The party is over - States can collect taxes

The U.S. Supreme Court today handed down its anticipated decision in South Dakota v. Wayfair. The case challenges South Dakota’s application of its sales tax to internet retailers who sell into South Dakota but have no property or employees in the state. At issue is the case Quill Corp. v. North Dakota from 1992, which set the property or employees standard for sales taxes using the Court’s (debated) dormant commerce clause power to restrict state taxation of interstate commerce.

Drumroll…South Dakota won. The Court laid out why South Dakota’s law is no burden to interstate commerce but made clear that more complex or overreaching laws would be. This was not too surprising, as during oral argument the justices expressed such frustration with the issue that it’s easy to see why they wouldn’t want this to be just the first of many cases. Better to articulate the rule well here. (We had filed a brief in the case, in support of neither party, urging the Court to uphold South Dakota’s law but draw a clear line preventing more problematic laws from being held as valid.)

https://taxfoundation.org/supr...line-sales-tax-case/

Here is a link to the ruling:

https://www.supremecourt.gov/o...7pdf/17-494_j4el.pdf

Interesting 5-4 decision, overturning longstanding precedent. Big victory for the huge retailers who are already charging sales tax - good luck to the small retailers who now must figure out a way to keep up with it.


GINSBURG, ALITO, and GORSUCH, JJ., joined. THOMAS, J., and GORSUCH,
J., filed concurring opinions. ROBERTS, C. J., filed a dissenting opinion,
in which BREYER, SOTOMAYOR, and KAGAN, JJ., joined.

quote:

Big victory for the huge retailers who are already charging sales tax - good luck to the small retailers who now must figure out a way to keep up with it.

Indeed. For the Amazon-haters and similar this is really gonna sting. Compliance will be prohibitive for medium and small firms, at least in the short run. That will reduce options and put some folks out of business I suspect. Compounded by nearly every state struggling financially and having an incentive to pursue collection efforts on noncompliant firms.

I also suspect there will be a number of firms that will streamline the reporting and remit process and offer this up for less than individual firms can do this in-house, helping out the mid-sized firms over time. Small guys are toast either way.

It will take a while to read the ruling, but if the states can tax, is it safe to assume that local municipalities will be able to get their share as well? That will be a nightmare to keep up with if so.

quote:

Originally posted by BamaJeepster:
Here is a link to the ruling:

https://www.supremecourt.gov/o...7pdf/17-494_j4el.pdf

Interesting 5-4 decision, overturning longstanding precedent. Big victory for the huge retailers who are already charging sales tax - good luck to the small retailers who now must figure out a way to keep up with it.


GINSBURG, ALITO, and GORSUCH, JJ., joined. THOMAS, J., and GORSUCH,
J., filed concurring opinions. ROBERTS, C. J., filed a dissenting opinion,
in which BREYER, SOTOMAYOR, and KAGAN, JJ., joined.

Interesting to see ALITO, THOMAS, and GORSUCH, JJ. agreeing with GINSBURG, J. I do not know if I agree with the ruling. I have no problem with the Quill standard, personally.

This is a direct result of people buying online and not paying the legally mandated use tax. Period. Tax money has been lost to the extent that those collecting it were motivated to do so.

Do you know who won't be negatively impacted by this? The life blood of your communities. Local brick and mortar operations. The same ones that have been paying their taxes while so many others attempted to game the system.

Personally I don't care if they charge tax on internet purchases or not. I never ordered online to avoid tax, I ordered online for the better price. It won't stop me from making big dollar purchases online. The savings will still be worth it. I work hard for my money and if ordering online saves me money, I order online.

quote:

Originally posted by mbinky:
Personally I don't care if they charge tax on internet purchases or not. I never ordered online to avoid tax, I ordered online for the better price. It won't stop me from making big dollar purchases online. The savings will still be worth it. I work hard for my money and if ordering online saves me money, I order online.

Same here. It's a factor of both cost and convenience. If I want to buy 1000 rounds of ammo, I find it far cheaper online and it's delivered to my door. This ruling doesn't change that. States aren't required to tax, so I can still buy in a low or no tax state.

quote:

Originally posted by a1abdj:
This is a direct result of people buying online and not paying the legally mandated use tax....

I teach accounting in college. When we hit the current liabilty section, which includes sales taxes, I ask the class how many have purchased online from out of state. Most raise their hand. I ask how many pay use tax on the line of their state tax return. Very few know what that is.

It is only going to complicate my life where I buy products to resale as a part of my business.

I HATE TAXES.

The losers in this are the local brick and mortar who sell out of state. They will have to keep track of sales tax in each state plus can arguably any local taxes that are added on.

