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The Courts Businesses Government The Almighty Buck The Internet United States

Supreme Court Set To Hear Landmark Online Sales Tax Case (gizmodo.com) 248

An anonymous reader quotes a report from Gizmodo: On Tuesday, the U.S. Supreme Court will hear arguments in a case that could at least somewhat clarify Donald Trump's complaints about Amazon "not paying internet taxes." It will also decide if those cheap deals on NewEgg are going to be less of a steal. The case concerns the state of South Dakota versus online retailers Wayfront, NewEgg, and Overstock.com in a battle over whether or not state sales tax should apply to all online transactions in the U.S., regardless of where the customer or retailer is located. It promises to have an impact on the internet's competition with brick-and-mortar retailers, as well as continue to address the ongoing legal questions surrounding real-world borders in the borderless world of online.
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Supreme Court Set To Hear Landmark Online Sales Tax Case

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  • by Ichijo ( 607641 ) on Monday April 16, 2018 @11:41PM (#56450015) Journal

    Regressive taxes ought to be illegal anyway. There's really no good reason for them to exist, only bad ones.

    • Regressive taxes ought to be illegal anyway. There's really no good reason for them to exist, only bad ones.

      What state do you live in that sales tax is lower on something more expensive?

      In any case, only sales tax puts the tax bill at an individual which is where all wealth resides and is therefore the final stop for all taxes anyway. Taxes at other levels such as corporate taxes are passed on to the customers (individuals) and personal income is too subject to manipulation.

      • by mpercy ( 1085347 )

        A few states have a cap on sales tax for cars, so a "more expensive" item pays a lower percentage of sales tax. E.g. "South Carolina collects a 5% state sales tax rate on the purchase of all vehicles. The maximum tax that can be charged is 300 dollars. "

    • Taxing online retailers == more local shops open up == less megacorps == more spending power for the middle class. No matter what side of the political spectrum you fall on, unless you're Bezos, this is something you should be cheering for to apply to both sellers AND buyers.
      • Taxing online retailers == more local shops open up == less megacorps == more spending power for the middle class.

        Well, I can accept the first part of this statement (Taxing online retailers == more local shops open up).

        I could even buy the next piece (== less megacorps) though there's not really a good reason to believe it's a foregone conclusion.

        It's the last piece (== more spending power for the middle class.) I have a problem with. No, there's not really a good reason to believe that more Mom&Pop

      • Not really. I suppose to a point it depends on where you live and the number and quality of local shops. Amazon, to use the current target of the establishment charges a sales tax. They also charge shipping and handling (whether directly on a purchase or as rolled into their Prime service). When I'm going to look for some non-food or more rarely food item I want to buy, I look there (or occasionally at some other retailer with a big online presence like Walmart or Target to see how they compare). If there

    • Yep. I'm good for eliminating sales and payroll taxes, although I have a plan for a public option that levies a payroll tax if an employer doesn't provide affordable care or if the employee doesn't buy into the employer's healthcare and goes on the PO (it shouldn't be cheaper for your employer to offload to the taxpayer). For the unemployed, self-employed, or employed without any healthcare offered, the individual doesn't pay the premium at all; if the individual has affordable care through the employer

  • by Anonymous Coward on Monday April 16, 2018 @11:42PM (#56450017)

    " The #AmazonWashingtonPost, sometimes referred to as the guardian of Amazon not paying internet taxes (which they should) is FAKE NEWS!
            — Donald J. Trump (@realDonaldTrump) June 28, 2017"

    Presumably the tweet that this will clarify? But it's clear enough already, Trump is pissed at Bezos for owning Washington Post, and attacks Amazon because Bezos is the CEO. He doesn't even disguise the motive here.

    What Trump's done of course is make any attempt to attack Amazon using the Executive powers open to court challenge. He cannot use executive powers to attack political enemies.

    And what Trump's failed to do, was to get the Washingtom Post to censor its criticisms of Trump in exchange for not attacking Amazon. Hence the attacks continue.

