Author Topic: Supreme Court Rules That States Can Force Online Retailers To Collect Sales Tax  (Read 2554 times)

Monsters For Sale

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U.S. top court lets states force online retailers to collect sales tax


"States have broad authority to force online retailers to collect potentially billions of dollars worth of sales taxes, the U.S. Supreme Court ruled on Thursday, siding against e-commerce companies in their high-profile fight with South Dakota.

The justices, in a 5-4 ruling against Wayfair Inc, Overstock.com Inc and Newegg Inc, overturned a 1992 Supreme Court precedent that had barred states from requiring businesses with no "physical presence" in that state, like out-of-state online retailers, to collect sales taxes.

The ruling opens the door to a new revenue stream to fill state coffers - up to $13 billion annually, according to a federal report - while imperiling a competitive advantage that e-commerce companies had over brick-and-mortar rivals that already must collect sales tax.

Shares of online retailers fell sharply following the ruling, with Wayfair down 3.8 percent, Overstock off 2.1 percent and Etsy Inc shares off 4.4 percent. Amazon.com Inc shares fell as much as 1.9 percent before paring losses. Amazon was among the biggest drags on the benchmark S&P 500 stock index.

The court, in a ruling authored by conservative Justice Anthony Kennedy, revived a 2016 South Dakota law that required larger out-of-state e-commerce companies to collect sales tax, a mandate that the online retailers fought in court.

"Rejecting the physical presence rule is necessary to ensure that artificial competitive advantages are not created by this court's precedents," Kennedy said.

The win was welcomed by groups representing brick-and-mortar retailers and decried by e-commerce advocates.

The ruling puts an end to a legal regime that "distorts free markets and puts local brick and mortar stores at a competitive disadvantage with their online-only counterparts," said Deborah White, general counsel of the Retail Industry Leaders' Association.

Small online businesses will be the hardest hit, said Chris Cox, a lawyer for e-commerce industry group NetChoice.  "Consumers will quickly feel the negative effects as those businesses dry up or are forced into the arms of Internet giants," he added.

South Dakota was backed by President Donald Trump's administration in the case. The law could yet face legal challenges on other grounds, Kennedy noted. 

The ruling is likely to lead other states to try to collect sales tax on purchases from out-of-state online businesses more aggressively. It also likely will lead to many consumers paying more at the online checkout. Forty-five of the 50 states impose sales taxes.

Most states would need to pass legislation before seeking to collect the additional taxes, although some have already enacted laws or regulations similar to South Dakota's.

South Dakota has estimated that it could take in up to $50 million a year in additional revenue with these taxes being collected.

States like South Dakota that depend heavily on sales taxes for their revenue are likely to benefit most, with a predicted maximum revenue increase of around 3 percent, according to a Barclays research note.  The states that are likely to see the biggest percentage increase in revenue are Louisiana, Tennessee, South Dakota, Oklahoma and Alabama, according to the Barclays research.

Kennedy wrote that the 1992 precedent that affirmed that a physical presence is required - a case called Quill v. North Dakota - was "flawed on its own terms" and was especially problematic due to the rise of internet retail.  In the digital era, the costs of complying with different tax regimes "are largely unrelated to whether a company happens to have a physical presence in a state," Kennedy wrote.

The ruling comes against a backdrop of Trump's criticism of Amazon, the leading player in online retail, on the issue of taxes and other matters.
Amazon, which was not involved in the Supreme Court case, collects sales taxes on direct purchases on its site but does not typically collect taxes for merchandise sold on its platform by third-party venders, representing about half of total sales."

(Reuters - Reporting by Lawrence Hurley; Editing by Will Dunham)


https://www.msn.com/en-us/news/us/us-top-court-lets-states-force-online-retailers-to-collect-sales-tax/ar-AAyXXvs?li=BBnb7Kz


CRAP!

(I would write the other 4-letter word for this, but the UMA would just Spell Correct it to this anyway.)
« Last Edit: June 21, 2018, 11:39:06 AM by Monsters For Sale »
ADAM

Anton Phibes

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So if you are an occasional seller on ebay to pay for your hobby....you now have to charge taxes and be considered a business? ??? ???

ChristineBCW

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NewEgg's massive advantage (lower prices AND no-tax) will certainly be an impact.  We hardly shop on Amazon because of state sales tax.

