ADDED: One of the cases is Lucia v. SEC:
Indeed, this is a case that Ronald Mann, who is covering it for us, says “may be as important a decision for the administrative state as any case the justices have heard all year.” The Constitution’s appointments clause requires that all “officers” of the United States be appointed by the president, by the “courts of law,” or by the “heads of departments.” At issue in this case is whether administrative law judges (commonly known as ALJs) of the Securities and Exchange Commission – who are not appointed by the SEC, the president or the judicial branch – are “officers” of the United States; if so, the ALJs’ appointments were unconstitutional....AND: Another case is Pereira v. Sessions:
The justices hold that the ALJs ARE "officers of the United States" for purposes of the Appointments Clause.
When a non-citizen is eligible for deportation, he may (in some narrow circumstances) avoid deportation by having his removal cancelled. One requirement for cancellation of removal is that the non-citizen have had a “continuous physical presence” in the United States for specific periods of time. That presence stops, though, when the government serves the non-citizen with a “notice to appear” for removal proceedings. The question in this case was whether the clock stops when the notice to appear does not specify when the proceedings will be held....SCOTUSblog is discussing why the Kennedy concurrence is "a big deal." It has to do with whether or not the decision ignores Chevron (and some of you know what that means).
The court holds that a notice to appear that does not designate the specific time or place of the non-citizen's removal proceedings is not a "notice to appear" for purposes of the statute and therefore does not stop the clock on the "continuous physical presence."
Next, in South Dakota v. Wayfair, the Court does something that makes it easier for states to tax retailers that don't have a "brick and mortar" presence within their borders: "The Internet's prevalence and power have changed the dynamics of the national economy." This meant rejecting an old case called Quill.
Posts
104 comments:
Wow on Quill...
This means collecting sales taxes on Internet sales.
For small mom and pops Ebiz it will be a nightmare.
Sales taxes vary all over the board.
Small websites are not set up to handle this.
Thousands of different jurisdictions...
Potentially a very big deal for online retail, as it puts a great administrative burden of collection and remittance of sales taxes (and tracking, for cases of refunds, etc.) for all states on all small businesses. This is yet another blow to small business and increases Amazon’s advantage in economies of scale.
How soon does this go into effect?
Will it be retroactive?
Argh!!!
Sales taxes vary all over the board.
Yeah, seems like there's an opportunity for someone to develop a middleware that geocodes online customers addresses and assigns the proper sales tax from a database lookup. A regional sales tax dataset would have to be kept updated, so it'd be a perpetual service.
There are some products out there...
Oh, fun fact! Something that can be retroactive on amazon...
Freight by Amazon.
Where amazon stocks a product for a third party.
You have no idea the location of warehouse used and you got nexus.
Going forward, amazon will just force third party sellers to charge sales tax.
Strange who voted for this headache..,,
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.
Someone like Intuit (of Quickbooks and TurboTax fame) would be the ideal choice for developing the software for regional collection and remittance of sales tax for small scale e-tailers.
I think this ruling will result in a VAT to reduce the tax chaos that will result. But SCOTUS is only concerned with enhancing governmental power so mission accomplished.
If I might:
https://ballotpedia.org/Chevron_deference_(doctrine)
Strange who voted for this headache..,,
Leviathan grows and grows.
The notice to appear seems like an easy fix. Just put a date on it. Even if that date won't be lived up to.
Whenever Congress or my state legislature passes a law, or when a court interprets the federal or state constitution or a statute I ask, "Do I have more freedom because of this, or less?"
Well?
> Wow on Quill...
Congress is the place to save us.
So if you get here illegally and stay here long enough - good enough! You getto stay.
Who needs immigration laws? Not us.
I like that the Court overturned Quill (and it’s predecessir from 1967). Ted Cruz submitted an amicus brief asking not to overturn Quill because Congress was working on a fix. What a fucking joke. Quill is from 1992. The majority is right. Under the guise of protecting “interstate commerce” the court discriminated against instste businesses. Fucking morons
That decision in South Dakota v Wayfair will make it less attractive to use the Althouse Amazon portal.
“Congress is the place to save us.” 🤣🤣🤣
Funniest thing I have read in months!
I also agree that Lucia v. SEC is the most impactful ruling of the day.
If all those appointments were un-Constitutional, does that void every decision made by those who were not appointed properly? The answer will likely be, “should, but no way we will open THAT can of worms” IMO.
Also means every single one of them needs to be reappointed. Those are career/lifetime appointments! All the Obama ones (and earlier) can be swept aside for an incredible influx of Trump (conservative) judges, and it will take many years for that bulge to work its way out of the snake!