  • Fundamentally, the justification for the tax is that it costs money maintaining the infrastructure and system that facilitates said sale. When the sale happens at a distance... both locations bear the burden, so.... both locations could reasonably demand sales tax. Sender's sales tax vs state's sales tax. Of course, this is handled internationally with customs, fees, import taxes and such, and the fed is specifically tasked with removing that sort of barrier to trade between states. And rightly so. And i

    • by rtb61 ( 674572 )

      So to simplify the whole issue, have a Federal sales tax and 80% money is to be distributed to the states on a per capita basis and the other 20% to be distributed to the states upon a need basis (some US states simply lack revenue sources and need to be economically stabilised, to promote development of revenue sources) and zero exemptions from that federal sales tax. This would help to end the corrupt practice of state tax free bidding wars by corporations, which has to come to an end, as it is extremely

      • by kenh ( 9056 )

        So to simplify the whole issue, have a Federal sales tax and 80% money is to be distributed to the states on a per capita basis and the other 20% to be distributed to the states upon a need basis

        Uh, no. People don't spend money equally, so a high-spending state like CA has a high per-capita tax collection level, and is reimbursed at the same rate as low-spending Montana? Why would any Californian think that was a good idea?

        Money spent in California is taxed to benefit Californians, end of story.

      • have a Federal sales tax and 80% money is to be distributed

        That would be simpler, but it would remove an important aspect of why we have states. They're places to try experiments with different government and to match rules with their situation.

        ....the thing with corporations and tax exemption bidding wars IS fucking bullshit though. It's just that they're bigger players than the states/cities and can bully them around. It's not even a sales tax thing. Typically the exceptions are straight up "We'll ignore property tax if you move here"? "Incentives". I don

  • Irony (Score:5, Interesting)

    by ShadowRangerRIT ( 1301549 ) on Monday April 16, 2018 @11:50PM (#56450035)
    South Dakota wants everyone else to obey their sales tax laws, whether or not they're located in South Dakota, while at the same time benefiting from usury laws not being enforceable across state lines. There's a reason most credit cards in the U.S. are issued from child corporations in South Dakota [marketplace.org]: South Dakota allows effectively unlimited interest rates on credit cards. They're perfectly fine with state-by-state enforcement when it benefits them.
    • It's not irony, it's standard operating procedure.
    • If we follow this line of reasoning, were a state can force vendors and citizens located wholly in another state to comply with the first state's sales tax laws, why can they not be forced to comply with another state's gun laws, abortion laws, marriage laws, pollution laws, welfare laws, ...?

    • SD citizens, like citizens in most states, generally are ignorant or simply ignore the states use tax laws.

      SD is unsatisfied with the perfectly justifiable actions of simply attacking its citizens with audits for not not paying their use taxes and just think it would be easier and less likely to make their citizens angry by forcing out-of-state vendors to be SD sales tax collectors like they force SD vendors.

      The issue here is, then what else can a state for out-of-state entities to do?

      --------------

      The Sout

  • by technosaurus ( 1704630 ) on Tuesday April 17, 2018 @12:13AM (#56450109)
    This would throw out the interstate commerce clause of the US constitution. Slippery slope, but it wouldn't be the first time.
    • by Anonymous Coward on Tuesday April 17, 2018 @12:31AM (#56450141)

      The Commerce Clause *needs* to be readjudicated (not thrown out per se), and Wickard v. Filburn overturned.

      • by Anonymous Coward on Tuesday April 17, 2018 @04:44AM (#56450777)

        Overturn Wickard and the BATFE just lost almost all of its power to regulate firearms.

        And the FBI also loses a ton of power... its amazing how that one case allowed Federal gov't to expand into every State and into your home.

        I agree Wickard is bad law, but the gov't and law enforcement as we know it would almost cease to have power if they significantly modified it (which they should).

  • If SD wins, the first question every one of those online merchants will have for them is "What's the contact point for authoritative real-time-response data on what the applicable tax rate is for any address in South Dakota?". Because if SD expects those retailers to collect sales tax, SD has to be able to tell those retailers what tax they should collect for any given transaction. For a physical retailer it's easy, the tax is determined by the retailer's physical location and the buyer's address is irrelev

    • by DogDude ( 805747 )
      http://taxcloud.com [taxcloud.com]
    • by mpercy ( 1085347 )

      And then SD will have to hire 10,000 new auditors to handle the sales tax cases from millions of small e-tailers.

      Now we see the true purpose...

