Author Topic: Quill Overturned--What does it mean for us?  (Read 299 times)

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uncleleroy

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Quill Overturned--What does it mean for us?
« on: June 21, 2018, 02:31:08 PM »
This is not going to be good. From WSJ:

"States have the authority to make online retailers collect sales taxes, the Supreme Court ruled Thursday, opening a new chapter in economic history where e-commerce is treated as a mature player in a marketplace that is no longer defined by trips to the corner store or shopping mall.

By a 5-to-4 vote, the court closed a loophole that helped fuel the early growth of internet sales, overruling its own 1992 precedent that forbid states from requiring merchants to collect sales tax unless those sellers maintained a “physical presence” within the state’s borders.

Justice Anthony Kennedy, who suggested years ago that the pre-Amazon.com precedent should be updated for the digital age, wrote for a majority that defied conventional ideological lines. Liberal Justice Ruth Bader Ginsburg joined his opinion, along with conservative Justices Clarence Thomas, Samuel Alito and Neil Gorsuch.

Justice Kennedy said the “physical presence” rule, always doubtful, had become untenable in the digital age The court cited studies suggesting that the current rule costs states up to $33.9 billion annually in uncollected sales taxes. Justice Kennedy said the old rule “limited states’ ability to seek long-term prosperity and has prevented market participants from competing on an even playing field.”

In dissent, conservative Chief Justice John Roberts spoke for liberal Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan, arguing the decision, with its vast implications for the national economy, should remain with lawmakers.

“E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule,” the chief justice wrote. “Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress.”

Congress, under its constitutional power to regulate interstate commerce, could at any time have altered the rule the court imposed in 1992.

The ruling likely will spell the end of an era in which consumers could save on taxes by purchasing goods online instead of from local merchants.

The justices’ decision overturned a 1992 high court ruling involving mail-order businesses that said states can only require tax collection by merchants who are physically located in the state’s borders.

The ruling is a victory for states that argued tax-free internet sales were costing them billions of dollars in revenue. It is also a big win for brick-and-mortar stores, which have to compete against online rivals that don’t have to collect the taxes on internet purchases.

Some large online retailers, such as Amazon.com Inc., already collect state sales tax on products they sell directly, but others don’t.

Amazon originally set up its business model to avoid state sales taxes, limiting its physical presence to just a handful of warehouses. But in recent years, it changed strategy to build more warehouses closer to consumers, as it has relied more heavily on its Prime two-day shipping offer—and started charging sales tax on items it sells directly.

Amazon hasn’t collected the taxes for most independent merchants who sell items on Amazon’s platform.

About $200 billion in sales originated with independent merchants selling on Amazon world-wide last year, according to Factset analyst estimates. That compares with roughly $116 billion in direct sales by Amazon. The company declined to comment on the ruling.

The case before the high court was brought by the state of South Dakota, which enacted a law in 2016 that required merchants to collect the tax. The state then set the stage for test litigation by suing out-of-state online sellers including Wayfair Inc., Overstock.com Inc. and Newegg Inc.

The companies’ stocks moved lower after the decision was released. Amazon’s was down about 1%, while Wayfair’s stock dropped nearly 7% before recovering slightly. Etsy’s stock at one point fell about 5%, and eBay’s was down more than 2%.

Wayfair said it collects sales tax on approximately 80% of its U.S. orders and didn’t expect the decision to have “any noticeable impact on our business, as it may on other retailers who do not currently collect and remit sales tax.”

“While we believe the court was not the ideal venue for creating this level playing field, we expect that today’s decision will bring clarity and certainty to this issue,” the company said.

Online marketplaces Etsy Inc. and eBay , where millions of small businesses sell their wares, noted in statements that the court had recognized a potential distinction between big internet retailers and smaller retailers.

Small online businesses have been using Amazon, eBay and Etsy to build their sales for years and have argued a blanket legislative solution is needed to prevent the high cost and burden of complying with different rules in each state.

“Now is the time for Congress to provide clear tax rules with a strong small business exemption,” an eBay spokeswoman said.

Before the court’s ruling, eBay Chief Executive Devin Wenig warned in an interview with The Wall Street Journal of an “extremely chaotic” environment if the Supreme Court handed states more authority to force companies to collect such taxes.

“Every state loves this tax because you get to tax people who can’t vote for you,” Mr. Wenig said. “You get to tax businesses that aren’t in your jurisdiction, so this is the favorite tax of every state legislature.”

Shares of real-estate investment trusts for shopping centers rose on the ruling. Perhaps the biggest boost came to a newly public company called Avalara Inc. that makes a type of tax-compliance software many smaller merchants may now need. Its shares were up 19% in recent morning trading.