There is no need for ALJs in the SEC. The SEC can bring civil actions in court. ALJs are just featherbed Jobs.
The PTAB is dead.
"Next, in South Dakota v. Wayfair, the Court does something that makes it easier for states to tax retailers that don't have a "brick and mortar" presence within their borders..."
No, no, no. It doesn't make it easier for States to tax retailers because the sales tax is not levied on retailers. Sales taxes are levied against purchasers at the point of sale. State laws require that sales tax to be collected and remitted by the seller.
Amazon has been collecting sales taxes on items they sell directly for a while, so no impact on purchases through the amazon portal.
I spent my career in direct marketing. At the time Quill was decided it made perfect sense. L. L. Bean was located in Freeport, ME received all its orders there by mail or phone and shipped from one distribution center there in Freeport. Eddie Bauer, Orvis, J. Crew, J. C. Whitney, et al, operated the same way. Each company paid appropriate income, inventory, property - and sales tax on local deliveries - in the jurisdiction in which it was located. In effect, and I think this is what Quill said, all sales were completed in Freeport ( for example) where they were given to a third party for delivery. At the time Quill was logical. Why should the tax collector in Louisiana be able to tax a company on a transaction that takes place in Freeport, ME ?
Today Kennedy wrote "Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States. These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause,"
I agree with him. Quill had become outdated, if not ridiculous. Internet sales are made in the state of the buyer. The item is ordered and paid for right there on the buyer's computer in the state he placed the order from. Whether L. L. Bean is located right next door or 3,000 miles away is irrelevant.
Kennedy should have left out the phrase: "and results in significant revenue losses to the States." That really has no relevance to the nexus issue. Nexus has shifted from the seller to the buyer. That is the important principle. Loss of sales tax is a bi-product and the amount is unimportant and only distracts from the decision that nexus has shifted from the seller to the buyer.
This will be a bit of a pain for the smaller retailers on the web, but I bet that there are plenty of packages available to handle the sales tax issue. On the bright side the web gives those retailers who are willing to work at it the ability to attract buyers from ll over the US, if not the world. Though I am not wild about the amount of retail that goes through Amazon it is clear that a service such as Amazon provides allows retailers to participate in much bigger markets than otherwise. As an example I have bought a number of books through Amazon (using the Althouse portal!) that have come from third party sellers with whom I would never have done business otherwise.
Strange bedfellows who voted for and against rejecting the Quill decision.
What is an administrative judge?
How many are there?
What do they do?
Current ALJ's are unconstitutional! Huge! Strikes a tremendous blow for due process where the ALJs have been adjudicating cases between their employer and the other party.
I have no dog in the immigrant fight, but I think the court got the other two cases right.
@ Ray This will give you an idea of what the ALJ issue was.
@ray:
https://ballotpedia.org/Administrative_judge
Thanks Khesanh 0802!
Funny typo...
Inferior officers
Thanks Leslie!
>The federal government employed nearly 2,000 administrative law judges and more than
>10,000 administrative judges and other non-ALJ adjudicators as of 2017.
Sotomayor: "...I would hold that Commission ALJs are not officers because they lack final decision making authority."
Her dissent makes more sense than the decision given. It would also nip this branch of littigation in the bud.
If you don't have access to the gears, you are just a figure on the clock.
A sales tax service will be essential for online retailers. In addition to the thousands of taxing districts with their own rates, the items that are or are not subject to sales tax vary widely by state. For example, in Colorado, uncooked food isn't taxed but it is in Alabama. Knowing those rules will be as important as knowing the tax rates. Then there are the reporting requirements. Retailers are required to submit reports and the collected taxes regularly (probably quarterly) to each of the districts. This will be an administrative nightmare to implement in the retail system. Even a specialized service provider will have trouble keeping track of all this including the frequent changes in tax rates. Companies will sell these services for a price, meaning the cost of every online sales transaction will increase. Brick and mortar retailers had a valid gripe about having to compete against online companies that didn't charge sales tax. Now, the online retailers will have a valid gripe about not only having to charge the sales taxes but also pay the cost of the service company. Big online retailers like Amazon have the resources to easily comply with these things (and the last things I've bought from them included sales tax) but it'll be more expensive for the smaller retailers. This will further drive them to come under the umbrella of the big companies, reducing competition.
@ Inga At first glance the "strange bedfellows" in the SD case was a result of how the dissenting Justices felt about precedent. The ALJ decision was 7-2 with only big government fans Ginsburg and Sotomayer in dissent. I am not about to read the reason for their dissent. Maybe Ann will.
Has the USSC met a tax it didn’t like? Obamacare......
Something is better than nothing. Flat tax it. Then let the robots handle that.
