
Did Supreme Court Potentially Bankrupt Tens of Thousands of Online Businesses? - pedro84
https://seekingalpha.com/article/4183560-supreme-court-potentially-bankrupt-tens-thousands-small-online-businesses
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jecxjo
My biggest issue with paying taxes in other states is what services are they
providing? You pay federal taxes which covers interstates, you pay taxes on
your shipping fees which should cover state roadways.

So if I pay South Dakota sales tax then I should be able to contact state
representatives, should be included in votes for any state referendums that
affect my business and should basically be considered a citizen of that state.
Otherwise I see it as taxation without representation.

~~~
moarcoffee
There’s a lot here to take apart.

First of all, you’re a citizen of the United States. You can be a /resident/
of a state, but citizenship is conferred by the federal government, not the
states.

Second, you’re not paying the tax, the customer is.

Third, it is absolutely not taxation without representation, which was a
charge the British colonists made against the government in England because
they had no representation in parliament. You, however, have several
representatives at various levels of government, as do your customers paying
taxes. You might argue that your representation isn’t good, and depending on
the state I’d argue that too, but you absolutely are not taxed without
representation now in 2018.

Taxation does not entitle you to vote in elections. If I drive through Ohio
and buy some gas, do I get to swing by again in November for the election? I
don’t know the relevant legal philosophy, but states can absolutely levy taxes
in other states and it’s ridiculous to suggest that paying them entitles you
to voting rights.

~~~
jecxjo
As soon as the vendor is required to collect this tax, and is responsible for
it to be paid, I'd consider it the vendor's tax. SD stopped making it the
consumer's tax when they lifted the burden on them to pay it. If the vendor
doesn't collect it the vendor still owes it because SD says making their
citizens pay use tax doesn't work.

When you drive through Ohio you are using services paid by Ohio citizens. The
gas you buy had to drive on state roads, cleared of snow by state plows, and
sold to you by people who use other state services. Since you don't live there
and are just using their services I think it's perfectly reasonable to be
taxed.

But what if you never stepped foot in Ohio? What if sent a box in the mail,
using the FedEx who charges you money for their services, pays taxes in the
states they physically exist, pay for vehicle licenses and property taxes and
income tax. All of which comes out of the fee I'm paying them. Has SD gotten
enough money from me yet? Still haven't actually used any services that aren't
consumed by the one thing I'm doing and paying for, shipping a box

The employees that work in Ohio get to vote, get to have protections by Ohio
government, get access to services. The businesses get protections too. And
yet I, the vendor, who lives in a completely different state, and never uses a
single service of theirs beyond those required to ship a box (odd that there
is no extra taxes on sending a letter USPS) is then required to do ohio's job
of collecting taxes, and pay any that I miss collecting or am charged a fine.
Sounds to me like Ohio is requiring me to fill a job position I did not
previously need or else pay a fine. That is all money that now goes to someone
else because Ohio says so. Could have sworn that is taxation.

And as for voting rights, I think everyone is disregarding the fact that
employees vote. If a referendum came up that would make their job harder or
even make it impossible, the employees get to vote on it. Not saying they
wouldn't all vote the way the company wants, but their are votes cast for
defending their livelihood. Since my company has no physical presence I don't
have that same representation. Yet I'm again still required to do everything
an in-state business is required. I had none of these issues when my business
only existed in the state I live in. And where I and all my employees vote.

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dbjacobs
The good news, is that so far most states seem to be modeling their
legislation after South Dakotas so hopefully there won't be a ton of rule
variation.

The filing requirement is the real kicker. Until small business software like
Quickbooks and Turbotax for business makes it trivial to file in every state.
The compliance cost will be VERY high. In Hawaii for example, you have to file
and pay your excise tax return every month. Multiple that by every state and
you have a lot of work.

I suspect those companies that sell inexpensive items will probably restrict
the number of states they sell to until the software support is there.

~~~
astura
Congress has the ability to nationalize sales tax collection and remittance
across State borders and bills have been introduced in the past that propose
to do just that.

So with this decision we might (should) see Congress solving this issue. The
Supreme Court had practically begged Congress to act before overturning Quill.

[https://www.forbes.com/sites/beltway/2018/03/21/congress-
has...](https://www.forbes.com/sites/beltway/2018/03/21/congress-has-
had-26-years-to-address-online-sales-taxes-it-is-about-to-fail-one-more-
time/#15ff8415139d)

>In its 1992 ruling in Quill v. North Dakota, the High Court said states could
require retailers to collect sales tax only if those businesses had a
substantial physical presence — known in legalese as nexus — in their
jurisdictions. But the Court, which called the legal issues surrounding nexus
a “quagmire,” strongly urged Congress to resolve the many unanswered questions
surrounding remote sales: “The underlying issue is not only one that Congress
may be better qualified to resolve, but also one that Congress has the
ultimate power to resolve.”

