
States Can Require Internet Tax Collection, Supreme Court Rules - uptown
https://www.bloomberg.com/news/articles/2018-06-21/states-can-require-internet-tax-collection-supreme-court-rules-jiomtl5c
======
kels
What no one is talking about here is how this would be handled, especially for
a small online sellers. There are almost 10,000 tax jurisdictions
([https://www.washingtonpost.com/blogs/fact-
checker/post/mccon...](https://www.washingtonpost.com/blogs/fact-
checker/post/mcconnells-claim-that-there-are-nearly-10000-tax-codes-
nationwide/2013/04/26/a6b3bef4-aeaa-11e2-a986-eec837b1888b_blog.html?noredirect=on&utm_term=.c97e1f8f782e))
and you're not allowed to collect sales tax unless you register for that
jurisdiction. There is also a fee collected by most jurisdictions to register
and most make you send in periodic reports, even if you didn't collect any
taxes for them.

~~~
myrandomcomment
Read the story...

"...South Dakota, whose law requires retailers with more than $100,000 in
sales or 200 transactions annually in the state to pay a 4.5 percent tax on
purchases"

"..Kennedy’s majority opinion strongly suggested the measure was
constitutional, in part because it has the $100,000 threshold and doesn’t try
to impose retroactive taxation."

A clear bar is set for what is covered here and what is a burden.

~~~
mlindner
$100,000 in sales is a very low bar. That's equivalent to a business with a
single employee, the owner, and they're probably not making a livable wage
yet.

~~~
ajross
$100k of South Dakota revenue is either an almost exclusively local single-
owner business or a much larger internet shop.

But regardless, that kind of number is a full time job. If you're selling over
the internet and making a full time job out of it, you can handle computing
sales tax for SD residents. Yes, it's burdensome. Yes, it would be good to
have a simpler federal framework for this. No, it's not the end of the world.

"No tax on the internet" sort of made sense in 1997 when it was a new and
exciting market and we wanted to see what would happen. Now, it's just a giant
subsidy for Amazon. We can put that money to better uses.

~~~
ballenf
I think you've got it kind of backwards. The absence of tax collection is what
allowed Amazon to become Amazon and this change is now a barrier to a new
entity challenging Amazon.

Amazon voluntarily started collecting taxes nationwide without a blip to its
bottom line.

The new law will in fact put Amazon's first-party goods in parity with 3rd
party sales. Third party sellers could often undercut Amazon's own pricing due
to the disparity.

This tax change is a huge win for Amazon on many fronts. Any protests they
make to the contrary are strategic, imo.

~~~
smallnamespace
All this would do is create an opportunity for a SaaS startup or existing
payments provider to offer collecting the correct amount of tax for you.

I personally worked on this sort of problem for a large company; most of the
work is in figuring out what the business logic ought to be; turning it into
code is (largely) trivial.

Figuring out the logic only needs to be done once, and the payments provider
is the natural place for it to live.

~~~
SyneRyder
Indeed, several already do this - Fastspring, Paddle, and there are services
like Taxamo (although I'm not sure if Taxamo actually remit the tax on your
behalf, or are just an API to calculate what your obligations are).

------
rossdavidh
I have a hunch that this will, in the end, be a massive win for large
retailers vs. small ones. The task of figuring out how to calculate tax for
all states is more or less the same amount of work regardless of size, which
means for someone like Amazon it's more or less trivial, but for a mom-and-pop
store it's a major hassle.

~~~
djsumdog
Many online payment gateways already offer some kind of sales tax API. Keep in
mind in California, sales tax changes per county. In places like Tennessee,
the tax rate can change if your item is a grocery or isn't a grocery.

There are companies that already sell massive lookup tables or API access to
calculate a lot of this stuff. I think for most retailers, this won't be that
big a change.

Most mom-and-pop online stores have disappeared too. Gone are the days when
you went to Pricewatch.com and Pricescan.com. Now all the individual shops
just create a store on Newegg, Amazon and eBay. I'm pretty sure the big
players will start offering up tools to do these calculations for them as
well.

~~~
deathanatos
Tennessee also has a "Sales Tax Holiday" on which _certain items_ are tax
exempt during _certain times_ (during the holiday). And because we know how
much programmers love date and time manipulations, it starts on "the last
Friday in July" (I mean, it kinda had to, to be a weekend).

[1]: [https://www.tn.gov/revenue/taxes/sales-and-use-tax/sales-
tax...](https://www.tn.gov/revenue/taxes/sales-and-use-tax/sales-tax-
holiday.html)

~~~
cpburns2009
An exemption such as this is one of those things that I'd say is not worth
supporting unless you're based out of TN, or do enough of sales there to make
it worth your while. Sure, I'd implement it if it's required but every special
case is just another point of failure.

~~~
secabeen
But if you don't support it, are you liable for collecting more tax than
required? How do you "not support" it? Just reject purchases from people in TN
during the holiday?

~~~
cpburns2009
Disclaimer: I am not an accountant. I would figure tax holidays are optional
and might even require an application to take advantage of. So you would
charge the regular sales tax and remit it to the state.

UPDATE: Out of curiosity I looked it up. And it looks like sales tax holidays
depend as usual on the state. The MO back to school one is optional if less
than 2% of merchandise is affected. But the TN one doesn't look optional.

~~~
windows_tips
Collecting 'tax' on an untaxed item could be considered acting falsely under
color of law.

~~~
emaginniss
"Under color of law" means that you're a law enforcement official. Collecting
extra tax and then remitting to the state will almost certainly not cause you
any issues.

~~~
windows_tips
>"Under color of law" means that you're a law enforcement official.

No.

Collection of taxes is done to enforce law, unless the state is compelling
people with something else?

~~~
sequoia
> Collection of taxes is done to enforce law

To _comply with_ law.