We are long since past the time when Amazon should have any protection from taxation at all whatsoever.
Overturning Quill is a huge burden to online retail that will likely hurt a lot of smaller internet retailers, and probably mail-order too. I did sales tax for a number of years and there is no consistency from jurisdiction to jurisdiction on what is taxable, the rate, and the date and frequency of having to remit the tax.
Just in New York, which is my specialty, collecting sales tax requires that a business register with the state to be able to collect. Returns are due quarterly initially, though they may change to annually or monthly depending on tax liability, and a business has to report all sales going to NY, whether taxable or not, and break out the sales amounts by the 78 or so local jurisdictions, including the various schedules that may apply. Taxing by ZIP code doesn't work as some ZIP codes include more than one taxing jurisdiction and what is taxable and at what rate isn't consistent across all jurisdictions. That $129 pair of Nikes is taxable everywhere in New York at the full state and local rate, but if they go on sale at $109, they're suddenly tax-exempt in NYC and several counties, while the rate drops by 4% everywhere else.
Likely any online retailer is going to need to purchase a service from somebody to handle the massive sales tax compliance issues and it's likely not worth it for anybody just looking to hawk a hobby product.
Cry me a river. Look at what has happened to retail. It wouldn’t be impossible to set up a central database and charge a small amount per ‘dip’ to calculate taxes based on address. People already do address verification.
"This means collecting sales taxes on Internet sales."
-- Is this a win for Amazon? Sure, it'll suck for them, but they can actually absorb it. It probably means I won't be able to order from my old favorite local gaming store now that I live in VA.
And NYC doesn’t charge sales tax on clothing because of the Garment Industry. I was shocked when I made my first purchase there. I’ve always paid sales tax. And one wonders why NYC is always short of cash....
And all 50 states sighed in relief. Show me the money!
Amazon, Alphabet, etc, should be broken up, but they have hijacked the power elite, so it’s too late, baby.
Big Mike said...
That decision in South Dakota v Wayfair will make it less attractive to use the Althouse Amazon portal.
I'd be interested in Professor Althouse's views on taxation of goods bought from Amazon affiliates through her portal.
Amazon has been paying sales tax in all 50 states for a while, so no impact on them.
Third party sellers, more of a headache... But easy fix by Amazon.
Smaller e-commerce, there are packages out there:
www.tipjar.com
www.avalara.com
But when you start saying no sales tax on clothing, what a nightmare to administer. I have a gut feeling, most of the e-commerce sales tax packages don't do a great job on this.
Sales tax issue is interesting because of the complexity and cost. How about if the sales were conducted outside of the US say in Canada or Mexico or an offshore jurisdiction? Set up a sales operation outside the US with the server conducting the sale outside the US and the card services company outside the US. Goods are warehoused in the US and sent out as directed by the seller. Could this work?
Illinois doesn’t charge sales tax on magazines but other states do.
Local retail isn't threatened by mom and pop online retailers, it's mainly threatened by Amazon and the other giant e-tailers who have already been collecting sales tax for several years for some states. Believe me, Amazon loves today's ruling, as does every other big commercial e-tailer, regardless of what they may say publicly.
I half wonder if Congress or the states will enlist the payment processors as the designated collectors for sales tax. 1099 reporting was already thrown onto them some years ago by Congress, and in theory they are best positioned to develop a product code database to apply the correct sales tax on transactions, whether online or local (including the ultimate unicorn goal, collecting the use tax on out-of-jurisdiction purchases).
It should be a flat 5%. The state county municipality and town each get 1.25%.
Amazon already charges sales tax in Ohio so I don't care. That's where all my non-grocery spending goes.
John and Ken (KFI in LA) years ago said brick and mortar stores deserve to die because of bad service, after one too many live retail experiences.
Amazon already charges sales tax. They've been doing it for at least a year.
I think this actually helps AMZN because they already have the infrastructure, and, notably, can manage a complex logistical nightmare that is the umpteen million taxing jurisdictions int the country. Even if they aren't the portal for sales, I expect that this would be a product they would offer to any web retailer (along with a discount for AWS). PLUS, they'd get all that juicy data on what was bought, for how much, and where it was shipped to. They should do it for free for that data, but they'll charge for it. Google will probably do it to. The complexity argument will be solved. It's simple database work.
Hypothetical time, what happens if I order my amazon portal order from an airport in Chicago (high sales tax), to an address in Delaware (no sales tax), if I live in NYC (high sales tax)?
What if a business set's up a "way station". AMZN ships my product to my personal locker at a company in Delware (no sales tax), who then, on a timely basis, empties my locker and sends it to my real address. It would only work for big ticket items, of course, but 10% savings is 10%.
