Supreme Court overturns Quill, subjects all internet transactions to sales tax

[Batpig]

Just as an FYI since it has been mentioned several times in the thread - 3rd party sales and use tax management already exists. I'm aware of Vertex, and I'm sure there are others.

[BobC]

Originally Posted by Batpig

Just as an FYI since it has been mentioned several times in the thread - 3rd party sales and use tax management already exists. I'm aware of Vertex, and I'm sure there are others.

I'm aware of it and other sales tax management software also but, in this case the trick is, does that software currently interface with a seller's Ebay account so they don't have to go through all the time and effort to gather and keep track of all the sales tax data themselves and enter into the Vertex software by hand to then be able to file and pay all the various state taxes they end up owing? Software like that will not be cheap, and will need to be constantly updated and revised as sales tax laws and rates change over time. And what about if they also sell at shows or have their own site they sell from? Aren't they going to have to record all that data and possible enter it into the tax management software by hand themselves?

Also, that software simply manages the data and information, and may or may not actually be able to prepare and file actual sales tax returns for you in every state, or properly remit the sales taxes in an electronic or other automated manner. And then as was alluded to by some other posters, there is also the matter of having to look at each state you sell in and checking their rules and nexus limits.

And then a seller is going to have to register or license themselves in each and every state they end up being responsible for sales taxes in. The software isn't going to do that for you. And don't forget that all those various states have separate and different rules and rates and you still have to comply with their separate laws, etc. And let's say you decide to take a break and not sell for a while, in most states you're still going to have to file sales tax returns, even if the tax due is $0. And if you decide to quit selling, then you're going to have to formally go and dissolve or terminate your license or registry in all those states so they don;t keep coming after you for sales tax returns and taxes.

Additionally, I'm not so sure Ebay would like to share their source code with someone to write such a program to interface with their software, at least not if they didn't own the software themselves. And as earlier poster previously speculated, figure out a way to then charge for the cost of doing so. Of course, this then may present an added dilemma to Ebay as I pointed out in my previous post in regards to Ebay not wanting to do things that could potentially make them responsible for the sales tax themselves. If they create/sponsor such software, and especially if they charge sellers for its use, they may add to the risk of them being viewed as directly responsible for the sales taxes themselves by the states as well.

And also, by creating/owning/selling/charging for such software, they could become liable for interest and penalties on screw-ups and bad or missed sales tax filings or payments if there are errors or mistakes made by the software, among other things I extremely doubt that Ebay would in any way want to become part of the tax software and compliance business and add that risk and liability to their plate.

[Exhibitman]

I am sure all of this is going to be addressed in legislation in Congress.

But seriously, I think this will open the door to serious consideration of a Federal sales tax and the creation of a Federal-state partnership on sales taxes for interstate sales. Congress certainly could enact a uniform set of sales tax provisions and rules for interstate commerce, which would ideally allow a retailer in one state to enter all data for all interstate sales into a single Federal sales tax return and leave it to the agency administering the program to apportion the money and distribute it to all of the states.

I would also guess that most states are going to address this case in the next legislative session. Until the state laws are changed, there is nothing to do, really. The ruling just opens the door to future changes in the tax programs.

[BobC]

Originally Posted by Exhibitman

I am sure all of this is going to be addressed in legislation in Congress.

But seriously, I think this will open the door to serious consideration of a Federal sales tax and the creation of a Federal-state partnership on sales taxes for interstate sales. Congress certainly could enact a uniform set of sales tax provisions and rules for interstate commerce, which would ideally allow a retailer in one state to enter all data for all interstate sales into a single Federal sales tax return and leave it to the agency administering the program to apportion the money and distribute it to all of the states.

I would also guess that most states are going to address this case in the next legislative session. Until the state laws are changed, there is nothing to do, really. The ruling just opens the door to future changes in the tax programs.

Oh, that has been talked about for a while but, the problem as pointed out before, all the different state rules, taxes and rates in effect. Normally when you get the feds involved they try/want to set it up as one set of rules for all, to make it more simple and easier to handle. Also, what do you do for those states that don't have a sales tax?

Trust me, while it sounds like a good idea at first, many states will end up fighting this tooth and nail. A good example would be if you look at Ohio, which has virtually every city and village in the state with their own city income tax. The state has been trying to take that over and regulate and collect it on behalf of the cities for quite a few years now. The cities have been fighting it all along as they figure once the state handles it, they are now at their mercy. Same thing will hold true with the states allowing the feds to handle and collect this for them. They don't trust the feds at all either, and rightly so. Just like the cities in Ohio know not to trust the state.

[Exhibitman]

Originally Posted by BobC

Oh, that has been talked about for a while but, the problem as pointed out before, all the different state rules, taxes and rates in effect. Normally when you get the feds involved they try/want to set it up as one set of rules for all, to make it more simple and easier to handle. Also, what do you do for those states that don't have a sales tax?

Trust me, while it sounds like a good idea at first, many states will end up fighting this tooth and nail. A good example would be if you look at Ohio, which has virtually every city and village in the state with their own city income tax. The state has been trying to take that over and regulate and collect it on behalf of the cities for quite a few years now. The cities have been fighting it all along as they figure once the state handles it, they are now at their mercy. Same thing will hold true with the states allowing the feds to handle and collect this for them. They don't trust the feds at all either, and rightly so. Just like the cities in Ohio know not to trust the state.