~~~
windows_tips
comply with and enforce

------
rbritton
Something like ten years ago now, Washington State changed their sales tax
requirements in a way that required the seller to look up the four-digit rate
code of the buyer, both for determining the rate to charge and later for
remitting to the state. The quarterly file they provide with this information
is ~150000 rows. Prior to that date, you just reported for the jurisdiction in
which the business was registered.

Between this and similarly far-reaching laws (e.g., GDPR), it's becoming
increasingly burdensome for small players to the point where secondary
services like Avalara are effectively required.

~~~
test6554
It sounds like Avalara costs $50 per year for small businesses, but scales up
for larger companies. So compliance is trivial if it truly works.

~~~
tathougies
If compliance were required to this new extent, then avalara could likely
raise prices

~~~
EpicEng
And if that happens then certainly competitors would enter the market. If
avalara is overpriced people will switch over.

------
nkurz
The actual (quite readable) Supreme Court decision is here:
[https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf](https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf)

Most of the coverage I've seen downplays it, but it should be noted that the
question is not whether tax is owed on these out-of-state internet purchases,
but whether the retailer should be required to collect it and submit it to the
state. Currently, the purchaser is (in 45 of 50 states) legally required to
pay a "use tax", but most Americans (98%?) are blissfully unaware of this
requirement, or have simply decided not to pay it. This is pure illegal tax
evasion, based on the (correct) assumption that enforcement is lax and risk of
punishment is low:
[https://www.npr.org/sections/money/2013/04/16/177384487/most...](https://www.npr.org/sections/money/2013/04/16/177384487/most-
people-are-supposed-to-pay-this-tax)

Rather than attempting to enforce these existing laws against their residents
(unpopular and difficult), states believe it will be easier to get compliance
from retailers. Until this decision, it was unconstitutional under the
Commerce Clause for a state to demand this collection unless the retailer had
a "substantial nexus" in the state, generally defined as a physical presence.
Post-decision (pending new national laws created by Congress) all retailers
are fair game. The particular South Dakota law in question has requirements as
to volume of purchase, but this is not a principle of the decision.

Beyond the implications for internet retailers, this is an interesting
counter-example to the Supreme Court tradition of "stare decisis" (to stand by
things already decided). Apparently, everyone on the court agrees that earlier
decisions that produced the physical location test were poor precedent.
Usually, the court is very reluctant to revisit these decisions, but in this
case, the majority justices decided to abandon precedent and explicitly call
the earlier decisions mistakes. The dissenting justices, despite conceding
that "Bellas Hess was wrongly decided", felt that the court was better off
sticking with the flawed precedent than changing things up now.

Personally, whether or not this is good constitutional precedent, I think I
agree with the dissenters that allowing local jurisdictions to make laws
affecting far-away businesses who have no other local presense is going to
lead to problems. Beyond just the burden of collecting confusing locally
defined taxes, I fear about where else it leads. If a locality can enforce its
local tax laws, what other custom crafted local laws can it enforce in return
for access to customers? Can it require a business license? Should it be
allowed to enforce its local environmental and labor standards as well? Is
this a good thing?

~~~
jdhn
>If a locality can enforce its local tax laws, what other custom crafted local
laws can it enforce in return for access to customers? Should it be allowed to
enforce its local environmental and labor standards as well?

This is pretty much what happens with California and car manufacturers. Even
today on certain aftermarket car parts (primarily exhaust systems), there are
explicit notices that they are legal anywhere in the US except California.

------
mindslight
Yet another tenuous stretching of _nexus_ by lawyers who have little interest
in how technology works, but _do_ have every incentive to justify increasing
their own scope. This is the equivalent of telling New Hampshire stores that
they're responsible for collecting Massachusetts sales tax for people coming
over the border to shop.

A business collecting taxes for the state they are in, even for orders shipped
out of state, _would_ make sense. But the individual states seem unwilling to
do this, as it would decrease their own businesses' advantage. And that's the
whole point - we _should welcome_ competition in tax rates, wherever it can
possibly even be found.

Referencing New England was not arbitrary, as the ability to drive two states
over to simply have dinner is a condition that holds the state governments to
a modicum of honesty.

~~~
dsfyu404ed
>holds the state governments to a modicum of honesty.

Coffee almost came out my nose.

Governments in southern New England are only regarded as legitimate because
people in MA and CT bury their heads in the sand and RI compares itself to NYC
and Chicago (that's not to say that useful or good programs don't exist within
these governments).

>This is the equivalent of telling New Hampshire stores that they're
responsible for collecting Massachusetts sales tax for people coming over the
border to shop.

I fully agree that state tax should follow the state of the merchant. If a
state's cost of doing business (through taxes, cost of living or some other
reasons) is so high that businesses that have to pay to ship their good can
out compete them then it's that state's problem. If it wants a cut it's going
to need to change things so that more business happens in its jurisdiction.
Sales taxes are regressive anyway so they should be a race to the bottom.

~~~
mindslight
Sure, but at least MA/CT sales tax is just above 6%, while CA is pushing 9%.

The bigger picture is that if one wants to live close to family and friends in
New England, they're still able to move and pay 0% sales and state earned
income taxes. Whereas if one wants to live close to family and friends in CA,
they're completely over the barrel.

------
ghaff
I find it hard to argue with from a fairness perspective. Clearly, retail is
in a much different place from when Quill was decided. My concern is more in
how a mom & pop online shop operating independently complies as a practical
matter, which means not only collecting the right amount for different types
of items but presumably remitting and filing with a huge number of different
tax jurisdictions.

~~~
jxcl
In Colorado you're already asked when filing state taxes what the value of the
goods you bought online that haven't been taxed yet, so the onus is on the
filer to look up receipts from the year for tax purposes.

Amazon already collects tax in Colorado, but a few smaller retailers will send
you a letter at the end of the year totaling up your untaxed purchases. Since
different counties and localities collect different rates, it's hard to get
the total tax right at the time of sale.

