Sales Tax on Internet goods

randytsuch · « **on:** 21 Jun 2018, 06:10 pm »

Wasn't sure what circle to put this on, picked here.

Just read that there is a new supreme court ruling that allows states to collect sales tax, even if the company does not have a physical presence in that state.
Up until now, states could only collect sales taxes if the company had a store, outlet or something in that state.

Lots of companies have something in Cal, so I have had to pay sales taxes anyway on lots of stuff, I would imagine people from smaller states will be impacted more.

I also know I used to weigh tax from a B&M store versus shipping costs from an internet co. If tax is on everything, B&M stores are likely to benefit, which isn't a bad thing in my book.

EDIT added usa today article about the ruling
https://www.usatoday.com/story/news/politics/2018/06/21/supreme-court-allows-sales-taxes-online-purchases/699556002/

Randy

Phil A · « **Reply #1 on:** 21 Jun 2018, 06:17 pm »

I haven't heard about it. The two cases that are famous are National Bellas Hess (1967 - https://en.wikipedia.org/wiki/National_Bellas_Hess_v._Illinois) and Quill vs. ND (1992). In Quill, the State attempted to assert that catalogs mailed in the State ended up in garbage dumps and therefore they were using in-state services. That got shot down. Some places like Amazon have elected to just collect everywhere. It is an administrative nightmare. Way back when I was involved in State and Local Taxes (for over 25 years - started when I was six years old of course

), there were over 7,000 taxing jurisdictions with over 30,000 tax rates. Zip codes do not equate to taxing jurisdictions as there are places that use a zip code for a different locality.

Wind Chaser · « **Reply #2 on:** 21 Jun 2018, 06:22 pm »

Here in Canada, everyone (except Albertans residing in Alberta) pay sales tax. The only possible exception to the rule is if you buy something from a business in another Province and have it shipped to you.

Specifically here in BC, when a person buys a used car from someone (not a business) they will be charged 7% sales tax when they go to license and register it.

I know that doesn’t answer your question, but this is an international website...

Phil A · « **Reply #3 on:** 21 Jun 2018, 06:25 pm »

I should add the technically whether or not one gets charged sales tax, they are liable for the use tax on out-of-state purchases. Some states have lines on their personal income tax forms for one to add the amount in (e.g. NJ line 23 - https://www.pdffiller.com/jsfiller-desk5/?projectId=197064129&expId=3559&expBranch=1#ebc872ad681d411a952c339e6347226b). They do get revenue from people reporting things but I doubt the majority use it.

Elizabeth · « **Reply #4 on:** 21 Jun 2018, 06:49 pm »

States like mine, which have a state sales tax, do want every penny of sales tax due for purchases made out of state.
Amazon adds the tax to the charge for it's own sales, marketers using the Amazon site do not.
Anyone living in my state pays that tax due on their income tax forms at the end of year.
The information seems to be based on 'trust' of the taxpayer to be honest and pay.
That may change to 'the state knows every penny you spent' any day now. Along with some (draconian?) penalties...
I would guess my state loses out on a billion dollars a year in taxes due to under and non reporting of uncollected sales taxes.

randytsuch · « **Reply #5 on:** 21 Jun 2018, 07:09 pm »

This ruling was announced today, so it supersedes any previous laws/rulings on sales taxes and states and internet sales.

Ruling allows states to collect the taxes, and I think it makes the companies responsible for collecting them. Must be based on shipping address.

I'm sure all of the states will be figuring out how to collect these taxes, and all of the larger internet places will have to start adding sales taxes based on your location.

BTW, sales taxes for me is 9.5%

Randy

Phil A · « **Reply #6 on:** 21 Jun 2018, 07:28 pm »

It's going to be tough for States if companies ship from outside the US (e.g. set up subsidiaries). NAFTA is one issue. It's probably going to just result in small businesses raising prices a drop to account for any potential sales tax and penalty and waiting for States to go bill them vs. the administrative effort and cost to collect for all those jurisdictions.

Phil A · « **Reply #7 on:** 21 Jun 2018, 11:03 pm »

btw - here's a GAO study from not that long ago - https://www.gao.gov/assets/690/688437.pdf

The big problem besides the cost of software and time of dealing with integrating an accounting system is the volume of sales tax returns. Once one files a return, the taxing jurisdiction will expect it every month, even if it is zero. Hundreds of returns per month (between States and Localities) is going to cause chaos for some businesses. Many of the monthly returns are due on the 20th of the following month (there used to be one or two on the 15th - have not followed it). It gets to be a chore getting the information to put into a return when one has a business to run without dedicated tax staff. Here is some info on administrative issues - https://cost.org/globalassets/cost/state-tax-resources-pdf-pages/cost-studies-articles-reports/the-best-and-worst-of-sales-tax-administration-2018-final.pdf

FullRangeMan · « **Reply #8 on:** 21 Jun 2018, 11:56 pm »

I dont know how much you are paying now in sales taxes but the charging of exorbitant taxes is very common when you live under a totalitarian government.

