Skip to comments.Supreme Court ignores obvious solution to Internet sales tax debate in Wayfair ruling
Posted on 06/24/2018 12:56:31 PM PDT by Tolerance Sucks Rocks
One question before the Supreme Court this term was a big one: As technology evolves, how do our laws governing commerce evolve with it?
The answer, issued in the ruling held in a 5-4 decision on Thursday, is a bad one for taxpayers.
Many proponents of an online sales tax have argued that we must completely revisit what we know about interstate commerce, and create illusory tax regimes to contemplate a brave new order of online transactions.
In reality, none of this is true. For one, while it has been 26 years since the Supreme Court visited the issue in Quill Corp v. North Dakota, the principles outlined in that decision translate easily to todays retail environment. In that decision, the Supreme Court declared that a business must have a physical presence inside a state in order to be exposed to that states tax authority. This "physical presence" doctrine requires no further clarification when applied to todays online era.
It did, however, prevent states from taxing outside their own geographic boundaries. And for good reason politicians should not be granted the power to tax citizens who cannot hold them accountable for that leaching.
South Dakota, chafing at these restraints, attempted to flout the Constitutions obvious deference to Congress on matters of interstate commerce and crafted a law in 2016 that required all businesses with effectively any business nexus with South Dakota to pay taxes to the state. As the National Taxpayers Union stated in its amicus brief to the court: This obligation apparently attaches regardless of the location or domicile, domestic or foreign, of the seller and even of the purchaser. An Illinois resident may purchase a product in New York for delivery to South Dakota that would trigger this monitoring requirement.
(Excerpt) Read more at washingtonexaminer.com ...
Vendors should pay the federal government say 5% for each sale and the feds distribute back to the states. In a perfect world there should be no tax.
The decision is indeed bad for small business.
On the other hand, internet commerce was killing the sales tax, the alternatives to which
such as income and property taxes, can be a whole lot worse for productive people.
What’s the balance?
As a small business owner that sells directly to consumers, this is a bad and disastrous decision. States already have laws on the books to collect taxes, now the Supreme Court gives them the go-ahead. Most states do not limit to companies with over $100K revenue in state. Now I have to negotiate nearly 10,000 jurisdictions—tax all, tax non-food, tax food, tax meds, tax shipping, tax services—all are sales taxes. A mess. And the cost of filing is on top of that.
"*SOB* our poor, poor overtaxed Mom & Pop Brick & Mortar businesses can't survive with out of state tax free competition. *Boo hoo hoo hoo*"
The solution is NEVER, EVER, EVER lower our local taxes so they can compete, It's ALWAYS impose taxes on someone, somewhere.
Preferably someone who has no presence in our voter pool and can't vote us out.
This used to be called "Taxation without representation", and we have fought one bloody war to end it.
Don't make us do it again.
I hardly ever buy online. I support the local places instead so this ruling doesn’t affect me much.
And I will never send a penny to Bezos/Amazon which he uses to bash Trump and conservatives through the propaganda filled Washington Post.
I have friends who sell on both Ebay and amazon. Bad decision indeed. That means filing taxes to more than obama’s 57 states which is complicated.
No. They should have treated this question with deference to the US Constitution, specifically the Commerce Clause.
While the States might theoretically be short-changed on sales-tax collections due to internet shopping (a) you can't "lose" revenue you never had; (b) the obligation to pay the sales taxes was already in place, and it belonged to the consumer. The Supremes should have sent South Dakota back home and told them if they want their tax revenue, then go enforce the existing, Constitutional law against their own citizens. To do otherwise, clearly places a significant burden on the conduct of interstate commerce by forcing out-of-state merchants to be their toll collectors.
My advice - don’t sell to Colorado whose sales tax system is a nightmare.
There are tax services who probably can help you but you’d probably need to raise your prices.
They are taxed.
It has been obvious for some time that this would be ruled legal.
This was a decision for congress not the court.