~~~
ghaff
>In Colorado you're already asked when filing state taxes what the value of
the goods you bought online that haven't been taxed yet

Many states do this. I imagine that relatively few individuals (as opposed to
businesses) actually comply.

~~~
blang
People rarely comply, unless they are tax lawyers that fear the IRS wants to
put them up as a trophy:

[https://www.npr.org/sections/money/2013/04/16/177384487/most...](https://www.npr.org/sections/money/2013/04/16/177384487/most-
people-are-supposed-to-pay-this-tax)

------
taurath
What a boon for SaaS payment providers, and what a loss for both smaller and
larger shops doing things in-house.

We are seeing in action the consolidation and corporatization of the internet,
as regulators and laws catch up from the wild west days. This is how every
industry goes, but start saying goodbye to startups as they've been for the
last 15 years. Already its a better deal for most workers to just work at a
bigco (and has been for a while).

Of course, this doesn't address whether internet sites should have to deal
with state taxes (they probably should), but gosh everything is getting a heck
of a lot more complicated.

------
rahimnathwani
The situation for retailers shipping to states where they have no physical
presence reminds me of the situation of foreign retailers with significant
online sales to customers in the EU.

In each case, the seller (who has no physical or other presence in X) is
required to collect tax from the buyer (a resident of X) and remit it to the
tax authorities in X.

The tax is owed by a resident of X, to the tax authorities in X. But the tax
authorities in X want someone outside X to collect it on their behalf.

EDIT: According to Wikipedia, some states charge sellers sales tax, and others
do it the way I assumed (tax is charged to buyers, but collected by sellers).

~~~
dtech
That is the price of doing business with customers of the EU, similar to how
you must comply to EU regulations if you want to sell physical goods. In
return, you get access to the EU market and can deal with a single ruleset for
the whole EU instead of each country individually.

Also, this is only for consumers, to business customers you can reverse-charge
the VAT so they have to handle it.

~~~
rahimnathwani
Anything can be construed as 'the price of doing business'. If the EU instead
required every retailer with at least one customer in the EU to get a tattoo
of the EU flag, in return for getting access to the market, would you also
consider that just 'the price of doing business'?

My objections to this are:

\- If an EU country is owed tax by people resident within its borders, then
perhaps the country's tax authorities should arrange for it to be collected,
rather than relying on some foreign entity (e.g. Chinese company) to collect
it.

\- There are ~200 countries in the world. Should any company who wants to sell
over the internet need to know about the sales tax or VAT registration
thresholds in each of those countries? If so, this gives a huge advantage to
large retailers over small ones.

~~~
walshemj
VAT (Eu sales tax) is a tax on the seller it is not a tax that individual
residents pay at all.

~~~
rahimnathwani
Your statement is wholly incorrect.

[https://ec.europa.eu/taxation_customs/business/vat/what-
is-v...](https://ec.europa.eu/taxation_customs/business/vat/what-is-vat_en)

That page says that VAT is 'a consumption tax because it is borne ultimately
by the final consumer. It is not a charge on businesses.'

------
gregrata
Isn't this at some level taxation without representation? If I don't like how
some other state is taxing, I can't alter that behaviour by voting. At least
in my current state I might have a chance to do so.

~~~
redbeard0x0a
The taxation is on the person living in that state. Most states require that a
person buys something and doesn't pay sales tax, they are supposed to self-
report and pay the tax. (Most people don't).

~~~
koboll
>The taxation is on the person living in that state.

Right, and before this decision, it was that person's responsibility to remit.
Now it is the business's. So the burden of remittance has shifted to the
disenfranchised party.

~~~
delinka
"...the burden of remittance has shifted..."

And the party paying the tax has not shifted. The party paying the tax votes
on representation.

~~~
koboll
>The party paying the tax votes on representation.

Technically the business is "the party paying the tax", in the sense that they
are the party sending money to the government. If I drop ten dollars on the
counter and sprint out of a store carrying an item that costs ten dollars plus
tax, the store is still responsible for paying tax on that item to the
government.

------
sdhgaiojfsa
This is good news for the country, even if it's bad for my wallet. The prior
state of affairs was absurd. Online retailers already have major advantages in
terms of convenience and inventory. Getting a N% discount vs. brick and mortar
by not charging taxes was completely unnecessary.

~~~
mullingitover
Exposing consumers to more regressive sales taxes is in no way good for the
country. What would be good for the country is to abolish sales taxes
entirely.

~~~
s73v3r_
"What would be good for the country is to abolish sales taxes entirely."

In favor of what, exactly? Don't pretend that sales taxes could just be
abolished, and states would just go without that revenue. Kansas tried gutting
their tax revenue; it failed miserably.

~~~
mullingitover
The most reasonable and fair replacement would be land value taxes. See:
[https://en.wikipedia.org/wiki/Land_value_tax](https://en.wikipedia.org/wiki/Land_value_tax)

------
nickjj
Unless I'm totally misunderstanding this, doesn't this mean the following:

If you sell a few thousand digital goods (let's say video courses or ebooks)
to people spread across 30 states in the US over the year, you will be
responsible to collect sales tax and do the paperwork to pay each of those 30
states sales tax every quarter (or per year)?

When dealing with a low priced item, it's not difficult to accumulate a high
number of transactions.

Not only are those fees a huge financial burden but I imagine the act of
filing all of that is going to kill any motivation to do anything. For me,
I'll end up either stop doing what I love (creating educational content to
help other developers while making enough $ to live on) or move to a different
country with a better tax system.

------
nlh
Fascinating mix of justices on this one:

 _> The vote was 5 to 4. Justice Anthony M. Kennedy wrote the majority opinion
and was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel A.
Alito Jr. and Neil M. Gorsuch._

I can't imagine we're gonna see RBG agreeing with the Alito/Gorsuch/Thomas
clan too often.

~~~
Retric
So how exactly is this a constitutional question where a new court can have a
different opinion?

 _Quill now harms states to a degree far greater than could have been
anticipated earlier._ That hardly seems like it changes the Constitution.