Government won't care about that burden because they just want the revenue.

As someone above said, there was already a duty to pay your internet tax to your state but no mechanism to force compliance. I doubt this decision would have come down this way if the self-reporting was working.

I'm not against paying state and local taxes. It's still the best way to fund my local infrastructure despite the waste created by bureaucrats and politicians ineptitude. I've been paying taxes on Amazon for some time now because of their huge presence in Washington. I don't even blink an eye.

Jim

quote:

Originally posted by Georgeair:
Indeed. For the Amazon-haters and similar this is really gonna sting.

Why would that be?

You are aware, I assume, Amazon didn't always assess sales tax on every part of every purchase, right? Now they must. Hard to see this as a "win for Amazon."

quote:

Originally posted by Georgeair:
Compliance will be prohibitive for medium and small firms, at least in the short run.

I would imagine the states will give them time to get into compliance.

quote:

Originally posted by BamaJeepster:
It will take a while to read the ruling, but if the states can tax, is it safe to assume that local municipalities will be able to get their share as well? That will be a nightmare to keep up with if so.

Yeah, I wonder if SCOTUS knows what can of worms they opened with this one?

quote:

Originally posted by mbinky:
Personally I don't care if they charge tax on internet purchases or not. I never ordered online to avoid tax, I ordered online for the better price.

Same here. Not even for the better prices, but mainly for the selection and not having to run around looking for stuff.

But I'd begun to change my buying habits, anyway. The impetus for finally making me work a bit harder to do that, was ironically, Amazon. Lo and behold: I've found that, for many things I can get it as inexpensively as I can on-line, and I can have it right away. Also don't have to worry about somebody stealing it off our porch if I'm not right there to receive it.

I've traditionally been of a mind that if I could get it locally, and locally was price-competitive, I'd buy locally. But Amazon had made me lazy. Now I'm checking locally, first, again. The result being, for example: Of the $400 I've spent so far on a whole-house TV/DVR solution: Over 2/3 has been spent locally.

As an aside: Amazon today, coincidentally, gave me another reason to shop elsewhere (and eventually drop Prime): They shipped $160 worth of stuff by their own lame shipping service.

I wonder if, as written, Congress could explicitly reverse this under the Interstate Commerce Clause?

I don't order too many things from Amazon but in the past have been charged sales tax because they have a facility in Tennessee. My last order had no sales tax added but the e-mail notification on it being shipped had this included.

How long until your residing locality wants a use tax on purchases in other localities? I work in a place with 7.7% tax, but right over a hill is 10% (where the local gun shop is, my name should be on a brick).

I'm surprised at the way they voted, all the conservative SCOTUS leaning to the way of higher taxes and increased burdens on small businesses and then Mr. I want to be the important one Roberts going the other way with the liberal justices.

I think they got it wrong, unless the business is domiciled or has a physical presence in the state the state should have zero ability to demand action and collections of anything from a business in another state.

The states proper channel for tax collection is the individual resident, who have been purposely avoiding filing voluntary tax reports and paying the sales tax.

Adding cost of leasing a tax table for sales for your internet store for Moes Taco Supplies vs Amazon is probably going to be prohibitive for Moe, and peanuts for Amazon.

Amazon, WalMart et all wanted this, not for equality but to add expenses and regulations to burden the competition... For Amazon it's easy with 1000 programmers on call looking for stuff to do...

Congress should step up and fix this.

quote:

Originally posted by ensigmatic:

quote:

Originally posted by Georgeair:
Indeed. For the Amazon-haters and similar this is really gonna sting.

Why would that be?

You are aware, I assume, Amazon didn't always assess sales tax on every part of every purchase, right? Now they must. Hard to see this as a "win for Amazon."

Items sold by Amazon charge sales tax, items sold by third parties via Amazon may or may not charge the tax (see notice posted by olfuzzy above).
http://money.cnn.com/2017/03/2...sales-tax/index.html

Also, it's an advantage for the massive retailers because they have the resources to program and run systems to keep up with the myriad tax schemes in all the states. Smaller retailers will not have the resources to do this or it will be a huge burden to implement.

I predict a nightmare in administration.

quote:

Originally posted by ensigmatic:

quote:

Originally posted by Georgeair:
Indeed. For the Amazon-haters and similar this is really gonna sting.

Why would that be?

Because they are already geared up for this and are, I suspect, the largest internet retailer in terms of purchases and product count by far. That will allow them to absorb the compliance cost across a larger base than anybody else can even come close to.

I just think in the near term that will allow them to be more dominant and will see others having to increase costs, thin margins or modify their sales scope to keep compliance manageable.