My Communist country Customs Taxes are the highest in the world,
as I already said many times here its 100%

100% over the value of product, freight and insurance
60% of federal taxes and 40% of state taxes

The Customs Officers which are Federal Police are specially stringent with packages coming from US, so most of the people buy in China, US shops never will sell alot to my country.
Below is a table with the Customs taxes of some countries:
French VAT: 20%
German VAT: 19.0%
UK VAT: 20.0%
Netherlands VAT: 21.0%
Italian VAT: 21%
Brazilian Customs Tax: 60% (plus eventually costs of transport and insurance).
Mexico VAT: 16%
Canada VAT: 5%
Thailand VAT: 7%
Switzerland VAT: 7,6%
Australia VAT: 10%
China VAT: 17%
Russia VAT: 18%
Spain VAT: 21%
Finland VAT: 23%
Sweden VAT: 25%
Danemark VAT: 25%
Norway VAT: 25%
Paraguay VAT: 10%
Peru VAT: 18%
Chile VAT: 19%
Argentina VAT: 21%
Uruguay VAT: 22%
Venezuela VAT: 12%
Ecuador VAT: 12%
Bolivia VAT: 13%
Colombia VAT: 16%
India VAT: 12,5%

| France VAT: 20% | Germany VAT: 19.0% | UK VAT: 20.0% | Netherlands VAT: 21.0%

OzarkTom · « **Reply #9 on:** 22 Jun 2018, 12:05 am »

No taxes on internet goods if bought out of state, but that may change soon. Amazon now charging about 4% sales tax to Missouri residents, it depends on state to state. Some of the bigger internet companies are now charging sales tax. Ebay is no tax unless you buy it in state, ebay keeps warning sellers that that may someday end.

It will be a paper nightmare to keep up with all 50 states, but the states should get together and charge all the some rate.

ArthurDent · « **Reply #10 on:** 22 Jun 2018, 12:33 am »

Interesting timing for this thread. I just got bit last week, and did a little checking. http://money.cnn.com/2017/03/29/technology/amazon-sales-tax/index.html Apparently Amazon started increased collections last year, though none of the resellers I've dealt with had been on their list. Then after placing an order, mostly with 3rd party sellers I questioned some of the amounts on the receipts I received. I went back and looked at my order confirmation, and sure enough it showed sales tax, which I'm pretty sure did not show on the 'place order' screen.

So seems now if you just browse Amazon, listings only show price & shipping. However, if you sign-in to your account those same items show price, shipping, & estimated sales tax. At least here in WA state, on all the CDs & DVDs I've checked so far regardless of source. At least in part it's not just if the seller has a B&M in your state, but if Amazon has a distribution center in your state, or so it seems. And as Phil notes I'm relatively sure regardless of location it's our 'duty' as good citizens to pay sales tax on out-of-state purchases, as least as the laws are written. In WA it's called "Use Tax". Since so far we don't have a state income tax we are expected to notify the Dept. of Revenue, and voluntarily send them a check. Oh well, guess I've not been a good citizen in the past. But Amazon is going to help me be better.

JLM · « **Reply #11 on:** 22 Jun 2018, 11:37 am »

Just ordered shoes from RockPort (from Ohio) and got charged Michigan sales tax.

djbnh · « **Reply #12 on:** 22 Jun 2018, 12:28 pm »

Interesting ruling, probably partially resets the brick'n'mortar v. online retailer dynamic. The ruling would seem onerous for small businesses in no sales tax states like NH (the added business costs of either purchasing tax calculating software, time $pent to research / collect / remit tax-per-out-of-state purchase would be high). However, brick'n'mortar retailers who were previously at a competitive disadvantage to e-retailers (who were not charging / collecting state taxes) now are at a more level playing field. So 1) winners to me are states who have sales taxes, tax software companies, brick'n'mortar retailers, while 2) losers are small businesses, and consumers.

FullRangeMan · « **Reply #13 on:** 22 Jun 2018, 04:58 pm »

Hi Ddjbnh it was a long time I havent see you posting.

randytsuch · « **Reply #14 on:** 22 Jun 2018, 05:16 pm »

From the link in my first post (which I added later),
The ruling only directly affected South Dakota, which had sought to collect taxes from online retailers with more than $100,000 in annual sales or 200 transactions in the state.

So hopefully they will give exemptions to small businesses where it would be a real hardship to do this. Seems like the intent is to make the larger internet companies pay sales tax.

I would expect companies who create the web sales software to add sales tax collection.

Randy

johnto · « **Reply #15 on:** 22 Jun 2018, 05:41 pm »

Another reason to buy from a private party used, especially if you can find what you want locally.
No sales tax, no shipping and no PayPal fee.

Charles Calkins · « **Reply #16 on:** 23 May 2019, 04:36 am »

Hi Guys:
I just bought a preamp From Crutchfield. Free shipping. Two day delivery to Ca. But for the very first time I had to pay Ca. sales tax.
I've been doing business with Crutchfield for 25 years and never paid Ca, sales tax until now.

Charlie

Charles Calkins · « **Reply #17 on:** 23 May 2019, 04:40 am »

Quote from: JLM on 22 Jun 2018, 11:37 am

Just ordered shoes from RockPort (from Ohio) and got charged Michigan sales tax.

JLM:

Rockport are the only shoes I wear. They just fit me perfect. I've tried other brands but they don't fit me like Rockports.

Charlie

NickMimi · « **Reply #18 on:** 23 May 2019, 10:45 am »

Hit and miss on the Amazon sales tax issue. On my tax exmpt business account I am now very careful during checkout and will question Amazon first before making a purchase or delete the purchase before checkout if I notice any tax charges where they should not be. A year ago this was not an issue, yes tax collection is slowly coming across the board on internet sales.

OzarkTom · « **Reply #19 on:** 23 May 2019, 01:20 pm »

Ebay started collecting sales tax from several states just a few months ago. Amazon has collected Missouri tax for two years or so.