is. I explained why above.

    The passages I cited are classic progressivism.

  • Will Nonya||

    They aren't regulating the business. They are enlisting the business to help regulate the consumer.

    Whether you acknowledge it or not you, your earnings and your possessions belong to the state.

    I wish that was cynical or sarcastic but too many people with the power of government believe this.

  • jph12||

    "How do you justify allowing a state to regulate a business that it has no jurisdiction over for any other purpose?"

    I'm pretty sure the long arm statutes of most states would give the state jurisdiction over out-of-state businesses that shipped products into the state for issues related to those products.

  • Rossami||

    That's the majority's point. They DO have jurisdiction for many other purposes. For example, if you run a catalog business and fraudulently sell to an out-of-state customer, that customer can sue you in their home court. They are not obligated to travel to your state to file the suit. Likewise, if you sell a customer something that is illegal in the customer's state (such as wine), not only is the buyer liable but so is the seller.

    This decision merely brings jurisdiction-for-sales-tax into line with many other established jurisdicational rules. I don't like the result but it is consistent.

  • Modus Pwnens||

    That's the majority's point.

    I don't recall reading that anywhere in the opinion. To the extent the majority has a point, it seems to be "waaaaah not fair!!!!!"

    if you run a catalog business and fraudulently sell to an out-of-state customer, that customer can sue you in their home court. They are not obligated to travel to your state to file the suit.

    That's in civil matters, and under the somewhat dubious doctrine of personal jurisdiction. Not state laws requiring administrative tasks be done on behalf of the state.

    Likewise, if you sell a customer something that is illegal in the customer's state (such as wine), not only is the buyer liable but so is the seller.

    That is only because Congress has passed laws regulating interstate sales of such items. In the case of wine, it's actually in the Constitution: "The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." Amendment 21, Section 2.

  • albo||

    If you're doing business in a state--and me ordering on website while on my laptop in my home is doing business--you are subject to their sales tax. The physical presence ruling was always on shaky ground.

    I think the anger should be directed at state legislatures and their tax policies instead of this decision.

  • Modus Pwnens||

    me ordering on website while on my laptop in my home is doing business

    Yes, that's why the state can force you, the person ordering online from within their territory, to pay use taxes. The online retailer is not "doing business in the state" by serving a webpage.

  • albo||

    And I don't think it's a burden on industry, especially in 2018 compared to 1992 and Quill, to allow states to require out-of-state retailers to collect the use tax.

  • Will Nonya||

    what about international entities?

  • Rossami||

    There I will disagree with you. Calculating the tax value for all the different sales taxes is computationally easy. Mapping your products to the >3000 wildly differing sets of definitions of what is taxable, however. That's no easier now than it was in 1992. In fact, with the proliferation of taxable jurisdictions below the level of states, I would argue it's considerably harder now.

  • Bubba Jones||

    And yet every online retailer in California manages to do it for California.

    I agree that it makes more sense for congress to limit compliance to the state level.

  • Modus Pwnens||

    There I will disagree with you. Calculating the tax value for all the different sales taxes is computationally easy.

    Baloney. Computing the tax jurisdiction from a mailing address can be very difficult in some cases. And you have to be able to deal with the messiest cases as screwing up 0.001% of the time has dire consequences.

  • I am the 0.000000013%||

    I was building something that required a lot of highly machined parts. I spec'd them out from the classic vendors, then looked on ebay and found sources in China that were selling what looked to be the same parts (and actually turned out to be better when I received them) for about 8% of the cost, even including shipping.

    The moral of the story is that I'm going to be buying a lot more stuff from other countries. I'm perfectly fine with applying libertarian principles to my country. If we are stupid, we deserve to fail.

  • albo||

    So, are you paying your state's use tax on those items bought out of state?

    I believe most, if not all, state sales taxes are sales and use taxes precisely to address tax avoidance by purchasing in no-tax jurisdictions.

  • Will Nonya||

    I would hope the answer is no. Use taxes in principle are stupid and in many states could be applied on top of sales taxes.

    Aside form being generally unenforceable (but the surveillance state is working on fixing that) the idea that they deserve a share of the sale because i live in their state is ludicrous. I typically buy online BECAUSE the state makes it unattractive to buy locally.

    If i buy something online while I'm in a different state does that negate their claim since i didn't purchase it win their state? or do both states assert their claim?

  • I am the 0.000000013%||

    So, are you paying your state's use tax on those items bought out of state?