NYC and Chicago are going to want their sales taxes.... There are going to be plenty of new cases for SCOTUS to chew on.
Set up a sales operation outside the US with the server conducting the sale outside the US and the card services company outside the US. Goods are warehoused in the US and sent out as directed by the seller. Could this work?
Ahh, but then you have customs issues. We inspect everything at the border. We don't inspect everything driving from Delaware to NJ.
A national flat sales tax would be good. but keep it low. Boulder sales tax is almost 10%. Progressives live and die to tax us to death. What we get in return? More bureaucratic flunkies on the pay roll.
Strange that the market sees this as bad news for the AMZN's of the world. If anybody could build a package to track all the necessary taxes it would be AMZN. And again, they'd get that juicy data on what EVERYBODY was purchasing.
This is an opportunity.
Full disclaimer, I'm an AMZN stockholder so this may be cognitive dissonance on my part.
How long till some clueless legislator tries to levy a higher than local sales tax on internet sales to "protect our local businesses".
"Why should our money go to Joe's widgets in Delaware when we can keep Bob's widgets here in Capital City, in business!"
Having built numerous e-commerce systems back in the day, this will put a ton of small businesses out of business. Not because they couldn't pay a service, but because they will need to rebuild their website and they won't be able to afford that. How you pay each of these tax agencies is a whole different issue from calculating the tax. Do you have to write hundreds of checks each month? It's going to be insane. Glad I'm out of that business now.
Interesting. There certainly seems to be a lot of hatred for Amazon around here and a lot of people who seem OK with paying a bunch of heretofore uncollected state taxes on all the stuff they buy online.
A spot of good news this morning.
I spoke with a friend who owns a book store. I know he makes almost nothing from his foot traffic and makes a lot of money from online sales. Most sales these days aren't even books. He and his wife put together biblical study guides ever month. They make a lot of money selling these online.
Anyway, he said this decision won't cause any issues with his sales because they already use a service called Etsy that calculates the tax for them.
South Carolina has a two day sales tax holiday in August for "back to school items". The list of such items is wholly arbitrary, subject to dispute at the register and adjustable yearly by the Legislature. Expecting, say, a fountain pen enthusiast site run in North Dakota to know not to charge sales tax on pens for those two days is crazy.
Ohio also has a “Voluntary Use Tax” form for taxpayers use to pay the Ohio Sales tax that was not collected on out of state sales. You just figure out how much you spent on the internet where Ohio sales tax was not collected and compute the tax owed. Simple. So it does not need to be collected and remitted from out of state - the honest residents of Ohio already take care of it...... sure.
Perhaps I don't understand this correctly but judging from the sales tax decision the court has forced businesses that are in no other way governed by a given state and that state's subdivisions to be governed by that state and it's subdivision.
Last time I checked tax rates on newspapers in Austin, TX, the rule was that newspapers were tax-free except when they exceeded a certain price if bought over a weekly period. Some box stores then charged some $5 for the NYT and the WSJ and didn't assess the tax they should have.
What a mess!
Bottom line: We pay more taxes. Government grows.
This decision really makes me regret some of my votes for Supreme Court Justice...
The tax is paid by the buyer. The companies only remit the proceeds. Big pain in the ass but doable. Common sense would have told you this had to happen. Quill had turned into an anachronism, it was essentially indefensible based on its internal logic. I don't like the impact much, but I agree with the decision. I am sure a little ingenuity will suffice for the small guys.
Higher taxes is a whole different issue. Soak the guys from out of state! There will be repercussions.
In fiscal 2017 Ohio reported just over $10 million in use tax revenue. To make the math easy assume 5% sales tax. So about $200 million in out of state sales in a year were claimed.........
Inga wrote:
"Strange bedfellows who voted for and against rejecting the Quill decision."
I don't think it very odd- e-tailers other than Amazon were urging the upholding of Quill- e-tailers are often in found in liberal run states like Washington and California. I think it likely that they all donate a lot of funds to friendly politicians from those locations in which their headquarters reside. A priori I would have expected the liberal bloc to be on the dissent at a minimum. The conservative bloc would have been harder to predict for me- they have no natural political allies in the e-tailers themselves, nor in the states that were suing to bring the case. I think perhaps the driving of the conservative bloc came from the position the present Administration made for overturning the case, but I think in the case of Kennedy and Thomas- the only two justices to rule in both cases- it was simply the changing of the nexus of sale that mattered.
Chief Justice Roberts addressed Amazon in his dissent in South Dakota v Wayfair.
“Some companies, including the online behemoth Amazon,” he wrote, “now voluntarily collect and remit sales tax in every state that assesses one — even those in which they have no physical presence.”
