As a consumer, bad! For states and citizens, good. As a small business, this is frightening. While South Dakota law has $100K threshold before requirement to collect taxes, will other states? And what about states that collect tax on services? And how am I as a small business owner supposed to sort out state, county, and local taxes for each customer?!
And be subject to audit by every state sellers ship to. Could be really messy for smaller online sellers
As a small business, this is frightening. While South Dakota law has $100K threshold before requirement to collect taxes, will other states?
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According to what I’ve read in another article, there probably will be legal pressure on other states to keep their laws simple like South Dakota’s and not be a burden on interstate commerce.
It is a nightmare for small businesses. It would be better to have a national sales tax that is centrally collected and then disbursed to the states. Trying to collect for not only state but local option sales tax is a great burden when your sales are nationwide.
Why not make stores collect sales tax from out of state buyers? We can be sure they are not paying the use tax when they bring the items they buy back home. So they must pay the onsite tax as well as the tax for their state.
If this is implemented then states that do so must eliminate their use tax.
An entrepreneurial programmer or group of programmers could create a database of all state and local sales tax formulas, put it online, and then let small businesses subscribe to it for a small price.
Set it up so a point of sales systems (POS) can log in, automatically put in the buyer’s zip code, the web site computes the tax, and send it back as data to the POS to finish the customers charges.
It wouldn’t take a lot of work, and could make the developers/web site owner lots of $$$.
They key would be to charge very little for a long-term subscription and get lots of subscribers.
Any FReeper programmers out there, feel free to develop my idea, but just give me credit! :->
Services would be covered by income tax. If you provide services to other states, you need a resident agent at a minimum. Typically, states will exempt out of state income tax on services when income tax for that revenue is paid to the home state.
To sort out sales rates, you’ll have to buy a service to provide you the rates associated with addresses or use someone like amazon instead of your own website shopping cart, whereby amazon will probably sell you that service.
The real problem comes with filing. Most states require monthly reporting. They make quite a bit of money from fining out of state filers when they make a mistake on those forms they’re not familiar with.
So you need an accountant now too.
Or, you could do your own research and roll the dice that way.
If the US is going to have an Internet tax, then I propose the following:
Each transaction is viewed a source and destination.
Source is where it is shipped from, destination is where it is delivered. Each state then publishes a tax rate for their source and destination values.
Retailers then average the source and destination rates, charge the average to the customer and then remit half to the tax authority for source and the other half to the tax authority for the destination.
And how am I as a small business owner supposed to sort out state, county, and local taxes for each customer?!
1. The small businesses go bankrupt.
2. A company creates software that tracks all of the various tax laws in all the states, counties, cities, and strip malls and charges tax accordingly - and sells it to the companies that don’t go bankrupt.
I have a feeling, though, that this is limited to state taxes only. But that will probably be tested in the SCOTUS as well.
They opened up a can of worms here. Seriously.
I honestly thought this could never pass because of the reasons it didn’t before. But as with Obamacare decisions, it really comes down to what they think “must” happen, as opposed to what is really constitutional.
And yeah, our founding fathers would have been shooting by now, but it is a different world. It is a fools errand to fight this violently.
I do the quarterly sales tax for my husband’s business here in upstate NY. It sucks! They want to know:
1. Your gross sales
2. Total sales not subject to sales tax
3. How much in debit/credit sales
4. Sales tax broken up by county (in our case 4 different counties)
I didn’t see the court explain WHICH sales taxes would be collected:
The tax at the location of the seller? Or the tax at the location of the buyer?
On a practical basis for bookkeeping purposes, the sales taxes being collected at the location of the SELLERE amkes the most sense.
IIRC, there are 3346 counties in the 50 states. My accounting software prints 50 lines per page. IF I were doing cooks for a client who did any online sales out of state, I would be creating 3346 new Liability accounts to record the collection of such taxes, which would take up 67 pages of Liability accounts on the books. In some states, I would have to file forms quarterly-—in some states I would have to file forms MONTHLY. That would be 50 different state forms filed 12 times a year at the most. 600 forms filed.
On top of that, the company would have to ALWAYS know the correct sales tax for every customer. That would require each customer to know exactly what county they live in. I know people that have absolutely NO IDEA what county they live in or what the sales tax is for that county. The burden to provide the correct county status would be on the customer, but the company could be fined if they don’t have the correct information. NOT fair. I predict the courts will have problems with that alone.
Now-—all the 3346 counties in the country who actually do have a sales tax also have to provide that information to EVERY company in existence & every new company when formed.
All of this is beyond a bookkeeping nightmare.
It would ONLY make sense to me that the sales taxes would have to be collected at the site of the SELLER. With companies like Amazon, who have different sites, they would have to be very careful. Summit Racing has 3 different locations—Ohio—Georgia—and Nevada. I can order a part from the call lady in Georgia, but the part is available at Nevada, so they will ship it. This structure isn’t uncommon for large companies.
The court case referenced ONLINE sales. I personally do not do ANY ONLINE buying. I do call Summit & a company that sells horse supplies & I work out of their catalogs——NOT ONLINE. I actually talk to a person who fills my order. (Summit also has a great tech group that answers my questions.) So-— IF I am buying with a phone call——NOT online—do I escape sales taxes ????
I don’t know how fast this Supreme Court decision is supposed to be implemented, but there is hard work ahead for these companies.
There is also the fact that there are some states which have NO sales taxes. Oregon for one (but they have horrendous property taxes). I do NOT know if there are individual counties within those states that DO have sales taxes.
While all the younger people are believing that “computers can handle all of this”, it still remains that software has to have the capacity to isolate each locality collecting sales taxes. AND the coding has to be correct.
The SALES into each county also has to be isolated...so there will have to be 3346 different income accounts. This is a software & accounting nightmare.
Why? Because the forms I have filled out for years in California for clients has the ‘sales’ as part of the form. Then the sales tax is calculated off the gross sales for that location.
I can also see states having to add MANY more staff to audit the return forms for accuracy.
I am glad I no longer have clients who have to fill out sales tax forms.