Semi-OT: Online Sales Tax Levied by States

[soulspinner]

Originally Posted by frankwurst

i don't buy online to avoid sales tax. I do it to sit at home and drink beer in my yard.

yes

[oldpotatoe]

Originally Posted by jrsbike

Its really amazing what a critical part of the economy that small businesses play yet they continuously get hammered. This will not help.

Collecting sales tax isn't hammering any small business..you are just collecting it for somebody else...30 minutes at end of month..write 2 checks(state and local)..out in envelope(what I did for 13 years).

[tlittlefield]

Originally Posted by MattTuck

New Hampshire baby! No sales tax here. Live free or Die!

I am from NH as well and from what I understand is that our local business who ship out of state will now have to collect sales tax from the state it ships to.

[Mark McM]

Originally Posted by rnhood

I have little sympathy for a business that bases their profit model on tax avoidance. If they go down the tube, good riddance.

It's not the businesses that are avoiding the tax - it is the customers. People who buy goods that have not had sales tax added still owe that tax to the state they live in. The only question that this decision answers is who has the obligation of collecting that tax for the state.

My question is this: Say there is a business in a state that has no sales tax, like my neighboring state New Hampshire. They don't collect sales tax for in-person sales, and they don't collect sales tax for mail-order sales to customers who also live in New Hampshire. But now they may be asked to collect sales tax for their customers that live in other states - but who has the authority to enforce that? For international sales, there are procedures and systems to enforce duties and tariffs, since every item coming into the US has to be processed through a US customs office. Are the states going to open their own customs offices, which will stop and process all packages entering the state to ensure the sales tax has been paid?

[Mark McM]

Originally Posted by oldpotatoe

Collecting sales tax isn't hammering any small business..you are just collecting it for somebody else...30 minutes at end of month..write 2 checks(state and local)..out in envelope(what I did for 13 years).

But that may now be increased up to 50 fold (for all 50 states). So instead taking 30 minutes to write 2 checks, will they have to take 1500 minutes to write 100 checks?

[notsew]

Originally Posted by ColonelJLloyd

Handle the accounting and tax compliance? POS and accounting software can go a long way. Also, there are third party companies that do this in much the same way as payroll processing companies.

I would expect to see state laws that set floors based on gross sales that would result in many small businesses not being required to collect and remit sales taxes. Or other language that exempts most of the small potatoes businesses.

Yep. The law being challenged had a floor of $100k of sales or 200 transactions in the state, not exactly small potatoes. Of course this will vary by states, and it will certainly cause challenges, but it's not insurmountable - much can be automated. The states do have some work to do to simplify the remittance process.

Aside from the implications to bike parts, this is a really good thing. It somewhat levels the playing field for local retailers and restores lost revenue to your local municipality, which it could almost certainly use.

[rnhood]

Originally Posted by Mark McM

It's not the businesses that are avoiding the tax - it is the customers. People who buy goods that have not had sales tax added still owe that tax to the state they live in. The only question that this decision answers is who has the obligation of collecting that tax for the state.

My question is this: Say there is a business in a state that has no sales tax, like my neighboring state New Hampshire. They don't collect sales tax for in-person sales, and they don't collect sales tax for mail-order sales to customers who also live in New Hampshire. But now they may be asked to collect sales tax for their customers that live in other states - but who has the authority to enforce that? For international sales, there are procedures and systems to enforce duties and tariffs, since every item coming into the US has to be processed through a US customs office. Are the states going to open their own customs offices, which will stop and process all packages entering the state to ensure the sales tax has been paid?

I would think these companies would just have to register with the state that has taxes, and thus be required to collect the taxes. Pretty much the same way states that have taxes do today with in state businesses. I can't see that it will be that difficult. It should be a very automated process and the respective states will probably give the software to said companies once they register. I'm not an expert though, so there may be complications that have to be resolved. But I'm sure they can do it, and will since it probably represents big income, and will continue to get bigger with our fashionable on-line purchasing venue.

[nickl]

Originally Posted by MattTuck

New Hampshire baby! No sales tax here. Live free or Die!

Not exclusive to NH. Delaware, Montana and Oregon do not collect sales tax.