~~~
gascan
The Constitution uses a fair amount of fuzzy language. "Undue burden",
"excessive bail", "cruel & unusual punishment", "unreasonable search &
seizure", etc.

Thus our perception of what is undue, excessive, cruel, or unreasonable can
change, without the Constitution changing a word.

~~~
Retric
That's relevant to specific sections not the entire thing. I really don't see
any applicable fuzzy language involved.

As far as I can see it's purely a political question and they simply chose
ahead of time to change their minds independent of any arguments given. That's
a huge perversion of the entire idea of the supreme court.

------
jedberg
> Grover Norquist, president of the anti-tax group Americans for Tax Reform,
> said in a statement, "Today the Supreme Court said yes -- you can be taxed
> by politicians you do not elect and who act knowing you are powerless to
> object."

That doesn't follow. The people being taxed are the people living in that
state, and _their_ representatives are enacting that tax. As usually Norquist
is making up BS to scare people.

~~~
datamingle
Think of it from the perspective of the business selling goods. Then the quote
makes more sense.

~~~
jedberg
No it doesn't. The business isn't paying the tax. They are only collecting it
on behalf of the taxing agency.

~~~
mrfredward
Maybe a more precise wording is "you can be forced to collect tax from others
and must pay registration fees to collect said tax by politicians you do not
elect and who act knowing you are powerless to object."

The sentiment is still the same.

~~~
jedberg
While that may be true, it's meaningless. As a tourist, you are also subject
to tax that was enacted by representatives you didn't elect. You can choose
not to go there, just like a business can choose not to sell to someone who
lives there. In California, every city has it's own sales tax, so every city I
go to is taxing me without representation.

There are many many cases in the US where you are taxed without a choice of
the representatives. You have a choice not to be taxed though, by not going
there or doing business there.

------
Symmetry
So, if a state has a flat sales tax for all purchases then that's pretty easy
to implement. But often you tax different categories of product at different
rates. And there are fuzzy edges. The advertisements for Fig Netwons famously
were "a cookie is just a cookie, but Newtons are fruit and cake." But is that
true, legally speaking? And if it's true in one state jurisdiction does that
that necessarily translate to another? How you you avoid having to figure out
the tax rate for each product you carry in each of the 50 states?

~~~
swsieber
I would think the same way any national chain does it.

~~~
Symmetry
That's true but stores have an advantage in that if they mess up it's harder
for regulators to notice. But I'd bet the way this actually works is that
companies mess up on this all the time and regulators will yell at companies
to fix it before they start resorting to fines.

------
hoveringcto
This is great news for Amazon. They already collect sales tax on everything
they sell in most states (47 I think?). Now that smaller sellers (marketplace
sellers, eBay, etc.) also have to collect tax, that hurts the ~8% discount
built in, so why even shop around?

~~~
wolco
The problem with Amazon is that shipping can take months for non-prime users.
In most cases you are better off buying from walmart if they carry the item.

Sent from someone outside of the US

~~~
Retric
US sales tax is not relevant if you're not in the US.

------
techsin101
There should be no sales tax to begin with, Or income tax or property tax....
Most taxes can be simplified and reduced to a 1 simple wealth tax.

If you look at this matters with some attention you realize system works
against poor...

Only income taxes are progressive. And Rich don't get richer because of their
income.

Whether you're a trillion dollar company or about to make your first sale to
pay rent you owe same amout of sales tax.

Wether you live in NYC and pay 3k in rent or live in Alaska you pay same
federal income tax.

.... Wealth tax is way simpler... It let's govt tax wealth/income on its last
form. Like a fraction in reduced form, or equation that's been simplified.

Easier to conduct business, easier to start business, easier to pay taxes,
easier to be poor. Much much fair to all.

Capital tax is not same as wealth tax. In fact if you have wealth tax there is
no need for capital tax.

I suggest 4% wealth tax and remove pretty much all other taxes.

If your wealth is 200 billion, first year you pay 8 billion. If your wealth is
$5000 then you pay only.. $200, doesn't matter if you earned 400k. If you
didn't accquire assets you spent it and some else have that now so they will
pay it...if you bought stuff then your wealth isn't really 5k

~~~
gnicholas
This disincentives savings and is in many ways the opposite of VAT taxes,
which many tax scholars hold out as one of the most efficient ways to raise
revenue without distorting desirable economic behavior.

~~~
techsin101
The incentive to be wealthy is far more greater than 4% tax on wealth could be
a disincentive. Beauty of this is you only pay if you are rich, not if you are
poor or even if you earn a lot and still have lot of expenses (medical, live
in nyc, or have children etc)

~~~
gnicholas
A perpetual 4% tax on wealth is a great disincentive to saving. It's like
compounding interest, but in reverse.

I would be curious to know if any politician or scholar has ever proposed
relying on a single tax like this? I studied tax in law school and practiced
as a tax lawyer for the better part of a decade, and I have never heard it
mentioned. I'm not up on all the latest developments since I left law to build
a startup, and I'd be curious to know if things are leaning in this direction
now.

~~~
techsin101
you say that but then what about inflation .. that is worse than 4% tax now as
it hurts poor more whose most savings are in cash form, and inflation doesn't
really affect say land value, it automatically adjusts. While person with $3k
saving becomes poorer.

I forgot to add... to me ideal is this.

\- no artificial inflation. \- fixed currency rate. \- taxes on wealth only.
\- interest free limited loan by government. (ie. you can borrow x amount of
money in lifetime, x increases if your wealth increases)

That's perfect to me.

The only system that can't be endlessly manipulated by conglomerate/old
money/corporations/lobbyists.

------
windows_tips
>Although the court left open the possibility that other arguments could be
pressed against the South Dakota law, Kennedy’s majority opinion strongly
suggested the measure was constitutional, _in part because it has the $100,000
threshold_ and...

Anyone know where the Constitution talks about this $100,000 threshold?

>doesn’t try to impose retroactive taxation.

Similar to how it presumably not limiting what arms can be sold makes it
'constitutional'.

