
Heroku – Sales and Use Tax - minton
https://www.heroku.com/salestax
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kuhhk
Didn't the recent Supreme Court decision on sales tax make this the seller's
responsibility?

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teilo
The SCOTUS decision allowed the states to establish the concept of an
“economic nexus.” This means that a business does not need to have a physical
presence in the state, but only meet certain transactional threshholds, such
as the number of transactions, or the value of those transactions. However,
this presumes that the buyer takes delivery of a physical product in the state
itself. In other words, it is not residence in the state, but where the buyer
takes possession of a product that determines whether a seller must collect
sales tax. There has to be a shipping address within the state for a
transaction to qualify as taxable in that state.

So where does a buyer take possession of an online service? There is no
shipping address. Most state laws do not yet deal with online services, and
the SCOTUS decision is not specific enough to allow such services to be taxed
based upon the residency of the buyer.

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teilo
Nor does any other hosting company. This is not newsworthy.

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minton

      “Heroku is not required to, and does not, collect your state’s sales or use tax. Purchases are not tax-exempt merely because a seller is not required to collect the tax. Your state’s law requires a purchaser to review untaxed purchases and, if any tax is owed, file a use tax return and pay any tax due.”
    

This is taken from a Heroku receipt. It seems to suggest taxes may be required
but that the burden is on the consumer. If I’m understanding this correctly
and Heroku can just avoid the mess of collecting taxes by adding a sentence to
their receipts, why wouldn’t every company selling services online do this?

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teilo
You misunderstand.

Heroku does not avoid having to collect taxes by adding this to their
receipts. They could say nothing, and every word of that statement still would
be true, and they would still not be liable to collect the tax. Heroku is just
unique in that they are telling the customer about it.

I am the CIO of a $150M company. I am in charge of the sales tax processing
infrastructure at this company, and I even re-wrote our billing process to
comply with the various state laws. Though I am not an accountant, I know more
about sales tax than I ever wanted to know.

I also purchase thousands of dollars worth of online services every month.
NONE of them charge tax. None whatsoever. Again, Heroku is not unique.

This is true of every online service because to be required to collect tax,
you must have a nexus in the state to which you are delivering a product. That
used to mean merely a physical business presence. (Quill Corp. v. North
Dakota, 504 U.S. 298 (1992)). But now, since the SCOTUS decision last June, it
can mean an "economic nexus." But even then, this nexus is defined by the
physical address to which a product is delivered. See the issue?

And regarding the requirement of consumers to self-assess sales tax: This is
true of _everything_ you buy online that, if purchased in a store in your home
state, would otherwise be taxed. Almost all states technically require
purchasers to self-assess if the item is taxable, whether the vendor tells you
about it or not. And again, as part of my job, I have to know which products
we must self-assess, and which we don't have to, and fill out our purchase
orders accordingly.

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saurik
?

~~~
orastor
hey saurik how are you doing these days?

