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Government Businesses The Courts The Internet United States

Tech Giants Urge Congress To 'Protect Entrepreneurs' From Supreme Court Ruling (theverge.com) 300

Posted by EditorDavid from the third-party-favors dept.
U.S. states can now require online retailers to collect local sales taxes, according to a recent Supreme Court ruling that could affect thousands of third-party sellers on top tech sites. An anonymous reader quotes The Verge: In fact, Amazon, which last year started collecting sales tax in all 45 states that require it by law, may have a substantial amount of work to do to help its Amazon Marketplace sellers stay compliant. Yet we don't know if that burden will fall primarily on Amazon or if it will be the responsibility of the sellers. More than 50 percent of all sales on the site are conducted via third-party sellers, some of which use Amazon for fulfillment but otherwise operate independent small- to medium-sized businesses... Etsy, eBay, and others are in similar boats. According to the US Government Accountability Office, as much as $13 billion in annual sales tax revenue is at stake....

Etsy is concerned about what it sees as "significant complexities in the thousands of state and local sales tax laws" and that by overruling the Quill decision, the Supreme Court has put the ball in Congress' court. "We believe there is now a call to action for Congress to create a simple, fair federal solution for micro-businesses," Silverman added.
The Verge writes that "the case may be litigated for years to come to figure out how to account for the over 10,000 state jurisdictions that govern sales tax across the country. That is, unless congressional legislation supersedes the state court decisions... Even groups that were in favor of the ruling, like the nonpartisan research institute the Information Technology and Innovation Foundation, are imploring Congress to act."

eBay has already mass-emailed many of their users urging them to sign an online petition "to protect entrepreneurs, artisans and small businesses from potentially devastating Internet sales tax legislation." The petition presses state governors, U.S. lawmakers, and president Trump to "support the millions of small businesses and consumers across the country."

Keep reading to see what eBay is urging legislators to do...
  • Keep the Internet as free from government taxation and regulation as possible.
  • Protect entrepreneurs, small businesses and artisans from new taxes, audits or collection burdens because they can least afford the added costs.
  • Continue to prohibit states and localities from applying and enforcing sales and use tax laws on small, remote local businesses who have no political or voting connection to the taxing state.
  • Reject tax policies that raise prices on consumers who shop online with small businesses for artisan, craft, religious, vintage or other niche products because they should not be paying more taxes.

Do you agree with the Supreme Court -- or with the tech companies who want a new federal solution?

Leave your thoughts in the comments...
This discussion has been archived. No new comments can be posted.

Tech Giants Urge Congress To 'Protect Entrepreneurs' From Supreme Court Ruling More

Tech Giants Urge Congress To 'Protect Entrepreneurs' From Supreme Court Ruling

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  • Propaganda? (Score:2, Insightful)

    by MeNeXT ( 200840 )

    Is it me or does this sound like buzzwords intended hide tax avoidance.

    It sounds to me that some want the benefits and access to society without making any contributions.

    If it's not OK for online stores to collect sales tax when doing business in a jurisdiction why is it OK for brick and mortar? Local shops are at a disadvantage since they have to contribute to the infrastructure that makes online commerce feasible while the online merchants consider it "unfair" to make any contributions.

    • Because the brick-and-mortar store only has to send the collected funds to single (possibly a few) taxing bodies: i.e. the one where the store is located. Online sellers would have to collect and send money to thousands of taxing bodies. Next thing, they'll be demanding that the money be kept in separate escrow accounts.

      • Re: (Score:3)

        by MeNeXT ( 200840 )

        It's the cost of doing business. It is the same issue with the brick and mortar stores. If you choose to be in business in a jurisdiction you must follow the rules. If the rules are too cumbersome then they need to change. Why should online retailers get a free ride and not contribute? I never understood this mentality. If they don't want to collect the taxes then it's simple they don't sell to that jurisdiction.

    • Re: (Score:3)

      by Ichijo ( 607641 )

      Online retailers already pay shipping fees which pay for the necessary infrastructure to get their products into the hands of their customers. This isn't tax avoidance by online retailers, the online sales tax is just a money grab by the states.