  • Perhaps the Flying Spaghetti Monster sees it fit to give liberals a consolation price for loosing the chance to break the nearly 50 years of conservative majority in the Supreme Court
  • by oldgraybeard ( 2939809 ) on Tuesday April 17, 2018 @01:06AM (#56450219)
    Small business on line sales. There are over 9000+ individual taxing districts in the US. Each requiring quarterly or if your sales are small yearly reports filed.
    Each one is different, each one has it's own crazy rules. Here is one in the state of Minnesota. Say we sell a pair of gloves. If the user uses them to keep their hands clean they are taxable. If the user uses them for a safety purpose. handling glass with sharp edges, they are not taxable. How does the seller know? So they always tax!
    The entire sales tax code, nation wide in the 1000s of taxing districts are a fuddled mess of crap.
    Big online sellers like Amazon are all for it, they want to force all small independents in to Amazon stores where they skim 8% - 15% off the top of all invoice.totals as their cut.
    Amazons master inventory system is a complete mess. They are always moving your products from the lower groups in to the 15% cut group. You call them up argue with them for a week and they will move that product back to the proper group. Next week they move 2 more up, rinse and repeat.
    If the government wants a sales tax they should be clear concise and honest. Just set one rate, one reporting entity, once per year settling up. Which they never do, everything government does is a complete convoluted morass of crap..
    How is a one-two person small shop supposed to file sale tax reports in all 9000+ taxing districts? Let alone quarterly reports/payments.
    This will go through because the big operators want to force all the small online retailers to pay them a cut.

    You may ask how I know, I run a business, have a state sales tax number. I also support other online sales sites from a tech stand point. I am in the trenches!

    Just my 2 cents ;)
    • Forgot to mention this one, Amazons return policy they apply to their store operators. Customer gets a product they are not happy with/defective whatever. Amazon does not want to handle any returns, you keep the item and Amazon just dings the sellers account for the sale.
    • by oldgraybeard ( 2939809 ) on Tuesday April 17, 2018 @01:23AM (#56450263)
      Also forgot this, to get your products in front of the customer you need to be fulfilled by Amazon. So you ship a bunch of your product to Amazon and they charge you inventory handling and management fees.

      The point is small margins become very small. The only way it pays is if you can do some volume sales. But Amazon always makes their cut ;)
      • by jonwil ( 467024 )

        Not to mention that Amazon probably has multiple copies of an item (from Amazon and from re-sellers) and the item the customer gets may not be the item the seller sent to Amazon (and may not even be identical to the item the seller sent to Amazon)

      • So why don't you use eBay instead of Amazon? As a consumer I prefer Amazon because I don't want to deal directly with small businesses like yours. This is based on my experience buying from eBay vs Amazon. I think you may not be giving Amazon enough credit for the value they're providing to you.
    • You may ask how I know, I run a business,

      You should probably try a bit harder, then. http://taxcloud.com [taxcloud.com]
      • So how do you answer the OP's question about Minnesota. No software can actually know what the user is "planning".

        Each one is different, each one has it's own crazy rules. Here is one in the state of Minnesota. Say we sell a pair of gloves. If the user uses them to keep their hands clean they are taxable. If the user uses them for a safety purpose. handling glass with sharp edges, they are not taxable. How does the seller know? So they always tax!

        The second issue which the OP doesn't go into detail is that YES, you can use software to help with sales tax. However that software isn't free. For a small business that may be thousands of dollars. For a large corporation it's trickier but not impossible to collect sales taxes.

    • by AvitarX ( 172628 )

      On top of that. It makes more sense for the seller to pay the tax front their location.

      If the tax is on the seller (which is the entity that pays), it's the seller's location that has the burden of supporting the seller.

      If a resident of another stayed buys something, why should that other state collect the money? The shipping company that moves the object should cover the states affected by the movement of goods, the seller should cover the infrastructure that their state provided, I see no reason what the

      • If a resident of another stayed buys something, why should that other state collect the money?

        • Income tax is a tax on money being given to a person or entity.
        • Sales tax is a tax on money being spent by the person or entity.

        So if the purchase is being made from the person's home, it makes sense for the sales tax to be collected by the state where the person's home is located, since sales tax is a tax on money leaving the person at whatever location it's leaving him/her. If the jurisdiction where the busin

    • Here is one in the state of Minnesota. Say we sell a pair of gloves. If the user uses them to keep their hands clean they are taxable. If the user uses them for a safety purpose. handling glass with sharp edges, they are not taxable.

      Uh, so what if the gloves are used to keep hands warm? Surely that is a common use case in Minnesota?

    • by Solandri ( 704621 ) on Tuesday April 17, 2018 @06:39AM (#56451039)
      There are services small businesses can subscribe to which will provide a database of sales tax rates for different zip codes and addresses, which is updated regularly. It might affect a small mom and pop shop doing a few dozen interstate orders a month. But any business with a reasonable volume of interstate sales can easily cope with the patchwork mess of sales tax rates.

      The problem is none of these services will indemnify the business against their screw ups. If their database gets a sales tax rate wrong, and the business ends up collecting insufficient sales tax for some of their transactions, the business has to pay for it, not the company providing the sales tax database.