South Dakota may pass a law that forces out-of-state businesses to be its tax collectors, but what recourse do they have if you simply don't pay? It would probably cost more to enforce this type of arrangement than they'd ever raise in tax revenue.
As an agent for collecting taxes, my fees for service will be, $5 per sale and 2% of the total value of the sale. That agency fee will be deducted and any remaining amount will be remitted. Any negative amount must be remitted by ACH by the 10th day of the following month or a penalty will assess at 25% of the outstanding amount. Amounts remaining overdue by the 59th day will be forfeited.
What the SCOTUS did was to REFRAIN from INTERFERING with a just role of CONGRESS/STATES, i.e. Taxation.
SCOTUS corrected their error and stepped away, leaving the question up to CONGRESS/STATES to figure out, as it should be. Taxation is at first a political question, not a legal one.
ALL sales within a state can now be treated the same way.
It is the “sale” not the “entity” that creates the act of taxation. Technology will develop a mechanism to satisfy the parties involved.
The physical presence rule was an invention by the court. Talk about an activist court!
But, . . . if the locus of the sale is now the selling corporate entity, then the retail sale did not take place in the buyer state. ( seeeeeeeeee ....??) That’s the next argument to be made. State laws affecting “foreign/alien” corporations will also come under scrutiny.
Catalogue sellers was a battle from the last century against taxation. Now, Online sellers can take their turn. My money is on Online and the Behemouths. They will pay their way to get the rules “adjusted”.
Now, taxation is left up to the states and the people, as it shouldnbe.th e
> “An Illinois resident may purchase a product in New York for delivery to South Dakota that would trigger this monitoring requirement.
So New York adds a sales tax to a purchase of a product in its state, then South Dakota adds a sales tax to the product delivered in its state, Illinois adds a sales tax to the purchaser for purchasing the product.
Is this a plan to save brick and mortar businesses?
Me thinks this decision needs to be revisited pronto.
I don’t think they realize or care just how “not” based on the constitution their decisions are. What’s ok with one court isn’t ok when one or more seat changes... The decisions this time around were a mix of liberal and conservative (topsy turvy) and no one could predict how they would turn out. Interesting but hardly gives one confidence ANY of them know what they’re doing..
This decision is a little like Nancy Pelosi’s Cigar Tax. It is aimed at certain Internet Giants and has the unintended consequence of harming the small businesses it sought to protect.
However, I don’t see congress addressing the real problem of predacious Monopolist Conglomerates anytime in the near future.
When I lived in Wyoming, a free Internet leveled the playing field. Tools, materials, books, etc. which were not available locally were now only a day away. It beats driving to Fort Collins for supplies, in which case Colorado reaps the sales tax, not to mention fuel and time lost. Local Wyoming contractors can compete with big multistate operations at the same level.
South Dakota is similar. The commercial and cultural gains offset the sales tax loss. South Dakotans can also participate as sellers as well as buyers. Lower taxes boost economic output. And like they say, a rising tide lifts all boats.
Another possibly in lieu of a sales tax, would be a delivery tax, where each package delivered by FedEx, UPS, etc would have a dime tax added to it. It essence it would be a flat rate sales tax. Of course the danger is that dime will creep up to a dollar. But at least here, the burden is removed from the seller. And if such a tax were to vary state to state, the delivery companies already have the apparatus in place in all 50 states to handle it.
It's really a complex topic, not well served by my off the cuff remarks.
The glaring weakness is this argument is the contention that the businesses are being taxed. They are not. The end consumer is being taxed by the state in which they reside. So the argument that the party getting taxed has no recourse at the ballot box is false. If I live in Texas, I pay the Texas sales tax which is collected by the business and forwarded to the Texas on my behalf. If I don’t like it I can express my opinion at the ballot box when I vote for my representation in Texas.
The contention that this will be exorbitantly expensive for small business has not yet been shown to be true. Sales can be easily tracked by zip code, the proper tax rate applied and balance due to the state and or city computed and remitted. The challenge is for someone to actually illustrate what the new exorbitant expense will be.