However as we know, Amazon does not collect taxes for Amazon Marketplace sellers.
But the true effect is unimaginable for the little merchants, starting with E-Bay sellers. When you add 46 states, counties and cities within states and local taxing authorities, we have differing rules from several hundred sources. A computer program such as Amazon's will be needed to bill taxes on every order processed.
This likely means that Amazon, who Trump hates, will be the biggest beneficiary of the new law. Selling through the Amazon's Marketplace will be the new way to go on the internet. A quick program fix to permit these smaller merchants to properly bill will be the only way to go. The commission paid to Amazon will go straight into selling prices.
L. L. Bean -my alma mater- opened a store in MN. That means I now pay sales tax. Don't like it, but will not keep me from ordering stuff I need.
On the merits, I think this morning's decision was the right one- the point of sale is the home computer these days. The part I dislike is Kennedy writing that the issue of revenue loss is important in the decision- that is inappropriate to be a part of this decision- he could have stayed on "change of nexus" alone and been on solid ground, but mucks the issue with the part about revenue.
It will interesting to watch what happens when the states try to apply this retroactively, which they are sure to do. I also have nothing but contempt for Amazon for which this decision is a direct competitive advantage- they used Quill to their advantage over brick and mortar, and are now using its overturning as an advantage against their e-tailing competitors.
Is the method of tax calculation based on from where the product was ordered? Or is it to where it is delivered?
Seems to me it should be the latter.
Most people are happy to pay a use tax but not happy to compute it.
No doubt the main credit card companies (VISA, AMEX, MasterCard) have software ready to do this. Probably started getting ready when this headed to the Supreme Court. If they can find you to send your package, they can find your tax.
Is the method of tax calculation based on from where the product was ordered? Or is it to where it is delivered?
Seems to me it should be the latter.
It's an interesting question. I keep a P.O. Box and use that as the billing address on my credit cards. My actual residence is in a diferent zipcode and my vacation house is in a completely different county and city. I'm not aware of any tax differences from the PO box and primary residence, but there certainly are some between the PO Box and the vacation house not to mention stuff I have had sent to various random hotels where I might be staying on business trips.
The larger issue is not figuring out how much tax needs to be collected on an out of state purchase but in actually remitting that tax to the taxing authorities. A small internet based business (maybe working out of the house) will not only have to collect but arrange payment to taxing authorities in each state. So - you have a small business and now you have to (probably) file quarterly statements in each state that you had a sale. I am sure that each state’s filing requirements, documentation and payment methods will be different. That is where most of the work for a small internet business will be added. I envision lots of hours associated with compliance.....
Shipping Address.
Credit Card Processors (Visa, Amex, Mastercard) have nothing to do with this.
Most e-commerce websites now days are where you basically rent the software monthly, they are not built from scratch,and do a little customization. This way you get upgrades, somebody else takes care of the security, and hosting! Lots of sites just use a plug in for wordpress (blogging software).
For 3rd party sellers on Amazon, sales tax collection is a mixed bag. It was up to the seller if they wanted too...
Sales tax collection is based on ship to address, and it used to be based on the concept of Nexus (if you had a presence in a state). That changed today...
Tax case interesting because EVERY opinion, including dissent, states that two prior Supreme Court decisions were wrong. The split turns on stare decisis and whether the correction after five decades should come from Congress. The dissent says it should. The majority points out that the mistake was not in the interpretation of a Congressional statute but the Constitution, so for the Court to correct.
The solution is an Internet VAT tax. Say %25 until the debt goes below $10 trillion, and then %15 until it goes below 5 trillion, and .1% if it goes below 1 trillion.
All taxes goes straight to debt relief. The government makes money because the interest payments go down (over 2.6 trillion a year right now).
People will still choose the Internet, because brick and mortar stores are history. No one goes to a local store, when you can have it delivered.
Khesanh 0802 said...I am not about to read the reason for their dissent.
The dissent makes more sense than the ruling.
If you don't make the final decision, you aren't an officer.
It would be like privates being "officers" just because they recommend to the "Lt" that they should shoot their weapons during the attack. The "Lt" says, "yes, you are right. Thank you officers."
It's a crock, and a lifetime welfare job.
From news report:
Amazon, Wayfair, eBay, Etsy, and Overstock.com all fell in morning trading, with Wayfair at one point down by 8%. Big-box retailers like Walmart, Target, and Costco, on the other hand, recorded modest gains.
In the matter of the effect this will have on smaller retailers the Court noted that the South Dakota law offered relief:
"The [South Dakota] Act applies only to sellers that, on an annual basis, deliver more than $100,000 of goods or services into the State or engage in 200 or more separate transactions for the delivery of goods or services into the State."