~~~
aerotwelve
I haven't been able to read the opinion yet, as I'm on a phone, but often
these types of thresholds or tests come from related cases that have been
previously decided.

Natural places to start looking in this case would be the _Quill Corp. v.
North Dakota_ or _National Bellas Hess Inc. v. Illinois Department of
Revenue_.

(If not there, following the footnotes in Kennedy's opinion will likely get
you there eventually.)

------
zchrykng
Someone needs to develop a service to make calculating and paying the sales
tax easier. Something like plugin an address and it spits out the tax
percentage and where to remit the payment to. Ideally the states would get
together and create a centralized service so companies don't have to be
mailing checks to every single county government that has a sales tax.

~~~
magduf
The problem with this is: how do you know what the tax rate is for the product
you're selling? For instance, if you're in New Jersey and you're selling a
clothing item like a pair of socks, then there's no tax. But if you're selling
a fur coat, then there's full sales tax. There's different tax rates for
different products, and it varies wildly across almost 10,000 different
jurisdictions in the US.

~~~
jonknee
In general you would identify the product type from a list of a lot of product
types and then let your sales tax calculator as a service provider sort out
what needs taxed and at what rate.

~~~
NeonVice
What if each state has a different set of product types?

IMO, the federal government's responsibility to regulate interstate commerce
should include creating a standard of product categories. States can then tax
those categories at whatever level they see fit.

~~~
jonknee
That shouldn't matter too much, identify with the most granular option there
is one time for each product and then let the tax provider figure out what
falls into each bucket for each state. Also, UPC codes should help automate it
for large swaths of products. If I buy a Sony lens cap from B&H or Amazon or
Random Joe's Camera Shop it would have the same UPC and can be automatically
classified by any number of tax vendors.

------
cmurf
The ruling gives states the power to collect state taxes, but will states
require out of state retailers to also collect and remit sales tax for each
county, special tax districts, and cities?

It does not level the playing field if a non-local business must collect and
remit sales taxes for thousands of jurisdictions while a local business must
only collect and remit sales tax for their jurisdiction. It actually flips it
completely around, burdening online business more than local business.

As a small business owner, the sales tax remittance is super annoying, it's so
byzantine. They often refuse to let small businesses use automated submittal
unless you have enough volume, and if you don't, you have to hand write out
the forms and send in a check. Per jurisdiction. Separate forms for
state+county, and city. I'd rather see the states take back the taxing
authority of cities and counties, and dole out funding from the state sales
tax revenue based on population.

------
methehack
So how is this going to work? Imagine you're a small online retailer and
people from every state buy your stuff. Does that mean each state can send you
a tax bill? Without knowing what you owe? And what if you ignore it? What
recourse does the state (that you don't live in or don't own a business in)
have? Seems like none or very little. Plus, the administrative burden could be
quite large for any given state. And it's a crapshoot from the state's
perspective, since the state has no idea which retailers are heavily used in
their states. I wonder if the states will work together on collections and
figuring that part out... Seems like in the short term small sellers will be
ignored by the states and the large sellers will loose. Mid to long term --
who knows... Obviously, I'm guessing.

And another thing... The idea that the states are "losing out" on revenue
seems like a very simplistic way to look at things to me. First, the states
have undoubtably already adjusted their tax structure to get the revenue they
want/need. Lots of things affect that and the states adjust all the time. The
weather (literally) for instance. It's not like there's an unaccounted for
shortfall.

Second, the retailers in question are always local to a given state and their
online businesses contribute to their home state's revenue. If those
businesses have the administrative burden of managing sales tax across fifty
states they may contribute less to the given state's revenue. Or -- they raise
prices.

I think it probably hurts people starting up the most as it effectively
creates a lot more regulatory risk.

In any case, an economic drag as all bad regulation and regulatory uncertainty
is. There's huge uncertainty here as who knows what/if congress will do.
"Nothing" is a certitude for a few more months at least. Probably a few more
years. Just long enough for it not to be worth creating a business around
solving the problem.

------
DanielBMarkham
This decision has effectively killed the "internet lemonade stand", where a
person with a bit of web knowledge could go online and a day or two later have
a store that sold something.

Oh sure, you can still do that. But now it's going to all be channeled through
gatekeepers that will ensure regulatory compliance. And run their own little
walled gardens. Better not tick them off. (This is a nice little website you
have here. Are you sure you're happy with that tweet you sent one night after
heavy partying seven years ago? Be a shame if somebody made a fuss about that
and started harassing your gateway provider)

There should also be some interesting macro changes. At some certain price and
weight points, it's probably going to be easier to buy overseas and avoid
taxes, at least for some residents. I would expect international shipping to
tick up a bit.

~~~
hnburnsy
Yes on international, just bought a one plus phone, came from Hong Kong, not
one penny in sales tax. Quite the advantage over the iPhone x where I would
have paid close to 100$ in sales tax.

~~~
pishpash
And soon you'll get hit with a 10% tariff on it, as the phone most likely
originated in Shenzhen.

------
pishpash
This is potentially much broader though -- say you buy a domain on some
registrar, do you pay taxes on that now? Every such place then needs your
address, too.

And going down this road, p2p barter on the internet of any kind might be
subject to a tax regime soon.

~~~
jahewson
You don’t need people’s address to charge them sales tax. The business is
responsible for paying the sales tax - not the customer.

e.g. If I buy a sandwich I do not give my name and address to the deli.

~~~
rbritton
You need the address to charge them the _correct_ sales tax. In Washington
State, the rate is based on the address where the product is delivered, so in
the case of your example sandwich, that's the address of the deli.

------
JustSomeNobody
If you're going to take the onus away from the _purchaser_ to file correctly
for his state and put it on the retailer, then there should be a uniform, very
simplified way to correctly do that in place first.

------
jatsign
I run a little side project that sells a small software tool for $12/customer
(forever, not recurring). It generates about $1200/month.