I'm not against taxes.  I'm against giving them to this wasteful spending liars.  Make THEM do with less first.

Monsters For Sale

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So if you are an occasional seller on ebay to pay for your hobby....you now have to charge taxes and be considered a business? ??? ???

I don't know.

It would make more sense if sBay (or PayPal) tacked on the appropriate tax and turned it over to the states.  But then they would be justified in raising their rates for the extra book-keeping involved.

All I know for sure, is that it will wind up costing us more.
ADAM

Anton Phibes

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I don't know.

It would make more sense if sBay (or PayPal) tacked on the appropriate tax and turned it over to the states.  But then they would be justified in raising their rates for the extra book-keeping involved.

All I know for sure, is that it will wind up costing us more.

Ebay already takes 10% of the total sale. Even shipping. That's the same as God requires if you believe in tithing to a deity,lol.  So if they raise their rates, they will consider themselves bigger than god. Funny stuff right there,lol.

Creepy

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So if you are an occasional seller on ebay to pay for your hobby....you now have to charge taxes and be considered a business? ??? ???

According to the article I read, small scale sellers on sites like eBay and Etsy have been traditionally exempt. Its not clear what this means moving forward. Small collectors, selling pieces of their collection to fund other purchases would probably still fall under the "garage sale" exemption.

If, on the other hand, your have an eBay or Etsy store that is essentially a business, you are probably going to be targeted. Its all volume.
« Last Edit: June 21, 2018, 04:04:21 PM by Creepy »
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Creepy

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I pulled this off of an eBay discussion...I make no claim to being able to give legal or tax advice.

The Court’s decision states that the South Dakota law “applies only to sellers who engage in a significant quantity of business in the State, and respondents are large, national companies that undoubtedly maintain an extensive virtual presence.”

 

Later they make note that the SD law refers to $100,000 or more in e-sales.

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Anton Phibes

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I pulled this off of an eBay discussion...I make no claim to being able to give legal or tax advice.

The Court’s decision states that the South Dakota law “applies only to sellers who engage in a significant quantity of business in the State, and respondents are large, national companies that undoubtedly maintain an extensive virtual presence.”

 

Later they make note that the SD law refers to $100,000 or more in e-sales.


I haven't even sold or bought 100k in crap in the whole time I have been on evil bay....so no worries.

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Ebay already takes 10% of the total sale. Even shipping.


And then PayPal takes a few more, including shipping! Add what you have to pay for packaging material and see what you have left from a $2 sale!
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Monsters For Sale

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I haven't even sold or bought 100k in crap in the whole time I have been on evil bay....so no worries.

I don't think the sellers have to worry about much - it's the buyers who will foot the bill.
ADAM

aura of foreboding

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I've been paying taxes on online sales for years.  It just makes sense.  If you pay in the store, you should pay online.  I don't think this has any impact on small sales on eBay.  It will probably eventually come to that, and I'm okay with that too.  I pay at the antique store, so why not?  At least it's going to my state. 

skully

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Well, I do have a re-sale tax #, and when I buy on e-bay, and they collect sales tax, it can be a bit of a problem with e-bay to refund the sales tax that was already charged, the sellers sometimes are left with something to re-pay the buyer, and it can be confusing at times.

Monsters For Sale

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eBay is not just quietly collecting tax for the respective states, they are making a big deal out of it by making taxes a separate charge.

I like to keep a running tally of all my purchases - for double checking my credit card statement.  Now I enter my total and go to check my statement, only to find twice as many charges.  When Paying for multiple eBay purchases at once, the card statement can be quite long.

Two of the items in a recent multiple payment were cancelled and I got six notices of refunds - two on behalf of eBay, two on behalf of PayPal, and two on behalf of the seller.  Nutty.
 
ADAM

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I ran into this as a buyer on several recent eBay purchases. I live in Idaho, but my last few purchases have added a Washington State tax to my purchases? Seems weird to me, but what do I know? I contacted eBay after this happened for the first time and the rep assured me that this practice is all well and good; I wonder how Idaho feels about its  neighbor collecting taxes from citizens living in Idaho.😯
RF

Monsters For Sale

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Amazon seller gets $1.6 million dollar California sales tax bill:

         https://tinyurl.com/y6yarwy8

Sheesh!

Now they are going after sellers for sales that happened before the law was approved?
ADAM

 

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