      What really needs to happen is for the government to set up a central database of these sales tax rates. The burden would then be upon state and local governments to update this database with any changes they make to their sales tax rates. Any business in the country could then query this database for each sale, and be guaranteed that they are charging the correct amount of sales tax. If there's ever any error in the database, then the fault lies with the state or local government which should've made sure their database entry was correct. And thus the penalty for such errors falls directly upon the party making the error. Not the crazy system we have right now where the penalty is passed on to businesses who have little to no capability to verify thousands of sales tax rates across the country.
      • by MobyDisk ( 75490 )

        There are services small businesses can subscribe to which will provide a database of sales tax rates for different zip codes and addresses

        That's not good enough though:

        Baltimore City has a special sales tax called a bottle tax [baltimorecity.gov]. (Lots of municipalities are doing this - the money goes to cleanup & recycling efforts.) Under that law fruit juices with 10% juice fits the tax. So a Baltimore City resident goes to Amazon.com and orders a case of soda from the Spanish Manufacturing Corporation (SMC) located in Seville, Spain. Who is responsible for determining if the bottles sold in that meet the description of the Baltimore City bottle cap t

    • "The more numerous the laws, the more corrupt the government." -- Tacitus

    • by houghi ( 78078 )

      There are over 9000+ individual taxing districts in the US

      That is your problem right there.

      In Europe (compare states to countries) we have more poeople and nothing close to that. I do get a tax letter from my city, but that is basically just a bill for 50 EUR or 100 EUR or so per year and is unrelated to my income, but to the household.

      Sales rtaxes are country wide. That would mena 52 different sales taxes. Not very hard to program in. Not even for a small company.

    • The state of South Dakota agrees with you which is why they only require this if you do a large number of transactions in the state (over $100k/year I believe)
  • It would be great if they win this case.
    People could use digital stores to avoid taxes and reduce the power of the state.
    Less corruption of society.
  • by meglon ( 1001833 )

    that could at least somewhat clarify Donald Trump's complaints about Amazon "not paying internet taxes."

    It doesn't matter as Amazon already collects state sales tax for every state that has a sales tax, unlike say...Trump's own business which only collects sales tax for 3 states. The only clarity needed for Trumps comments are: he's an idiot that doesn't know what he's talking about.

    https://www.washingtonpost.com... [washingtonpost.com]

  • Not to mention that the items taxed are taxed differently in different states. Food may not be taxed at all in one state, but taxed fully in another.

    For example, a bagel in NYC is not taxed, but a sliced bagel is taxed as prepared food.

    In Washington, a candy bar containing flour (a Milky Way Bar or Kit Kat) is not taxed, while one without flour (a Milky Way Midnight Bar or 3 Musketeers) is. The only way for a consumer to know what's taxed before heading to the checkout counter is to read the ingredient lab

  • by mpercy ( 1085347 ) on Tuesday April 17, 2018 @09:11AM (#56451337)

    Most states *already* tax internet and catalog purchases, indeed all purchases made out-of-state for goods brought into the state. They just currently cannot force merchants outside those states to comply and act as proxy tax-collectors for them.

    These are called Use Taxes.

    The thing is, States are upset that no one pays Use Taxes and now want to force businesses in *other states* into servitude as tax collectors.

    What right does one state have to force a brick-and-mortar retailer in another state to collect sales taxes from border-crossing customers? None.

    Why then should they be able to force an out-of-state retailer of the virtual sort to collect sales taxes from virtual border-crossing customers?

    If I lived in North Dakota and I hopped across the border to Montana and bought a book at a shop there (no sales tax in Montana) then took it back with me to ND, I would be responsible for paying any use tax owed, not the book shopkeeper in Montana. Same rules should apply to the Montana shopkeeper if he mails my books to me at home.

  • This Streamlined Sales Tax idea is about allowing states to force businesses residing completely in *other states* to become proxy tax collectors, not to mention that those businesses will be forced into audits and liabilities from any state or tribal tax that can be passed completely without representation.

    People act as if technology will solve these "problems"...the equanimity of sales taxes are not simply a matter of rates. A software database would be huge to encompass the differences between states. Co

  • Brick-and-mortar Main Street vendors in Delaware have no obligation to collect and remit Maryland use taxes for Marylanders frequenting their stores. Even if the Marylanders are jumping across the state line to take advantage of Delaware's 0% sales tax. Even if the Marylanders then fail to report and pay their state's use taxes.

    Internet vendors should continue to have the same right to not be forced into acting as a tax collector proxy for some state in which they do not have a physical point-of-presence.