Should I care about this? I use Stripe to collect payments, if it matters.

~~~
brlewis
If I were a lawyer, I'd be able to tell you with great certainty and precision
what all the reasons are why you shouldn't look for an answer to that question
here.

~~~
jatsign
True, but there probably aren't many lawyers who can answer the question
either.

~~~
msbarnett
> True, but there probably aren't many lawyers who can answer the question
> either.

Strange take. On the contrary, there is an entire industry of lawyers who
specialize in the ability to answer precisely this kind of question.

~~~
delinka
Or are at least willing to indemnify you based on their answer should their
answer prove incorrect.

------
blairanderson
IF this is as burdensome as it sounds, I think Amazon will create an even-
larger competitive advantage for their marketplace and start collecting and
remitting taxes for all sellers in all states.

Since January 2018, Amazon has started collecting and remitting taxes for all
orders / all merchants in the state of Washington and Pennsyvania, and
Oklahoma will join in July.

They already do it. Why wouldn't they expand that program?

------
nickjj
I don't understand how this can be enforced for selling digital goods online.

Right now you can process a credit card transaction with only needing the
number, exp date and CVC. You do not need the card holder's billing address.
You don't even need the card holder's name.

So what's stopping someone from buying your digital item (let's say an ebook
or course where you use Stripe / PayPal to handle the transaction) but put in
a fake address, or an address they don't live in. I don't think Stripe /
PayPal will halt the transaction. Instead they might flag it as questionable
but the transaction will still go through.

In this case the business owner has no idea where the customer actually lives
to tax them properly and the customer has no incentive to put a real address
in because they are not getting something delivered to an address.

------
Meekro
If you run a SaaS company, you're affected too. You probably live in
California (which doesn't consider SaaS sales-taxable), but other states do[1]
so you'll have to start collecting taxes.

[1] [https://blog.taxjar.com/saas-sales-tax/](https://blog.taxjar.com/saas-
sales-tax/)

------
greghendershott
It's already non-easy to figure out what customers want, make it, make sure
they know you have it, and get them to buy it.

On top of that, lately it seems more challenging not to be an oligopoly if you
have customers in Europe and/or the US.

I suppose this represents an opportunity for startups to help other startups
to manage compliance and payment.

------
zdw
I tend to view the avoidance of paying local taxes as one of the internet's
original legislation workarounds (1). The entire wholesale (you buy for
resale, pay taxes when that happens) vs retail (you sell to the end user)
division was abused to allow the historical "nobody pays taxes on the
internet, so buy there and avoid them" logic many people used.

It would have been interesting to see how differently retail sales would have
grown, especially Amazon, if they were required to wrangle with local sales
tax in all the places they sold into.

Additionally, most locations have a Use Tax that's identical to local sales
tax, so it's transferring the legal burden onto the buyer. Almost nobody does
this.

1: It's not a new or internet-specific tactic either - many car dealerships
advertise "No City Sales Tax!" and are barely on the other side of the city
limits.

~~~
kevin_thibedeau
This wasn't invented by the internet. Interstate mail order sales delivered by
railroad in the 19th century were always tax free. E-commerce inherited that
system.

~~~
braythwayt
Then there was this thing called mail-order. Comic books seemed to rely on
advertising mail-order novelty items as their revenue model.

------
test6554
Ideally, there would be an API provided by the federal government that would
give you a list of tax rates for any address. Where there's always a standard
rate for general goods, and then any additional rates for things like school
supplies or other stuff.

------
jimnotgym
It's a shame that this wont apply to us here in the 51st state. US companies
will continue to drive on UK roads, use UK security and UK law and UK
infrastructure to access UK consumers, and will continue to pay less tax than
me.

~~~
DrJokepu
What? US companies have to pay VAT in the UK, just like anybody else.

~~~
jimnotgym
1) Consumers pay VAT not companies. Companies only _collect_ VAT, unless you
mean they are buying goods in the UK.

2) Google use EU cross border services rules to avoid charging VAT in the UK.
But since it is b2b it is generally reclaimable so no gain to exchequer either
way

3) Uber avoid VAT by classing their drivers as self-employed so they each run
a business below the threshold for registration. This is despite being found
at fault for this.[0]

So there are some very large cases of US companies not charging VAT.

[0]: [https://goodlawproject.org/uber-case/](https://goodlawproject.org/uber-
case/):

------
joezydeco
So while the states and small businesses are busy patting themselves on their
backs, Amazon will quietly build distribution points in every zip code and
prepare for 1 hour shipping everywhere.

------
bluepeter
Any idea how this will affect SaaS folks with no physical products?

~~~
jakejohnson
Some states consider SaaS [1] and digital products [2] taxable. Refer to the
blog posts below:

[1] [https://blog.taxjar.com/saas-sales-tax/](https://blog.taxjar.com/saas-
sales-tax/) [2] [https://blog.taxjar.com/sales-tax-digital-
products/](https://blog.taxjar.com/sales-tax-digital-products/)

------
xoail
Sales tax has one of the most complicated structures. Recently ADP built logic
to tax according to counties and sub-zones (not just states and cities) to
save millions on taxes for its customers. I doubt small start-ups can afford
their software. It will be great if Stripe can come up with an API to simplify
this. Or else, its clearly a win for large retailers and not as much for small
ecommerce stores.

~~~
psetq
Automated Tax Calculations in the Orders API:

[https://stripe.com/docs/orders/tax-
integration](https://stripe.com/docs/orders/tax-integration)

------
foxylad
Will foreign companies who sell internet services to US customers have to
collect state sales taxes?

This would be a serious nightmare. We already limit our sales to Canada
because if we go over a relatively low threshold, we'd have to collect and
remit state sales tax for about 12 territories. Having to do the same for
11,000 US jurisdictions would instantly stop foreign entrants into the US
market.

------
bcheung
Does this mean companies need to file 50 different state returns? How can any
company other than a mega-corporation be expected to handle that level of
bureaucracy? Even if their are firms that pop up to handle compliance it's
probably going to cost a fortune. This will put a huge strain on small
companies forcing many of them out of business.