[oldpotatoe]

Originally Posted by Mark McM

But that may now be increased up to 50 fold (for all 50 states). So instead taking 30 minutes to write 2 checks, will they have to take 1500 minutes to write 100 checks?

That’s assuming all/most of it’s sales are online, then sent out of state. I’m commenting that for local small biz, like Veccho’s, it’s not getting ‘hammered’ by this new law.

[nickl]

Originally Posted by Mark McM

But that may now be increased up to 50 fold (for all 50 states). So instead taking 30 minutes to write 2 checks, will they have to take 1500 minutes to write 100 checks?

This could be a nightmare for medium and small business since some states allow municipalities, counties and other jurisdictions to levy separate sales taxes. Computer programs to handle the variations are available but may be costly to maintain especially since these entities constantly change the percentage they charge on purchases.

[batman1425]

Originally Posted by oldpotatoe

That’s assuming all/most of it’s sales are online, then sent out of state. I’m commenting that for local small biz, like Veccho’s, it’s not getting ‘hammered’ by this new law.

I agree, the locally sustainable folks won't see a change, but anyone with even a modest internet based component - (Excel Sports, Arts Cyclery to use LBS examples) will have a more work to do in the data collection and at the end of the month. Especially for states with non-unified sales tax rates. There's more and more of those kinds of places emerging. The internet is a powerful marketing tool and selling and distributing nation wide is easily accessible for even the smallest businesses.

I wonder how this will affect places like Etsy? Folks there sell in such small volume, I wonder if this kind of barrier will make those folks stick to the local craft fair. It might force Etsy to include functionality for sales tax collection or else see a big dropout in users.

Kentucky addressed this in the past by letting you chose to submit receipts for everything you bought out of state or pay an estimated sales tax based on your AGI. They realize that no one keeps those records in practice so they made a table that ball parks about how much the average person spends on non-taxed out of state goods per year relative to income and you pay that as part of your return. Folks that buy a lot online pay a little less than they should, folks that don't pay a little more but the state gets something than nothing. Something they are technically entitled to. I think this is a pretty reasonable way to go about it given the ever increasing state of internet based commerce.

[batman1425]

Originally Posted by nickl

This could be a nightmare for medium and small business since some states allow municipalities, counties and other jurisdictions to levy separate sales taxes. Computer programs to handle the variations are available but may be costly to maintain especially since these entities constantly change the percentage they charge on purchases.

I've lived in 3 different states where that kind of thing was a nightmare.

[bikinchris]

Originally Posted by Mark McM

I understand the arguments about competition and fairness. But it is not clear to me under what legal authority a state has to compel a company completely in a different state to collect the first state's sales tax. If a mail order company refused to collect sales tax for a different state, is that other state going to march across the border and arrest the company owners?

Surely, different states can make agreements with each other to collect sales tax for each other. And since this is about interstate commerce, it falls under federal government authority, so the US Congress likely has the power to legislate this. But absence of these, how can the government of one state force a company to do something?

Actually, No matter where I am with my mobile bike repairs, I am required to collect all city, parish (counties for you) and state taxes and file and send taxes of the site where I did the repair.
This just levels the field IMO.

[Ozz]

Originally Posted by Mark McM

It's not the businesses that are avoiding the tax - it is the customers. People who buy goods that have not had sales tax added still owe that tax to the state they live in. ...

WA has a Sales Tax and Use Tax...essentially, if you buy something in a state without sales tax (Oregon) or online and no sales tax is collected, but then bring it home and use it in WA, you are supposed to pay taxes on it.

Of course, everyone I know is very diligent about this.....

[nickl]

Originally Posted by Ozz

WA has a Sales Tax and Use Tax...essentially, if you buy something in a state without sales tax (Oregon) or online and no sales tax is collected, but then bring it home and use it in WA, you are supposed to pay taxes on it.

Of course, everyone I know is very diligent about this.....

A friend avoided Washington State sales taxes for years by shopping in Oregon almost exclusively, since he lived in a border city. Unfortunately, he was audited resulting in him paying back taxes, fines and penalties. Credit card records provided WA with a paper trail. Painful.