    Wh

    • by mpercy ( 1085347 )

      The issue here is that Maryland would and should have zero chance of enforcing its will on Delaware business to force them to act as proxy tax collectors for Maryland, even if hoards of Marylanders rolled into Delaware everyday to stock up. It is the Marylanders who are violating (I assume) Maryland's use tax laws. Why is it the responsibility of a store in Delaware to enforce Maryland's use tax laws?

      There's no difference between Marylanders driving to Delaware to shop compared to them ordering from a store

  • Even paying sales tax, I'd still come out ahead on most online purchases. I don't look at something online and say "uh oh, they charge sales tax, I might as well get in the car and buy it from some big box store".

  • Imagine a mom&pop store in a state with 0% sales-tax, say, Delaware. Further assume it is close to the border with a state that has a high sales tax, like, hmm, Maryland which has a 7% rate.

    By reputation and the lure of 0% sales tax, people from Md make the short trip to mom&pop to buy their wares. Mon&pop do not care nor ask where their customers are from, there is no question *at all* where the transaction takes place. It is subject to Delaware sales tax: 0%. Being a brick-and-mortar store in

  • Bear in mind that what are being discussed are sales taxes, which are paid by customers.

    Businesses merely collect and remit these taxes. They are forced to act as proxy tax collectors because it is more efficient for states for force a few thousands of businesses to account for their sales than it is to force a few million citizens to do so individually (which is already a proven utter failure as per use taxes).

    Please bear that in mind before going of on a "these online corporations are skipping out on taxe

  • by mpercy ( 1085347 ) on Tuesday April 17, 2018 @09:37AM (#56451481)

    In a brick-and-mortar case, we know the location to use for the transaction as the entire transaction occurs between people located within a single state and subject to the laws of they state they are all physically in. So the state can force a store to collect sales tax from its customers who come into the store and make purchases.

    For an online purchase, it's not so clear?

    Purchaser's location? What if the purchaser is in a hotel room far from home, maybe even out of the country? Or on an airplane?

    Shipped-to address for the purchase or Purchaser's mailing address? I foresee a lot of Montana mailing addresses once someone in Montana realizes the business opportunity inherent in sales-tax avoidance arbitrage.

    Purchaser's home address? What if the item is shipped elsewhere, e.g. a gift to an aunt in a 3rd state? And why would I tell anyone my home address instead of my mailing address?

    Sender's address? Which one, the HQ? The warehouse? The fulfillment center?

    Will states be able to force out-of-state brick-and-mortars to quiz customers and collect and remit use taxes on the assumption that their citizens temporarily in another state just bought something that they *should* have bought at home, thus depriving the home state of revenue?

    • Wouldn't it just be simpler to use the state that the company is incorporated in?

      (And for fairness, this should apply to B&M and online stores.)

      I 100% agree this is a complete clusterfuck. e.g. Web Servers can literally be all over the world, so you can't use the location of those.

      An online store is akin to having a salesclerk personally visit you while taking your order.

      * It shouldn't matter where geographically the buyer is located,
      * Which leaves the question: Isn't the fundamental problem: Where is t

      • by mpercy ( 1085347 )

        Many businesses are incorporated in Delaware.

        Delaware has no sales tax, and does not allow cities or counties to assess any type of sales tax.

  • by hierofalcon ( 1233282 ) on Tuesday April 17, 2018 @12:15PM (#56452565)

    If states force online retailers to collect their sales tax - thus burdening the online retailer with knowing about all tax jurisdictions, having common descriptions of items country wide so you know what is even taxable and its particular rate on any given day then....

    make all non-online retailers handle the sales tax rates the purchaser would pay at their home and remit them to their home states as well! You make a purchase, show your ID and then the sales tax rate will be whatever it would be for your home address. If you come from a state that is sensible and doesn't collect sales tax - you wouldn't have to pay it anywhere. If you come from a state that is nuts - then you're equally repressed everywhere in the United States you shop.

    Seems fair to me. Your opinions will probably vary.

  • Come on Donny, could you at least TRY to know what the fuck you're talking about before you start flapping your gums like that?
    Also could you grow the fuck up and accept that Jeff Bezos is just a better and more successful businessman than you are? Seriously.
  • There's a good piece in the WSJ about this and the insanity of it all. In one tax district, a Twix bar is taxed at a different rate than a Snickers bar because one of the ingredients in a Twix bar is flour. Snickers, on the other hand, is considered candy. Nobody but outfits as big as Amazon could comply with all the taxation because only they have the army of people necessary to deal with it.

    I, myself, have to deal with the paperwork nightmare in different states and different government agencies. It t

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