Then Kennedy set up 15 yards behind the line and punted the obvious problem downfield:
"And, if some small businesses with only de minimis contacts seek relief from collection systems thought to be a burden, those entities may still do so under other theories. These issues are not before the Court in the instant case; but their potential to arise in some later case cannot justify retaining this artificial, anachronistic rule that deprives States of vast revenues from major businesses."
South Dakota v. Wayfair, the Court does something that makes it easier for states to tax retailers that don't have a "brick and mortar" presence within their borders:
This is a NIGHTMARE for mid and small businesses and will likely put many of them out of business or unable to do internet commerce.
Not only do the need to have the rates for millions of locations the tracking, record keeping and remittances by filing tax returns is going to be impossible. Each county or city or locality will be different within the States, they need to keep track of what sales tax goes to which location.
Depending on the amount of sales the business will need to file a Tax Return for each State on a monthly, quarterly, semi annual or annual basis.
Even IF there were software for this complex problem, it will still require hours upon hours of human labor to keep up with the paperwork burden. Many companies will just throw their hands up and say forget it.
Unless there is some sort of a threshold for gross sales before this onerous law kicks in, there will be a huge and dramatic drop off in economic activity in the US and it WILL affect the economy of the country as a whole.
In addition. Why did the Supreme Court even take on or rule on this case. This is Interstate Commerce which belongs in the Legislature NOT the Court.
Amazon is a facilitation device for many mid or small businesses. The orders are placed through Amazon, but the entity who is doing the sales, sending the merchandise is generally an independent business. Not Amazon itself.
For example. We buy check valves, pressure gauges, O rings, well seals, shrink kits and other specialty items through Amazon. The items come from suppliers in Iowa, Georgia, Montana and other places. All individual businesses. These items are not available locally at all... or within 150 miles from our location.
Now. We don't mind paying sales tax, since the cost of the items are generally 50% less. Wholesale, not retail. Even with shipping the costs is less than buying locally. However, the availability of these things will be less or not at all with this change. Therefore we will need to increase our costs to our clients by at least 50% or more.
Way to slow down the economy. Thanks a lot Supreme Court Dummies.
No, no, no. It doesn't make it easier for States to tax retailers because the sales tax is not levied on retailers. Sales taxes are levied against purchasers at the point of sale. State laws require that sales tax to be collected and remitted by the seller.
I like the Point of Sale issue.
So....if I go to Oregon, a mere 90 miles away from my house, use the internet there at a library or other outlet to make a purchase, because Oregon has no sales tax, then by the POS rule I owe no sales tax and the business/merchant doesn't have to collect anything? After all the POINT OF SALE is in Oregon, where my ass happens to be at that particular moment.
If I buy an item in Oregon at a bricks and mortar store, they don't collect sales tax. If, after I purchase the item and I decide to have it shipped to another location....like my house in California or my family in Tennessee as a gift, I don't owe sales tax either.
OR....is it the concept that because I live in X state (California) that all of my economic activity, no matter where I purchase an item from, belongs to the State of California? Last time I looked we had abandoned the Feudal system of Serfdom long ago.
Quick...everyone go buy things in Oregon!!
I just bought a back flow valve off amazon and the price was really good. Quotes I got with install were around $900, valve was $225, $80 to install, and $60 test / cert.
So...
Is it just me, or could there be a huge business opportunity in reshipping through a state with no sales tax?
It wouldn't make sense for small purchases, of course, but not all purchases are small. For lots of purchases, the cost of shipping an item twice, even with the additional delivery time, could be far less than the sales tax.
I'm imagining RSI (ReShippers Inc) sets up a small warehouse near a UPS hub in a state with no sales tax.
You, the consumer, rent a virtual address from RSI.
When you go online to shop, you use your address at RSI as the shipping address.
When RSI receives the package, they immediately turn it around and ship it to your address.
You receive your package two days later than you otherwise would, paying a second shipping-and-handling fee but no sales tax.
The burden on small businesses may be crushing. As others have mentioned, it's not collecting the sales tax that is the issue; it's keeping up with a zillion tax rules and a zillion tax filing/reporting requirements.
I've worked on payroll software, so have dealt with the same problem on the income tax side of things. If XYZ Township in PA implements a new school tax, we have to know about it. And maybe it's a temporary tax, and we have to know when to stop withholding it.
Heck, even worse, every time a house is built in the country, we have to know about it. Someone hires the person who buys that house, and we have to accurately know every single tax that does/doesn't apply to that address. Houses on the odd numbered side of the (new) street may be in the boundaries of the village and have to pay certain taxes, while the even numbered side of the street is just outside the dividing line, so they don't.