------
ashelmire
So what if you split your company:

1) A US based warehouse/shipping company. 2) An offshore entity that owns the
products and sells them - but the products never leave the US.

Company 2 sells the products to consumer, company 1 ships them. Company 2 is,
presumably, beyond the enforceable jurisdiction of the states and therefore
can't be forced to pay the taxes?

------
c3534l
The federal government was granted the power to regulate interstate commerce.
They seem more than happy to regulate matters of in-state commerce, yet when
it comes to actually doing a job they have legal authority to do, standards
are conspicuously absent to the points where it's quickly becoming a problem
for everyone.

------
0x86DD_
I'm Just wondering how long it will take to happen a data breach with all
these tax info. what a headache.

------
hnburnsy
Anyone ever feel like a vendor is collecting sales tax, but never remitting it
to the taxing authority. I remember Vonage was collecting a city\state
telecommunication services tax for where I lived but only the city (not the
state) actually levied the tax.

------
Aloha
I see a opening for a SaaS business, that can automate and outsource this, and
figure out how much tax is due per transaction, and then make the payments for
small businesses - its something online payment processors like stripe, for
example could do too.

------
foxylad
This is a huge opportunity for payment services to value-add. Providing
automatic sales tax calculation, collection and remittance (including another
couple of percent for their trouble) is a no-brainer.

------
tafurnace
It seems kind of silly that the stock prices dropped for online sellers that
already collect state sales tax. Is this a knee-jerk reaction or is there more
to this ruling that would be cause for this?

------
tvanantwerp
A good TL;DR from my co-worker at the Tax Foundation
([https://twitter.com/jbhenchman/status/1009808187137150977](https://twitter.com/jbhenchman/status/1009808187137150977)):

Does your state online sales tax law have:

* Safe harbor for sellers who have limited activity

* No retroactivity

* Adheres to SSUTA

* State level admin

* Provides software

* Provides immunity for errors

If so, upheld. If not...

------
graeme
Does this affect the sale of services or info products sold online?

I run an online business from Canada with American customers and am wondering
if I'm affected. All digital products or services.

~~~
bluepeter
Yes.

------
donbright
I've lived in many a city in "flyover country" and I think it's long overdue.

The result of plunging sales tax revenue due to online shopping, for a lot of
places, is bridges falling apart, underfunded police agencies, teachers
leaving the profession because they don't want to live in poverty, schools
without supplies, without music programs, without art programs, let alone STEM
programs, colleges shrinking, faculty not being hired, roads going unrepaired,
homeless population growing, libraries being gutted, social programs and
social service agencies facing layoffs and shortages, and on and on.

~~~
opo
>... is bridges falling apart, underfunded police agencies, teachers leaving
the profession because they don't want to live in poverty, schools without
supplies, without music programs, without art programs, let alone STEM
programs, colleges shrinking, faculty not being hired, roads going unrepaired,
homeless population growing, libraries being gutted, social programs and
social service agencies facing layoffs and shortages, and on and on.

Non one can seriously claim the lack of sales tax revenue from out of state
shippers has that big of an impact on state and local revenue.

According to the article:

>...Broader taxing power will let state and local governments collect an extra
$8 billion to $23 billion a year, according to various estimates.

As a comparison in 2012:

>...Tax revenues increased in all but five states in fiscal year 2012, with
some recording noticeable gains. In all, states collected $794.6 billion, a
record-high that represents a 13 percent increase from 2010 totals

[http://www.governing.com/gov-data/state-tax-revenue-
data.htm...](http://www.governing.com/gov-data/state-tax-revenue-data.html)

So even using the high estimates of 23 billion, that would be a small fraction
of total state/local tax revenue. The extra few percent of revenue from taxing
out of state businesses isn't going to solve the huge list of problems you
listed (nor is it obvious that the money will be spend on any of those
issues).

The real question with this ruling is how much it will cost all the Internet
retailers to comply with the law.

------
doggydogs94
It’s about time for internet sales tax. Just how do local firms stay in
business when internet based businesses can undercut them by 5-10%
automatically.

------
PrimHelios
Fucking RIP literally every internet store that doesn't have the ability to
register for 10 thousand (literally) different fucking tax jurisdictions.

------
mkempe
How does this apply to traditional mail-order catalogues? I thought their no-
sales-tax orders were the model for e-commerce.

------
marze
Shouldn’t this require an amendment to the constitution, to eliminate the
constitution’s clause forbidding the taxing interstate commerce?

~~~
dragonwriter
> Shouldn’t this require an amendment to the constitution, to eliminate the
> constitution’s clause forbidding the taxing interstate commerce?

No such clause exists; there is a clause in Art. I, Sec. 9 prohibiting state
import and export duties, but a tax on sales applied equally to sales into the
state regardless of whether the origin is in or out of state is not an import
duty, and therefore not prohibited.

------
koolba
How does this work for virtual delivery of products? Do online SaaS companies
have to ask for an address now as well?

------
astdb
How did catalogue/mail-order retailers handle this (presumably in business
since before the Internet)?

~~~
jhall1468
This ruling overturned previous rulings that allowed mail-order businesses to
avoid collecting sales tax outside of their state.

------
blairanderson
I think Amazon will figure out a way to make things good for the end customer.

\- They already collect taxes properly for all cities and counties for
everything THEY SELL. \- They already calculate/collect/remit sales taxes for
all orders(including merchant orders) shipped to Washington && Pennsylvania &&
Ohlahoma.

For other states, they can fairly easily take on this burden if it benefits
the customer.

------
SubiculumCode
Maybe the problem is sales tax. Its regressive. Its complicated in the multi-
jurisdictional context.

~~~
techsin101
Exactly

------
s2g
> and who act knowing you are powerless to object

I still have the power, mostly, to just not buy from other states.

------
Thersites
More friction for everyone, benefiting the entrenched leaders in all online
retail spaces, looks like another step towards Balajis Network State, his
Startup Society speech is amazing
[https://www.youtube.com/watch?v=KiLUPvUsdXg](https://www.youtube.com/watch?v=KiLUPvUsdXg)

------
switchstance
Is this for only physical products? What about digital downloads and software
services?