    Absolutely not.

    I believe that there is a small need for government, and I used to believe a sales tax levied at all levels was the answer to funding government, but I've evolved.

    I think at this point we need to fund government via a kickstarter like mechanism. Our legislative bodies use their processes to come up with initiatives and costs and post them on a kickstarter like site. If the funding goal is reached, it proceeds. If it doesn't, it goes away. Representative democracy with wallet participation.

    Until we have something like what I propose, I'm going to avoid paying any taxes I can avoid without incurring risk.

  • Modus Pwnens||

    Yes, having a decent standard of living is stupid. You realize it's that cheap because the workers live on dirt floors and they dump toxic waste wherever they feel like it, right?

  • Will Nonya||

    You know thats mostly bullsh!t right?

    and for what it's worth there are still people in this country who live with dirt floors.

  • BYODB||

    It's basically shorthand for low as fuck labor costs and little environmental regulation which is, in essence, correct in terms of price advantage.

  • I am the 0.000000013%||

    Assuming any of what you said is true, how exactly am I supposed to feel guilty when I'm sending them money!

    I really would like to see through other people eyes. I wonder what it's like to look around and see victims everywhere.

  • damikesc||

    You'd think this would generate more than one article.

    You'd be wrong, but you'd think it.

  • Will Nonya||

    A few things are going to happen, one of them is that some over seas sellers are going to start charging sales taxes they have no intention of delivering and states have no jurisdiction to collect or enforce.

    Overall this is a bad ruling.

    Some of the local city counsel here made an argument for this a few years ago claiming that the city should see taxes from online sales because it is their infrastructure being used. When i asked which part of the city budget went to roads or my electricity use, my internet etc i was decried as a heretic who hates his city. I assured them i don't hate them and merely hold them in contempt.

  • Modus Pwnens||

    I foresee a boom in mailbox rentals in the sales-tax-free states of Oregon, Delaware, and New Hampshire. Montana is just too far out of the way.

  • Longtobefree||

    I haven't checked yet, are the stocks in hold and forward companies going up?
    I know the market was not real happy just after the ruling came out.

  • Juice||

    So now online retailers will have to have a big maze in their software that determines the exact tax for the state, county, and municipality of every one of its customers. Then they'll have to do the paperwork for every single one of these special cases. Guess who can afford to do that and who can't? Yep, just one more thing to crush the small entrepreneur and create a high barrier to entry into the market. Good job, Supreme Court.

  • loveconstitution1789||

    I have already issued a memo to my managers to not change anything.

    This is preposterous and I won't have my Georgia business do what South Dakota, New York, and California want us to do. These states don't want the political hassle of collecting sales tax from their residents so they are trying to strongarm my business into doing it. fuck them.

  • Bubba Jones||

    Congress could make this a state level issue instead of micro jurisdictions.

    But if an online retailer can exist in California, this can be done on a national level.

  • loveconstitution1789||

    I will never allow my businesses to collect sales tax for other states. Let New York try and get jurisdiction over me and my business in Georgia. Fuck New York!

    Really disappointed with Gorsuch on this. This case would have been a loss for states if Gorsuch had not wanted to tear down the other SCOTUS decisions so bad.

    This was a bad decision to get rid of previous precedent. Hopefully Congress exerts it's Commerce Clause power to fix this and force states to collect sales tax from its citizens not burden out-of-state business with 50+ states tax rules.

  • Longtobefree||

    Do you use a bank with any branches in New York? Guess where the state will process the attachment order?

  • loveconstitution1789||

    I use credit unions for this exact reason.

    I had a client that dealt with a bank out of his home state trying to steal money from his account because it was a national bank. California requires all banks operating in the state to give them social security numbers of their customers even if the customers does not live in California.

    States are overstretching their power that Congress either deals with because that is what the commerce clause is for or too bad for states.

  • jph12||

    You might want to reconsider. I don't know why you are blaming New York, rather than South Dakota, but if you are shipping your products to New York then New York probably has jurisdiction over you related to those shipments. Under the Constitution, Georgia is required to give full faith and credit to judicial decisions from other states. I'm sure that Georgia has a process for domesticating foreign judgments, which will then allow enforcement of the New York decision in Georgia.

  • loveconstitution1789||

    Georgia requires other jurisdictions to seek a Georgia judgment for other state's demands for payment.

    Many states, you don't need a judgment to grab someone's bank account etc. Georgia you do. Other states have to send reps to sue here in Georgia.