      If online retailers are at a disadvantage, it's because the cities they are located in impose oppressive regulations on them that force their prices up and don't apply to online retailers. Regulations like minimum setbacks, maximum floor area ratios, height limits, m

  • In Communist Russia no tax to stand in line for you.
    In Capitalist USA new online tax for you.

    Time for an IoT party. Go full Taxachusetts. Let the states tax tea. Enjoy some tax free coffee.

  • I'm old (Score:5, Insightful)

    by rsilvergun ( 571051 ) on Saturday June 23, 2018 @11:02AM (#56833452)
    and I don't buy a lot that isn't food, shelter, healthcare or my kid's education. Now, we still manage to add sales tax on a lot of that (hooray for regressive taxation) but it's usually less and tax deductible on my federal return.

    What I'm saying is, go for it. Tax me. It'd be nice if I wasn't looking to a third rate pizza joint to fix pot holes. But while you're at it how about some new _Progressive_ taxes? Our country's best years (economic growth wise) were when marginal rates were in the 90% for income over $22/mil/year (inflation adjusted). How about if I'm gonna pay my dues the uber rich do too. They benefit more than me anyway.
  • You are buying it from them, where they are located. Anything else seems retarded.

    • Re: (Score:2, Troll)

      by ScentCone ( 795499 )
      No, they are delivering to you, where YOU are located. That's where the sale is considered to be completed. Whether you walk into a local store to pick it up, or UPS delivers it to your address, it's where you take possession of the goods that makes the sale a sale in a given jurisdiction. Has always been this way, and this ruling doesn't change that.

      • That doesn't make any sense. If I order something, I'm placing an order for a sale. The seller then decides if the sale will be complete. There can be many factors that go into that decision, including whether or not the item is in stock, backorder, etc. If the seller cancels the order because he doesn't have any stock, there's nothing at all as the consumer that I can do about it. Because the sale isn't complete until the seller accepts the sale. At that point, with the sale complete, he mails it to me. Wh

    • Re: (Score:2)

      by MeNeXT ( 200840 )

      You are selling in the jurisdiction you are delivering to. Everything else seems retarded.

      • Re: (Score:3)

        by theCoder ( 23772 )

        Do brick & mortar vendors near state lines need to start checking IDs so they can charge the right sales tax to each customer based on their home address? That's where they are "delivering" the items to, right?

        In some places, there are very different tax rates on things like cigarettes, such that smokers have a strong incentive to drive across the state line to purchase cigarettes at a lower rate. States have gone after these smokers for violating their home states' tax laws by not paying the higher t

    • You've never bought a home or a car from an out-of-state owner, have you? If you ever do, you're in for a little surprise.

  • people pay taxes on their income, then they are taxed again when they spend it, and those that have something for sale are taxed too, i think the whole tax system needs to be thrown out because the government is is corrupt and uses taxes like a criminal racket
    • No, a sales tax isn't on the person selling the item. A sales tax is the state forcing the seller to be a tax collecting agent on behalf of the state (or county, or city, or all of the above). The seller just collects it, reports on it, and passes it along. Of course the seller does have to bear the expense of doing all of that. But it's the BUYER who is actually paying the tax. But only in states where the state decides to generate some of their operating revenue that way, instead of, say, increasing vehic

  • From here, does Amazon actively help search for, turn in and prosecute every little online seller? Breaking tax laws usually results in disproportionately harsh penalties. If you are a few months late on a state's sales tax, a nice deputy of the law will lock your doors.

    At the same time, if you sell everything through Amazon, they will ensure compliance with the 1000's to 10,000's of state sales tax rules and quirks. In some cases, even within the same zip code, you have to know what side of a road someon

  • There are already services that will let you purchase goods through US companies and ship them internationally via a mail forwarder in Oregon, to avoid paying the sales tax. Depending on the jurisdiction, this could be a decent discount. What"s stopping a bunch of these companies from popping up? There's likely a lot of things where this would save money, as long as you don't care about shipping speed.