~~~
ghaff
Which is, in fact, the point of the Roberts' led dissent as well. Basically
that this would be better off as a Congressional effort and that, by
overturning Quill--even though there were good reasons to do so--the majority
has thrown a wrench into ongoing efforts to work towards a national solution.

------
godzillabrennus
Wouldn’t it make more sense to just incorporate offshore in the Caymans or
British Virgin Islands to do an ecommerce business now? Or would that foreign
entity still need to collect sales tax from USA consumers?

~~~
lord_ring_111
Trump might impose tariff?

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thrill
If anyone has caused undue pressure on businesses - and hence customers - it's
Congress. The Supreme Court interprets when Congress is unclear. Congress has
incentive to always be unclear - it gives them wiggle room to negotiate for
your vote.

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maxxxxx
It may also have saved tens of thousands of brick and mortar stores. I often
buy expensive items from B&H in New York instead of a local seller who has to
add 9% CA sales tax.

~~~
mreome
Except this isn't going to hurt the big online retailers undercutting local
brick-and-mortar stores. Companies like Amazon have whole divisions that deal
with sales tax (in the US and globally). They won't be happy about this
ruling, but they won't have real problems being complaint. This hurts small
online niche and specialty businesses with very thin profit margins, the mom-
and-pop online shops and one-man-startups.

~~~
ghaff
Except a lot of local sellers lost the fight to the big chains and then the
big online retailers a long time ago. There's maybe one local photo place in
the Boston area who could compete with B&H and they're inconvenient enough I
haven't been there in years.

B&H probably will be hurt by this a bit. Compliance probably won't be a big
deal and they beat out Amazon for a lot of specialty equipment. But they also
sell a lot of DSLRs and the like too. They just basically lost their price
advantage of Amazon for many items. (And, for those of us with Amazon credit
cards, Amazon will mostly be cheaper once these rules go in place.)

~~~
mreome
I agree that battle has largely already been lost, I was just making the point
that this ruling isn't going to significantly help brick-and-mortar retailers
as they are in competition with large online retailers who are already
undercutting the local B&M shops by far more then the sales tax rates and
won't have issues staying in compliance with lots of complex laws. I only see
this negatively effecting small online business, the niche stories, single-
person operations, etc. I'm not familiar with B&H specifically, so I couldn't
comment on them specifically.

~~~
maxxxxx
In photography equipment the local sellers are actually often very competitive
if you set aside sales tax. If B&H starts charging sales tax I'll definitely
go more to local seller.

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mkempe
This decision enables a state-imposed tax on inter-state shipping of goods
purchased in other states (via mail-order catalogues or internet e-commerce --
aka "virtual showrooms" as Kennedy's decision calls a website, in order to
drop the now-abandoned requirement for "physical presence").

Don't be fooled by it being labeled a "sales tax". In actual fact, the Supreme
Court has enabled _tariffs between the US States_. Which is exactly what the
Commerce Clause was intended to prevent.

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nasalgoat
I thought this only applied to businesses with over $100K in sales?

~~~
ghaff
That is specific to the South Dakota law that the Supreme Court made its
decision on.

That said, the Supreme Court also had language suggesting that one reason it
decided in favor of South Dakota was that its requirements weren't onerous.
This might suggest, for example, that states should have some minimum
threshold but the decision didn't supply one or state so explicitly.

IANAL but, if I head to guess, this isn't going t be an apocalypse but there
are going to be some uncertain times, some state will probably push the
boundaries, compliance costs will rise, many small businesses won't comply and
try to fly under the radar especially given it's not clear what teeth a state
has against out-of-state retailers with no physical presence, etc.

~~~
LyndsySimon
I suspect it’ll mean a move from independent web shops to “marketplace
platforms” which will handle the tax implications.

Bonanza.com probably stands to gain the most from this. Shopify and similar
products will likely adapt to gain as well. WooCommerce and other “self-
hosted” shops might actually end up dying from it.

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hiyer
Time for the US to move to a single VAT/GST model?