Then states, counties, cities, townships, school districts, public transit districts etc not only change their rates, but their filing requirements, their penalties for missing a deadline, oh, and didn't you know this form you used is outdated because we updated it last month?
It is not nearly as easy a problem to solve as it appears on the surface. We have teams of people and update our software every week or two to keep up. No way a small online business can keep up with that!
Clint asked; could there be a huge business opportunity in reshipping through a state with no sales tax?
This could be a good work around for those businesses/sellers to avoid the nightmare of collecting and remitting taxes to many different locations.
In another article: The cases the court overturned said that if a business was shipping a customer’s purchase to a state where the business didn’t have a physical presence such as a warehouse or office, the business didn’t have to collect the state’s sales tax. Now they do.
Is it the shipping address, where the purchase is going that determines the triggering of collecting sales tax. OR is it the point of sale location where the buyer is located.
Some sample scenarios.
1. I am buying an item through the internet while at my sister in law's house in Oregon, using her internet. Do I have to pay California sales tax.
2. I am buying the item while in Oregon and shipping it to Reno Nevada to a friends house. Taxable? Where does the tax go to when the seller files their tax return(s)?
3. I am buying the item while sitting in California but having it shipped to my SIL in Oregon where there is no sales tax. Shipping TO Oregon.
4. I am buying the item on line while in Reno and shipping to Oregon. Does Nevada get the sales tax or California or no one because Oregon doesn't have sales tax.
The question is does all my economic activity belong to the State of California no matter where I am when I am buying something?
Frankly....I don't give a crap about PAYING the sales tax as a consumer. That is not such a big deal
What I am concerned about is the availability of the items that I want to buy are STILL going to be available for me to buy or is the seller going to go out of business. Or is the seller going to just stop selling to various States.
What a can of worms.
"What a can of worms."
Yes, but it will be in each state's interest to make collecting and remitting the tax as doable as possible if they want the money.
Harumph. Let me know when you damn Yankees figure it out. Meanwhile, I presume my feds in Ottawa and the very much provincials in ---- who charge me HST and Gas Tax and Sin Tax and Surtax on Income and... (drinks shot of overtaxed RYE) well, this will just give them more ideas.
A great post and comments. It led to good conversation during my longish carpool commute home - sales tax v income tax?
On Amazon, when you buy an item, Sales Tax is based to on the ship to location.
So an easy way if you live in CA, say Yreka, is get a mailboxes etc. in Oregon to ship to in Medford, OR. Solves the sales tax issue, which would add an extra 10% to the order size.
Everybody is going to comply with this. It's just a matter of making it work. It may force congress to get going. Worst case for an e-commerce provider is you run a quarterly report for 50 states, and send them the report and payment. A headache, but doable. And there are solutions out there that will plug into your e-commerce site, to make it easy. Costs seem to be from $7 to $20 per month. I am still investigating costs. I assume most states are going to have a cut off, of not requiring reports or something if below X dollars in sales. But, details are to be worked out.
@DBQ I suspect that the nexus will be applied to wherever the item is shipped as it is today when a company may have a retail store or warehouse (nexus) in the place to which you are shipping. Where you happen to be ordering from makes no difference (which the company probably doesn't know anyway given the way the internet works). It really isn't that complicated to determine, the complication is in the various rates and making the tax payments.
It’s Cali. All your money belongs to them.
I should not have said I suspect. I am sure that the tax will be applied at the place of receipt of goods. No matter where you are when you buy, if the item is shipped to OR there will be no sales tax .....until OR decides to get in on the act.
Everybody is going to comply with this. It's just a matter of making it work. It may force congress to get going. Worst case for an e-commerce provider is you run a quarterly report for 50 states, and send them the report and payment. A headache, but doable. And there are solutions out there that will plug into your e-commerce site, to make it easy. Costs seem to be from $7 to $20 per month.
So.. Going back to my South Carolina two day "back-to-school" sales tax holiday example:
At the very least an e-retailer is going to have to classify every item (of perhaps tens of thousands) on the site into some yet-to-be-created standard classification so that their $7 to $20 monthly service can figure that during those two days, three items on an order aren't taxable though the rest are...
BTW: "Musical instruments are exempt as school supplies if used in the classroom or at home with respect to school assignments."
AND:
"The following items are not exempt:
Any item (whether sold or leased) used in a trade or business
Backpacks for hiking and camping (bookbags for school are exempt)"
Blogger Yancey Ward said...
On the merits, I think this morning's decision was the right one- the point of sale is the home computer these days.
