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Thread: Supreme Court rules on internet sales & Sales tax collection

  1. #16
    And what of states that have no sales tax, like Delaware? Folks from PA and Maryland have been running to Delaware for decades to buy computers and appliances to avoid the sales taxes. This has created a nightmare. Things to consider.

    1. I have a sales tax exemption in Pennsylvania for certain farming related items. Will that be recognized by an internet seller in New York? Or will I be zapped for New York Sales Tax? 2. If an internet seller in Idaho refuses to collect New York Sales tax, will a law suit by New York State in New York be valid? There had been a doctrine since the beginning of this country that one state will not enforce the tax laws of another state and a state will only enforce a foreign judgment if that foreign state had jurisdiction over the defendant to even grant a judgment. for instance, I moved to Pennsylvania in 1998. In 2004, the state of Virginia tried to enforce a judgment against me for 1999 and 2000 state taxes in Pennsylvania Courts. I defended on three grounds. 1) I was never served with papers for the Virginia suit and therefore the judgment was obtained in violation of due process and should not be recognized by Pennsylvania 2) I did not live there in those years to even owe taxes and 3) A centuries old doctrine that Pennsylvania will not enforce the tax laws of other states. The Judge agreed as to defense No. 3 and dismissed the case saying there was no reason to even consider the other grounds. If I were a small seller in Idaho with no plans to ever set forth in New York state, I would tell New York to stuff it. I often order agricultural parts on line. Even if I went to a brick and mortar store here in Pa, my purchase on most parts would be exempt from sales tax. (I have exemption forms on file at several places, TSC, feed mills and my local implement dealer.. I have exemption forms to supply to other businesses where I purchase items) For instance, if I buy a piece of lumber to turn into a chair for resale, I am exempt from PA sales tax. Would a specialty lumber company in MO recognize that exemption?

  2. #17
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    Quote Originally Posted by Perry Hilbert Jr View Post
    And what of states that have no sales tax, like Delaware? Folks from PA and Maryland have been running to Delaware for decades to buy computers and appliances to avoid the sales taxes.
    Yes, folks do that. But technically, under the law, they still owe those taxes each year when they file their PA state income taxes. It's right there on the tax return as a matter of fact. That also applies to things we buy over the Internet. Of course...most folks don't report it.
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  3. #18
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    Most businesses have known this was coming in some form or another for years. It will get handled and life will go on. The free lunch never lasts forever. Everyone gets upset when the weathy have a loophole- rightfully so- and this was a huge loophole but affected so many that you heard little of it. Dave

  4. #19
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    But technically, under the law, they still owe those taxes each year when they file their PA state income taxes.
    Living along the Columbia River affords many from Washington to shop in Oregon. Likewise many from Oregon come across the river to shop in Washington. In Washington cashiers often ask, "are you Washington?" Washington allows sales to Oregonians to be sans sales tax, there is no sales tax in Oregon. Of course the cashiers in Oregon do not ask about your residency to add a sales tax.

    In Washington we do not have an income tax, so no one claims out of state purchases "when they file their WA state income taxes."

    This will likely be a software fix where the money is collected through the entity facilitating payment. If so desired it could even be determined by Zip Code. Though if that were the case, Post Offices and Mail Address services will be booming close to the border in states without a sales tax.

    Every piece of legislation will almost instantly have people trying to figure ways to get around such laws and regulations. That is only one way of how our laws end up so convoluted.

    jtk
    Last edited by Jim Koepke; 06-22-2018 at 2:13 PM.
    "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."
    - Sir Winston Churchill (1874-1965)

  5. #20
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    Washington has a Consumers Use Tax return to be filed to pay the tax. Guessing the compliance was low. Dave

  6. #21
    My business delivers phone service to customers in several countries and all over the US. Imagine how complex it could be for us. But our legal advice was to treat OUR part of the service as local to our jurisdiction, and to let our providers deal with the local parts by not filing as tax exempt with them. This is different from physical goods of course. But now we have to go for legal review again to see if this changes anything.