If the states enact a hodge-podge of new regulations over interstate sales tax and there is wide variance between them, that is precisely what the commerce clause of the Constitution was meant to allow Congress to regulate. The business lobby will go apeshit and in this pay-for-play government, if the money goes crazy, the officials they bribe, er, donate to, will respond.

[BobC]

Originally Posted by Exhibitman

If the states enact a hodge-podge of new regulations over interstate sales tax and there is wide variance between them, that is precisely what the commerce clause of the Constitution was meant to allow Congress to regulate. The business lobby will go apeshit and in this pay-for-play government, if the money goes crazy, the officials they bribe, er, donate to, will respond.

Exactly right. This is not an easy fix. The problem stems from the way the old laws requiring physical presence to be in place before someone could be responsible for having to file and pay any kind of taxes in any state or jurisdiction. Back then there was no internet or online sales. The did have catalogs sales but, not to the extent or volume of today's economy. And because of the vast increase in such internet and online sales, old brick and mortar businesses are shutting shut down left and right, or having a real hard time competing, states lose out on sales tax and other tax revenue they would have otherwise had, and on and on. They're now trying to figure out how best to update and change the tax laws to deal with the new way businesses are run and operate. The problem is that everyone is pretty much ingrained with the old, existing tax systems and rules, and to just wholesale change them all at once would create pure chaos in the business world and the economy. And in the meantime, since not every state has the exact same types of taxes, laws and rates, it is near impossible to hope for any concerted effort on the entire country's part to address this, unless as you suggested, Congress and the federal government take the lead. Of course, the states will never go along with this as it violates their states rights and they'll never all agree on exactly how it things should be handled, and who should be handling them, anyway.

As a supporting example, for years, there has been a group of states that have gotten together to back and support and promote ideas revolving around the generalization of state taxes and such, and it is all as a result of what is known as the Multi-state Tax Compact that was actually put into effect all the back in 1967. Been that long and they still can't get all the states to work together to agree on how to do things from back then even. Fat chance you'll get them to change their ways and start agreeing on all the new things happening every day now.

[BobC]

Thought this might be of interest to some of you regarding a follow-up to the recent Supreme Court case involving Wayfair in South Dakota. Here's a link to a recent article in accountingToday that talks about the possible ramifications of the ruling and potential reactions from other states going forward.

https://www.accountingtoday.com/news...les-of-wayfair

The interesting thing here to note is that under this Remote Seller's Law, originally enacted by South Dakota and effective back on May 1, 2016, is that their threshold and definition of a large online retailer/seller is anyone with more than $100,000 in sales to South Dakota residents/businesses in a current or prior year OR 200 or more transactions with residents/businesses in a current or prior year. Hitting $100K in sales may be a little tough for smaller sellers but, having over 200 transactions may not be so tough, especially for anyone selling a lot of smaller value cards. This puts outfits like PWCC and Probstein right in their cross hairs as 200 transactions a year only amounts to about 16-17 sales a month, which is really not that many and will likely impact quite a few sellers on Ebay.

Also, this recent Supreme Court ruling is not the final action. The case actually went back to South Dakota courts then for final resolution, so the actual law has not yet officially been put into full effect yet and still has to get over some additional constitutional hurdles. Here's another article talking about the history of this and where it now stands. Still, this should start being enforced sooner than later I would think as the South Dakota courts had already aligned with the state on the legality of this. Thankfully it sounded like South Dakota was only going to enforce this going forward, and not put any added burden on businesses by trying to make the law retroactive as trying to go back and collect sales tax after the fact is virtually impossible in my opinion.

https://www.salestaxinstitute.com/re...constitutional

Another interesting question is what exactly counts as a "transaction" towards the 200 per year threshold. If someone buys from a catalog or off a website from a seller like say Kit Young or Wayne Varner, i would think the total number of things they purchased at the same time would be bundled and sold altogether as one transaction. However, if such a seller also sells items on Ebay, which I'm pretty sure both of these guys I mentioned do, I'm not sure if each individual listing being sold on Ebay would be considered as a separate transaction or not, even if someone purchased several items all at once and then bundled and paid for them through checkout in one payment. I'm guessing that is something the South Dakota sales tax department will have yet to determine and opine on.

Also, sellers have to remember that if they sell through catalogs, websites, Ebay, or via other means, the $100K and 200 transaction thresholds are for total sales and activity through all those venues added together, not just Ebay sales and transactions. Ebay sales and transactions are probably the most visible and easiest for the states to go look at though, which is another reason Ebay is very unhappy about this because they are so big and visible to the states. Sellers trying to get around this may just reduce their activity on Ebay, or get off it entirely, so South Dakota doesn't come looking for them. Ebay knows this will likely have some negative impact for them going forward, just how much, no one knows yet. Also, it will possibly put Ebay in the middle if the South Dakota sales tax department comes asking them for information on sales into their state, or detail on seller's activity such as sales amounts or the number of transactions with SD residents/businesses. They won't have much of a choice and will likely have to comply with any such requests, so this will probably cost them additional time and effort as well.

This could become real interesting, and not necessarily in a good way!!!