Commercial law has standard provisions that determine point of sale. FOB (Free on Board) terms indicate which party bears responsibility of paying freight charges and at what point ownership or title of the goods passes from the seller/shipper to the receiver/buyer. Essentially, the FOB terms signal the point at which liability and risk of a shipment is passed from the shipper/seller to the receiver/buyer. The four most common FOB terms are: 1) F.O.B. Origin, Freight Collect, 2) F.O.B. Origin, Freight Prepaid, 3) F.O.B. Destination, Freight Collect, and 4) F.O.B. Destination, Freight Prepaid.
But current sales tax law remains locked into Quill rules until amended, with provisions for voluntarily billing and collecting taxes provided the merchant is registered with states where sales tax is collected by the seller. So what really matters to merchants (going forward) is which state tax is being collected? Mine or yours?
Remember also, when buyers purchase items for resale, no sales tax can be collected.
D 2 said...
Harumph. Let me know when you damn Yankees figure it out. Meanwhile, I presume my feds in Ottawa and the very much provincials in ---- who charge me HST and Gas Tax and Sin Tax and Surtax on Income and...
Canadian Taxes like HST (Harmonized Sales Tax), GST (General and Federal Sales Tax) and PST (Regional Sales Tax) is exactly how you make complex that which should be easy for Canadian bureaucrats.
What I have noticed is Canada Tariffs from the US nobody understands. They are inconsistently applied. Sometimes my customers get hit with them, sometimes not.
What some customers do is they ship to a US address, and then pick up.
>Canadian Taxes like HST (Harmonized Sales Tax), GST (General and Federal Sales Tax) and
>PST (Regional Sales Tax) is exactly how you make complex that which should be easy for
>Canadian bureaucrats.
I listened to local radio talk show and it became obvious that many people know little about sales tax rules and many people get sales tax mixed up with tariffs.
But the talk show host said that many people who don't pay use tax to the state when they are not charged sales tax because sellers just do not know the law.
However, everyone seemingly understands that your state of residence is entitled to be paid but nobody pays because states refuse to audit sales transactions.
In this day and age of computers, state tax departments could collect huge penalties simply by requiring orders filled to be provided electronically by merchants as they occur. Merchants, of course, should be paid for their information.
Governments the will send bills once a month imposing big penalties on transactions not paid timely. Three strikes and your out with the sending of an "It's felony time!" notifications.
To review: My new internet sales company will sign up to sell through the Amazon Marketplace in order to obtain accurate billing to include sales tax. I will pass on any commissions and billing charges from Amazon, adding these charges to each customer invoice processed. Now I can sell anywhere Amazon can sell - and I will incur no charges not covered on the Customer invoice, thus maintaining desired margins -unless I want to trade margins for volume by selling via Amazon Prime.
I sell more, the state collects more tax revenue and small internet companies will make more millionaires. Internet customers will bear the burden. This can be the next great internet business leap forward - just as renting rooms took off with AirBnB. Everyone has an extra bedroom!
One of the benefits of living in sales tax free New Hampshire is that I didn’t feel like a sucker if I paid a state use tax or a criminal if I didn’t. So I get to see our mall parking lots filled with Massachusetts cars (presumably driven largely by hypocritical liberals) avoiding paying either sales or use taxes.
As for the implementation, it’s pretty obvious the credit card companies, AmazonPay etc. will offer a tax withholding and remission service. Might take a bit to spin up.
The focus of Althouse blog attention has come and gone, so maybe my comments will not be noticed. Meanwhile, I have read the Wayfair opinion. I recognize that tax issues are not the Professor's field of expertise so this may be helpful.
The headlines are all about the Quill decision being overruled, which is right. However, the concept of state tax nexus has not been overruled. The Complete Auto case is still controlling, which required the following for a state to impose a tax collection responsibility:
(1) an activity connected to the state,
(2) fairly apportioned based on intrastate commerce,
(3) nondiscriminatory, and
(4) related to state services provided.
These criteria are only valid if Congress has not imposed conflicting regulations.
Also it is worth noting that the Court in Wayfair said that the North Dakota tax was constitutional because it had the following features:
· A safe harbor of $100,000 or 200 SD sales;
· Prospective application;
· ND follows the Streamlined sales tax project uniform rules and definitions, and
· Provides access to free software for sales tax administration, and
· Provides immunity from audit liability for those using the state certified software.
The question is whether states with less than that full slate of features still pass the Wayfair test. Many states will not pass this test under current law, but may decide to conform to the Wayfair criteria over time.
Not every remote seller meets the above criteria, and in particular only 23 states are members of the Streamlined Sales and Use Tax Agreement.
So while it is clear that the Quill decision has been overruled, the rest of the decision seems to impose limits on state sales tax requirements that will be helpful to businesses selling on the internet.
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