    I pick on New York because their regulation is outrageous, taxes are high, and they are so corrupt their various government levels fight to grab $10 even if it costs them $100,000. California is the same way.

  • loveconstitution1789||

    In Georgia, you can demand a jury trial for a speeding ticket. Many states don't have that option. The most Due Process you can get is a judge (bench) trial.

    In many ways, Georgia law needs to be updated. In other ways, the lack of updating has left some great checks to government bureaucrats, especially from other fucked up states like NY and CA.

  • Longtobefree||

    Harvard theoretical case.
    Consumer A, a resident of state A, is on a trip, and while traveling through state B (which has a sales tax), places an online order for item C from vendor X (in a state with no sales tax, but using a server in state Y which has a sales tax), for delivery to his sister, a resident of state D (which has no sales tax), who upon receipt decides she does not like it and ships it consumer A at his home address for return to the seller.
    Which state(s) if any, can claim that A owes them sales tax, and why?

  • Modus Pwnens||

    Under current law, none of them, since the ship-to locale has no sales tax.

    There could be use taxes and other taxes all over the place, though.

  • Longtobefree||

    Try it again, but with an in person order in state A to be shipped to said sister. The consumer still pays sales tax to the state where he made the purchase under the current rules.
    My point is just that those saying a few lines of software can inexpensively heal the pain to come for 'other than Amazon' web stores are a bunch wrong.
    There are going to be so many different laws passed in such a hurry to get in on the gravy train that small business may just have to close up for a year and get a day job. The only guys who will make out are the lawyers, again.

  • Rossami||

    Interesting hypothetical. First let's get rid of the easy part. The return from D to A is irrelevant because once the product is returned, the sale is reversed - and the sales tax reversed along with it. This is true in all jurisdictions.

    For the rest, the answer is state A if the product is a gift to his sister but state D if it was really a straw-purchase initiated by the sister in order to evade state D's regulations. The reason is that the payment of sales tax is an obligation on the buyer, not the seller. This is and always has been the obligation in all jurisdictions.

  • Rossami||

    States outsource the collection of the sales tax to the various sellers. The moral arguments for that compulsory service are weak but they have been deemed legally sufficient for a very long time. The legal arguments for that compulsory service are (supposed to) balance practicality. Under the old brick-and-mortar-only rules, it was considered reasonable to require the seller in state B to collect B's sales tax across the board (because it was unreasonable to ask about the residence of every buyer) and reasonable for the tiny fraction of out-of-state buyers to both apply for a refund from state B and pay a use tax to state A at the end of the year.

  • Rossami||

    continued
    Then we invented cars, trains and planes, out of state travel got cheap and tax rules got insanely complicated - but the reasonableness decision was never reconsidered. It ossified into a rule that 'it used to be reasonable and there was no one big change so it must still be reasonable'.

    Then the internet happened. That was a big change and the reasonableness standard changed for those transactions - for a while. Now we're back to the same bad old rule but worse. Now, there are states arguing that the seller should use different heuristics than the seller's brick-and-mortar location to determine that Consumer A most likely is also a resident of state A. Some think that residence address in Consumer A's profile decides the answer. Most, however, think that the ship-to location is more reliable and use that as the proxy. But that just determines which algorithm to use for collection. The tax is actually OWED by A (unless straw-purchase above).

    Clear as mud?

  • Modus Pwnens||

    For the rest, the answer is state A if the product is a gift to his sister but state D if it was really a straw-purchase initiated by the sister in order to evade state D's regulations. The reason is that the payment of sales tax is an obligation on the buyer, not the seller. This is and always has been the obligation in all jurisdictions.

    Bullshit of the complete and utter variety. Regardless of the final destination, the sister was the buyer and there are no laws against "straw purchases" on items that are not age-restricted or subject to other legal restrictions on possession. If I buy a toy at my local Walmart in my low-tax jurisdiction, and then send it as a gift to my nephew in a high-tax jurisdiction, have I broken the law?

  • Rossami||

    Wrong again. And there's case law to prove it. While no sane prosecutor will chase you for a de minimus purchase from Walmart, the question becomes lots different when there are enough tax dollars involved.

    For example, say you live in Delaware (which has no sales tax) and your sister lives in New Jersey (high tax). You buy a new car. You "give" the car to your sister at the same time that she makes a cash gift to you. Purely coincidentally, the cash gift from your sister is the same as the price of the car. Your sister claims that she owes neither sales nor use tax because the car was a "gift". What do you think are the odds that the New Jersey Division of Taxation is going to buy that argument?

