My tax guy told me that CA is trying to collect sales tax for Internet purchases this year. The CA 540 tax form now has a line where I’m supposed to declare Internet purchases that didn’t have CA sales tax paid.

“WASHINGTON (AP) - The Supreme Court sounded concerned Tuesday about doing away with a rule that has meant consumers don't get charged sales tax on some online purchases.

The justices heard arguments in a case that deals with businesses' collection of sales tax on online purchases. Right now, under a decades-old Supreme Court rule, if a business is shipping a product to a state where it doesn't have an office, warehouse or other physical presence, it doesn't have to collect the state's sales tax…”

http://www.wavy.com/ap-top-new...tion-case/1127160811

Most states have had the requirement for years for residents to self-report non-paid sales tax on out-of-state internet/catalog purchases, and pay it to the state themselves. (In Arkansas, this is known as "consumer use tax".) But most folks don't follow through with it, and there's no good mechanism for tracking or enforcing it, so the states simply miss out on the tax.

As a result of the big upswing in internet sales and the corresponding big loss in collected sales taxes, states have started looking at ways to get online sellers to collect tax at time of sale. However, in most cases, they can only force the companies to do this if the company has a physical presence (store/warehouse/HQ/etc.) in-state.

Some of the largest online retailers, like Amazon, have started voluntarily collecting state sales tax, though.

There has been standing precedent for decades that states cannot force out of state entities to collect sales tax for them. This is based on the Interstate Commerce Clause of the US Constitution. That hasn't changed. Congress could mandate out of state sales tax collection. They haven't. All that being the case, I don't see any legal basis for the SCOTUS to overturn existing precident.

If the states want to collect tax on out of state purchases, they should go to Congress. If Congress says now (which is what has been the situation until now) the states need to just STFU and deal with it.

Detailed background on the case from SCOTUSBLOG:

http://www.scotusblog.com/2018...ion-in-internet-era/

If the local St. Louis City sales taxes weren't so high, 10-13% depending on "special taxing districts", I'd feel sorry for them.
They are destroying local businesses because people will go out of their way to avoid the high taxes.

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Originally posted by Pipe Smoker:
My tax guy told me that CA is trying to collect sales tax for Internet purchases this year. The CA 540 tax form now has a line where I’m supposed to declare Internet purchases that didn’t have CA sales tax paid.

That's not unique to the land of the fruits and nuts, and the SCOTUS case has, IIRC, 37 states involved?

The states, of course, in addition to having a natural insatiable hunger for more of your money, are getting pressure from local chambers of commerce who, like leftists, can't seem to come to grips with reality. In this case the reality being people shop on-line, not primarily to dodge taxes, but because local businesses are dropping the ball.

I just went through this yesterday. Considering bars for the garage window. HD and Lowe's doesn't stock them locally. I can get them from AP for less money, faster, and cheaper. Plus, the last time I ordered something on-line from HD, it took forever and a day to get here.

declare $1

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declare $1

You guys should just do that on your federal and state returns on the income line as well.

The law in most states is the tax must be paid, whether it is paid as sales tax or use tax. Buying something online and not paying the use tax (when required) is against the law.

In fact, internet sellers should be collecting a higher rate. The states are missing out on all of the property and income taxes, so they should make it up by doubling or tripling the sales tax on online purchases.

most sites I buy from nowadays are collecting tax anyway.

Sometimes it’s not clear whether or not state sales tax was paid. Nespresso declares a price of 70¢ per pod for their “original line” coffees. No additional sales tax charged to me, but I know damned well that they pay it to CA – they have a physical presence here. I buy a LOT of Nespresso coffee.

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Originally posted by a1abdj:

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declare $1

You guys should just do that on your federal and state returns on the income line as well.

The law in most states is the tax must be paid, whether it is paid as sales tax or use tax. Buying something online and not paying the use tax (when required) is against the law.

In fact, internet sellers should be collecting a higher rate. The states are missing out on all of the property and income taxes, so they should make it up by doubling or tripling the sales tax on online purchases.

If the states are not providing services to the seller of an item (who is located in a different state and pays taxes there), why are they entitled to any tax revenue from them? Would it not be double taxation? A case could be made for the consumer to owe tax on items he or she consumes, but not the seller.

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If the states are not providing services to the seller of an item (who is located in a different state and pays taxes there), why are they entitled to any tax revenue from them?

Sales tax isn't paid by the business, it's paid by the purchaser. The purchaser is in the state, and consuming the services provided by that state while avoiding paying for them. The online business is merely collecting them and remitting.

Tax revenue has to come from somewhere. If we loose it from the brick and mortars where else are they going to add it? Property tax? Why should I pay higher property taxes to make up for the loss of sales tax revenue if I'm not buying online?

Shouldn't the online buyers be making up that loss?

CA always had a line item on the state income tax for you to declare how much stuff you bought outside of the states and to pay sales tax on them.

Obviously, not too many people would own up to having bought any.

quote:

Originally posted by Pipe Smoker:
My tax guy told me that CA is trying to collect sales tax for Internet purchases this year. The CA 540 tax form now has a line where I’m supposed to declare Internet purchases that didn’t have CA sales tax paid.

AZ tried that crap about 5 or so years ago. The line on the tax form disappeared after the second year.
 

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AZ tried that crap about 5 or so years ago. The line on the tax form disappeared after the second year.

It's been required in Arizona since 1955.

Those of us in New Hampshire, along with Montana and Oregon are crying crocodile tears.

Marty Jackley, our SD Atty General was the main voice representing the 40 odd states' attorneys general in this action. He had some very valid arguments not the least of which is that Congress has had 3 decades in which to address this issue but hasn't which is why SCOTUS is being asked to weigh in.

Sales tax has always been a consumption tax so it is logical to tie it to the buyer's location and not whether the seller maintains a physical location. Small internet businesses also have a valid point about the burden and cost of collection and remittance. A reasonable compromise is needed as far too many local brick 'n mortar outfits have been driven out of business by huge internet outfits in addition to the mega chains like Wallyworld.

As an aside Jackley had been our attorney before leaving private practice becoming attorney general. And he's currently running for governor (conservative republican). Good man.

quote:

Originally posted by Pipe Smoker:
My tax guy told me that CA is trying to collect sales tax for Internet purchases this year. The CA 540 tax form now has a line where I’m supposed to declare Internet purchases that didn’t have CA sales tax paid.

“WASHINGTON (AP) - The Supreme Court sounded concerned Tuesday about doing away with a rule that has meant consumers don't get charged sales tax on some online purchases.

The justices heard arguments in a case that deals with businesses' collection of sales tax on online purchases. Right now, under a decades-old Supreme Court rule, if a business is shipping a product to a state where it doesn't have an office, warehouse or other physical presence, it doesn't have to collect the state's sales tax…”

http://www.wavy.com/ap-top-new...tion-case/1127160811

Pretty much always been "required" that if you buy something without paying sales tax, a use tax return was required to be filed in your State. Mostly been unenforceable except when a State did a Sales Tax Audit on a business. At the individual level, they started adding the line to the personal State income tax returns several years back - still pretty much unenforceable unless they examined your return.

Amazon adds state sales tax to items it ships from it's distribution centers. Some of their third party sellers do and some do not.