State legislators and big-box stores had tried unsuccessfully for years to push Congress to give states the authority to require sales-tax collection. The U.S. Senate passed a bill in 2013, but it died in the House, caught in a fight between anti-tax Republicans and Republicans who back the brick-and-mortar retailers.

Thursday’s opinion is likely to spur a new push for a federal law to limit states’ ability to require tax collection by small businesses and to restrain cross-border audits. This time, however, it will be Internet retailers and catalog businesses seeking guardrails on state action, and they’ll have the burden of mustering majorities in a Congress.

“We are now really comfortable with Congress continuing its path of not acting on this issue,” said Max Behlke, director of budget and tax policy for the National Conference of State Legislatures.

States are expected to examine their existing laws and consider implementing new ones, Mr. Behlke said. “It’s not like tomorrow the world’s going to change. But in the next 60 days, I think we’ll see states start to move forward,” he said.

Steve Delbianco, president of NetChoice, an e-commerce trade group, said Congress should act immediately to create rules for states and retailers to follow.

“A brick-and-mortar business won’t have to comply with the differing rules of over 12,000 tax jurisdictions, or integrate costly and complex tax software into its operations,” Mr. Delbianco said in a statement. “But small web businesses will, eating away at their already razor-thin profit margins. When these businesses disappear, consumers will be the biggest losers.”

The decision produced an unusual split among the justices. Joining Justice Kennedy were three of his conservative colleagues, Justices Clarence Thomas, Samuel Alito and Neil Gorsuch, as well as liberal Justice Ruth Bader Ginsburg.

Justice Kennedy’s opinion eliminates the physical-presence test but doesn’t set out a bright-line rule about exactly when a state’s sales-tax collection law might impose an impermissible burden on interstate commerce.

Justice Kennedy did note that the South Dakota law at issue wouldn’t apply retroactively, included an exception for small business and offered retailers software and clear definitions to help merchants comply with the sales tax requirement."






Southern Jewel's Fab Finds

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Re: Quill Overturned--What does it mean for us?
« Reply #1 on: June 23, 2018, 01:12:19 PM »
Nexus no longer matters.
Correct?
Anyway....Amazon already collects and remits sales tax to a few states.
Unless the 3rd party seller does it. 
For sellers that use Amazon’s Tax Collection Services, it’s business as usual.
Of course, that's for Amazon Sales.
My eBay sales will be different, but I do suspect there will be some sort of ease that will be built in.

Take this in the way in which it's presented because it's not gospel, it's just good advice:
According to my 'tax guy,' more than likely Amazon is going to collect sales tax from all sales and remit it to the states.
As he said, corporate ecommerce companies (and companies that have the ability for brick and mortar AND ecommerce) have already been collecting in every state, and it works.
There will be some bumps in the road, but that is to be expected.

I have an eBay, etsy and an eCrater store, I'm gonna sit back and see how this plays out.
Luckily, I am blessed to have tax advice and I'll pass that along as I receive.

Hope this helps.

Southern Jewel's Fab Finds

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Re: Quill Overturned--What does it mean for us?
« Reply #2 on: July 02, 2018, 07:54:13 PM »
Found this info on another forum I belong to.
I'm not here recommending the below information, I'm just passing it along.
My advice is you meet or discuss this with your accountant before considering.


Open a Taxjar account and wait for the email that says they are done calculating your tax.

See what states they found you have Nexus in. (States were Amazon had stored your stuff in their warehouse.)

Open your account in each state. 

Tell them you just opened your business or pay back to when you did open it.

Open accounts in all of those states.

Use the number the states give you to enter into Amazon so they start collecting tax for you.

Start sending the tax money to each state according to the schedule they give you (monthly to annually).

Use the Taxjar amount to know how much to send.
Note Taxjar will do that for you, for a fee.




uncleleroy

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Re: Quill Overturned--What does it mean for us?
« Reply #3 on: July 03, 2018, 04:08:48 PM »
Tax Jar = $$$ down the drain

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Re: Quill Overturned--What does it mean for us?
« Reply #4 on: July 17, 2018, 05:28:47 AM »
I figure wait for the state(s) to demand the filing by smaller sellers. Which, will eventually come, but I don't see a reason to make it happen any sooner than necessary.

uncleleroy

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Re: Quill Overturned--What does it mean for us?
« Reply #5 on: July 17, 2018, 02:59:06 PM »
I figure wait for the state(s) to demand the filing by smaller sellers. Which, will eventually come, but I don't see a reason to make it happen any sooner than necessary.

agreed.

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Re: Quill Overturned--What does it mean for us?
« Reply #6 on: July 17, 2018, 03:41:42 PM »
Yep

  

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