    On the other hand, if you really do buy the car and give it unconditionally to your sister with no thought or evidence of remuneration, the NJ DoT may give your sister a hard time about it but they won't win. Depending on the state, she might owe a gift tax but that's a different tax with different rates, different rules about exemptions and limits, what's waivable, etc.

  • John Thacker||

    It is Pollyannaish to pretend that even just upholding Quill would have been fine. South Dakota was hardly the first state to find ways to tax these purchases (in ways much more intrusive than the practically voluntary "use taxes.") Thirty-one states had some kind of law massively expanding Internet taxation far beyond what you'd think of as a "physical nexus" (all the way to the truly absurd ones that call placing a cookie on the customer's computer as a physical nexus.)

    Those should have come up in court before now, because by letting them alone, it had already shown Quill to be essentially dead letter.

  • Modus Pwnens||

    They don't really provide any information on any of those 31 states' strategies at the link, much less that they had been successfully enforced.

  • loveconstitution1789||

    Thomas and Gorsuch are hoping Congress will step in and fix the business burden of this ruling.

    It's Pollyannaish to think Congress will do the right thing.

    The court could have reversed Quill and prevented states from forcing out-of-state business to collect their state sales tax.

    I'm not doing it as South Dakota has zero jurisdiction over me because I live in Georgia. I live in Georgia because South Dakota, New York, California, etc want to take the shit out of business and burden them with lefty bullshit.

  • SRoach||

    My concerns are as follows.
    I Do Not live in a town. If I have to pay local sales tax on Amazon purchases, where do they say I live? The town listed in my mailing address? The one which is the county seat? I already think the county seat's sales taxes are too high, but for much of my local shopping, it's the only game in town. I rarely shop in the town where my local post office is located. I don't even know what the sales tax is there.
    ...Okay. I just looked it up. The county seat's sales tax is 0.75 cents higher than the tiny little town where they sort my mail.

    If my local tax-and-spend town doesn't have to compete for dollars with Amazon, how high can that local sales tax get? They've already used sales taxes for things I disagree with. They managed to get some matching grant for something or other, and used that money to improve their local school.
    I do not live in that district. I refuse to wear their colors or mascot on significant days. I have my own affiliation.
    If they get the tax revenue, they have a partially captive audience in everyone who lives within the whole county. If the other town gets the tax revenue, they're getting tax revenue for services I don't even use indirectly.

    Worse, if the city gets tax revenue from businesses who do not use local services, what is the motivation to offer those services? You don't need paved roads to collect from Amazon. Nor reliable sewage, either.

  • Modus Pwnens||

    If you think it's hard to figure out your own sales tax rate, imagine how fun it is for a small online business to figure it out for 10,000 people like you.

  • I'm Not Sure||

    How about this- when I email the customer an invoice for his purchase, I copy his state on it, too. Let them arrange for collecting it, if it's that important to them.

  • loveconstitution1789||

    States want online revenues to save brick and mortar business and not have to spend much on services since the product is being delivered by road. No need to spend new taxes on expensive infrastructure for brick and mortar stores.

  • Bubba Jones||

    This isn't a locating in a low tax jurisdiction. This is about locating in a low population state.

    Oddly North Dakota managed to play this backwards.

  • josh||

    It might not be good economic policy, but I think it's certainly defensible as a legal ruling.

  • jph12||

    I'm not even sure it's bad economic policy. I suspect that, like South Dakota, most states won't care about the small merchants because it's not cost effective. And the big online vendors are already subject to sales tax on most of their sales because they have physical locations within the states where most of the people live.

  • Unemployed Armenian Tranny||

    How exactly are the States going to enforce collection of their taxes on businesses not resident in their State?

  • Phillip||

    Government of the people, by the people and for the people....oh never mind, just forget it...

  • buybuydandavis||

    I always thought this tax bias was at least a law.

    Instead, it was judicial authoritarianism. I should have known.

    This is a monster of a ruling.

    The internet interstate sales tax moratorium is a 5-10% edge for online only compared to brick and mortar. A huge cost advantage in retail.
    Pumps money into Amazon (sales), Google (ads for sales), Facebook (data for sales, ads)

    Good day for Walmart.

  • vek||

    Well this is fucked. In a sane world where governments only taxed what they needed to the fairness angle makes sense... But in this world it will cause nothing but higher taxes and problems for businesses.

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