  7. #22
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    Quote Originally Posted by David Kumm View Post
    Most businesses have known this was coming in some form or another for years. It will get handled and life will go on. The free lunch never lasts forever. Everyone gets upset when the weathy have a loophole- rightfully so- and this was a huge loophole but affected so many that you heard little of it. Dave
    Yes, it's been inevitable that this would happen. The indications have been there for awhile now given how much commerce has migrated to on-line. Consumers might grumble, but this is a real challenge for small businesses as has bee mentioned. "Collection" is the easy part. It's the reporting and remittance to what is potentially many, many jurisdictions that is going to provide the most angst. Small businesses that sell thought the Amazon platform are better positioned already because Amazon already collects state taxes in all the states that require them. But even they apparently have some work to do to support the multitude of county and local jurisdictions over and above states. I personally have to pay attention to this because I'm smack in the middle of starting up a small business that will be selling items online to non-local folks. PA is easy for me and I'm already setup for that, but now I have to be concerned with beyond PA. It will be a topic of discussion when I meet with my accountant next Tuesday for sure.
    Last edited by Jim Becker; 06-22-2018 at 3:42 PM.
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  8. #23
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    Yes Jim, an unintended consequence could be to further strengthen Amazon's dominance in the marketplace. At some point there will be reasonable software available to small sellers but I worry that Amazon will someday swallow up way too much commerce and our choices will be limited. Way to early to tell. Dave

  9. #24
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    What an I supposed to do if I sell a few things on Ebay for say $500 total in one year?
    Bill D.

  10. #25
    Quote Originally Posted by Bill Dufour View Post
    What an I supposed to do if I sell a few things on Ebay for say $500 total in one year?
    Bill D.
    Your personal used goods? Nothing.

  11. #26
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    Bill, Carlos is correct...selling off personal property occasionally isn't generally covered by this. But if someone was to be perceived as constantly selling off a lot of stuff, there might be some question about whether or not they are really a "stealth business" and that would affect a whole lot of things from a government purview.

    There is a property down the street from me that has a multi-day "yard sale" about once a month. There's just no way that they are selling off personal property. It's a stealth antique and junk business.
    --

    The most expensive tool is the one you buy "cheaply" and often...

  12. #27
    For sellers, as a general rule state taxes are no problem, it's the local taxes that are going to be a nightmare. Here in Apex, our zip code covers two counties, and the New Hill Zip code covers parts of three counties.. A few people live in NC with Virginia addresses and some in Virginia with NC addresses. Most don't think of it, but when you are out of state, and consume a meal, you owe your home state the taxes, if you return home before your next BM. I now have to charge my customers 7.25% sales tax on my labor. Being a sole owner, this amounts to a 7.25% income tax surcharge on my income tax. No government agency has ever said "We don't need as much money as last year!"

  13. #28
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    Quote Originally Posted by Bruce Wrenn View Post
    Most don't think of it, but when you are out of state, and consume a meal, you owe your home state the taxes, if you return home before your next BM.
    Does that mean what I think it means? Technically, one might need to wait for 2 BM's to avoid the taxes on that meal.

  14. #29
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    Quote Originally Posted by David Kumm View Post
    Yes Jim, an unintended consequence could be to further strengthen Amazon's dominance in the marketplace. At some point there will be reasonable software available to small sellers but I worry that Amazon will someday swallow up way too much commerce and our choices will be limited. Way to early to tell. Dave
    Amazon has been collecting sales tax for some time now so they already have the infrastructure and they are well versed in providing IT services to others so yeah, they likely have a leg up. I imagine somebody like Intuit (Quickbooks), PayPal and Square could be players as well, they just charge a bit more for their services.

  15. #30
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    I read another article (I can't remember which one or where to link to it) on this last night that was interesting. The going forward impact of this ruling will depend upon how the states (and localities) react to is. From a narrower perspective, the ruling is primarily about SD's desire to collect state sales taxes on businesses who do more than $100K or 200 transactions to customers who reside in their state. The article speculated that "may" help the "micro-businesses", at least in the short term given the threshold in the SD case for compliance. But there was also agreement that ultimately, there would need to be some kind of Federal action to keep things sane and fair if the requirements to collect and remit sales taxes becomes universal across all taxing entities...which number in the thousands within the US when you add in the municipal/local type sales taxes. Here in SE PA, for example, Philadelphia has a 1% sales tax over the 6% state sales tax.
    --

    The most expensive tool is the one you buy "cheaply" and often...

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