~~~
switchstance
Anyone?

------
g0dg0d
This is going to drive so much business OUT of states with these taxes.

~~~
bluepeter
Unlikely. This is similar to an occupancy tax... why not soak out-of-state
guests who don't have much choice in the matter, and won't be voting to do
away with the tax. A SaaS business is going to refuse to do business w/, say,
Proctor & Gamble and pay Ohio sales taxes? No way.

------
miguelrochefort
Why don't we get rid of taxes altogether?

------
gigatexal
Amazon and other retailers’ stocks are down to session lows after the news.
Makes sense.

~~~
DanCarvajal
Really Amazon already collected sales taxes but now it extends to Amazon
marketplace sellers.

------
anoncoward111
More compliance and regulation for us to deal with. How about you just tax
property? It doesn't move. And also, how about the state stops spending money?

~~~
URSpider94
Thankfully, we have computers! Any online sales program worth paying for
includes automatic sales tax collection by jurisdiction.

Note, this ruling doesn’t mean that all businesses will immediately be taxed.
The law over which this suit was filed requires collection if your annual
business in the state is $100,000 or >200 sales, which means you’re already
doing a sizeable business.

~~~
supertrope
Compliance is far more complex than a simple look up table. Rates vary by
state, county, city, school district, mass transit zone, water district. And
each of these political subdivisions and the sales tax they assess changes
with every ballot issue!

There's a lot of faxing, forms to fill, etc.

So most of the value is the vendor doing the legwork in keeping up with
details and fixing corner cases. And leveraging their pre-existing trust
network and economy of scale.

~~~
MBCook
Don’t forget type of product, if it’s a sales tax holiday, phase of the
moon...

------
dsfyu404ed
One of the nice benefits of the US system of government is that the ability to
relatively easily pick and choose where to live, where to work, where to do
business, etc forces the states to compete with each other to some degree.
This ruling runs counter to that because using online retailers to avoid local
taxes is a very low effort way to avoid local taxes or avoid funding a local
government you disagree with and this ruling paves the way for states to
prevent that.

I have no problem with sales tax. I have a problem with states getting a cut
of transactions that did not result in transfer of money to an entity within
their borders.

Sales taxes generally follow the location where the money was received, not
where the goods were used. If I buy something at a brick and mortar store then
I'm subject to the sales tax where that store is located. Why should the state
of buyer be getting a cut of the transaction when the state of the merchant is
the one that is responsible for the environment in which that commerce
happened?

If I live in MA and drive to NH and buy fireworks then MA has no claim to tax
the transaction because it's obviously the environment of NH that made that
commerce possible at all (you can't buy fireworks in MA). What if I live in CA
and want to buy some special paint or cleaning product not for sale in CA so I
drive to NV to buy it? What if I want to buy a widget and my home state taxes
it and some other state subsidizes it (not necessarily at the retail level,
the tax/subsidy could be anywhere in the supply chain) so much that I drive to
the other state. In that case my home state still has no claim to tax the
transaction since it happened out of state. What if the price is so much
better elsewhere I'll be willing to pay shipping from half was across the
country? How does the fact that the a 3rd party (shipping company) is
responsible for getting the goods to their address change the situation? Does
the fact that the transaction originates online affect anything?

I have no problem paying state sales tax as long as it goes toward the state
of the merchant. The state of the merchant is responsible for creating the
environment that facilitated the commerce. They should be the ones getting a
cut.

Edit: I genuinely would like to know what the reasoning of those who disagree
with me is. I see no good that can come from allowing states to exert
authority on businesses outside their jurisdiction.

~~~
irrational
In what way? I choose to live in Oregon. Oregon doesn't have a sales tax. So
the Supreme court ruling has no bearing on me. There is nothing stopping
anyone from moving to one of the states that don't have a sales tax.

------
seibelj
Software engineers and entrepreneurs are extremely clever, numerous solutions
will arise to integrate with all of the major ecommerce platforms to automate
this. This won't be much of a burden on business. As long as regulations are
clearly defined (unlike GDPR) the industry will deal. Uncertainty is always
the biggest risk.

~~~
briandear
You have no idea what you are talking about. Won’t be much burden on business?
If you have physical shipping addresses, it is a bit easier, but what if you
sell virtual goods/services? Billing address? But that doesn’t actually have
anything to do where the person is actually buying the product. If I go to a
masseuse in California but my credit card has a Texas billing address, I am
still charged California taxes. So the precedent of using billing address for
tax calculation is a bit ridiculous and innaccurate. What if I have a foreign
billing address? So do we use IP address? My IP address routinely has me in
the wrong city and sometimes wrong region. When I lived near Avignon, France,
my IP would always show me as being in Corsica. Then there is VPN that could
make us all in Oregon and avoid taxes completely. Oregon-as-a-Service.

Engineers are clever. Sure that might be true, but now that cleverness is
going to be wasted building tax compliance solutions which aren’t even close
to being “not much of a burden.”

~~~
seibelj
If the purchaser has an address in an area with taxes, you then pay it. If
they do some weird VPN workaround and billing address in the Cayman Islands,
then you don't pay the taxes. It's self compliance. We sent men on the moon in
1969, this isn't rocket science to calculate a tax bill.

~~~
throwawayjava
It's really interesting to think about this. Very different types of
complexity.

The smallest possible correct program implementing a tax calculator is going
to be a LOT bigger than the smallest possible correct program for controlling
a 60's era manned flight to the moon. The latter is more complex in other
ways, of course.

Complexity can be "deep" or "wide". software for rockets is "deep and thin
complexity", but calculating hyper-local minimal tax bills is extreme "wide
and shallow complexity".