    • The laws have become so complicated and so unknowable in detail that I'd be willing to guess that it is illegal to do that or that they can stretch some rule, regulation, law, or procedure to get that desired result.

  • Even worse than you think... (Score:5, Informative)

    by bradley13 ( 1118935 ) on Saturday June 23, 2018 @11:39AM (#56833558) Homepage

    From what I've been reading, being liable to pay sales tax is even worse than you think. It's not just a matter of keeping track of the 10,000 or so different jurisdictions. It's much worse than that. Here's a quick overview of the issues as I understand them:

    - Every jurisdiction has different rates (a combination of state, country, city, and possible other taxes).

    - Different jurisdictions categorize products differently. Pre-prepped food? Food containing flour? Cloths? Work clothes? Every jurisdiction has an accumulation of exceptions and special considerations, and they are all different. So it's not only the tax rates by jurisdiction, it's the cross-product of the tax rates and the categorization of the particular products that you sell.

    - You can't just send off a random check, and expect it to get cashed. If you are paying sales tax somewhere, you need to register so that they know who is paying them, and why. Of course, once you are registered, you have to file summary reports of how much you paid, for what sales, etc.. This report is typically due monthly, maybe quarterly in some places - and once you are registered, you have to file every period, even if you had no sales in that area. The specific reporting requirements also vary by jurisdiction.

    - Finally, as a registered entity, you may be subject to other taxes and fees in addition to sales tax.

    The court decision will have no immediate effect, but it will eventually lead to a completely untenable situation for all but the largest of businesses. This is a situation that only Congress can resolve: it is precisely interstate commerce, and precisely their responsibility to devise a fair and simple interstate solution. For example: set state-level average sales taxes, with zero variation and zero special categories, and require reporting only for periods where products are actually sold. Let the states distribute the taxes internally, however they see fit. Of course, that won't happen, because Congress is incapable of actually doing its job ("Go do nothing somewhere else"). Watch the lobbying dollars flow...

    • Re: (Score:2)

      by DogDude ( 805747 )
      Why do you think that keeping lists of taxable items and jurisdictions is such a difficult task?

      And, why not just use a sales tax service, like TaxCloud to take care of it all for you for $10/month?

      • Re: (Score:2)

        by tepples ( 727027 )

        Why do you think that keeping lists of taxable items and jurisdictions is such a difficult task?

        If you sell 5,000 distinct products to 5,000 jurisdictions, how much time does it take you to run through the 25 million (product, jurisdiction) tuples?

        And, why not just use a sales tax service, like TaxCloud to take care of it all for you for $10/month?

        Because TaxCloud hasn't been doing enough to make the existence of its service known to the public.

        • Re: (Score:2)

          by DogDude ( 805747 )
          If you sell 5,000 distinct products to 5,000 jurisdictions, how much time does it take you to run through the 25 million (product, jurisdiction) tuples?

          Probably a few man hours. But if you've got 5000 items that you sell to 5000 jurisdictions, the time should be negligible. It's certainly not impossible.

          Because TaxCloud hasn't been doing enough to make the existence of its service known to the public.

          Huh?

          • If you sell 5,000 distinct products to 5,000 jurisdictions, how much time does it take you to run through the 25 million (product, jurisdiction) tuples?

            Probably a few man hours. But if you've got 5000 items that you sell to 5000 jurisdictions, the time should be negligible. It's certainly not impossible.

            I'm confused. Through what process does one blow through these 25 million combinations in "a few man hours"? Please help the rest of us figure it out so that the rest of us can stop whining about it.

            And, why not just use a sales tax service, like TaxCloud to take care of it all for you for $10/month?

            Because TaxCloud hasn't been doing enough to make the existence of its service known to the public.

            Huh?

            A business whose officials do not know that TaxCloud exists cannot use TaxCloud. Through what means has TaxCloud been informing businesses that it exists?

            • Re: (Score:2)

              by DogDude ( 805747 )
              Dude, if you can't figure it out, then you shouldn't be in business. It's not the government's job to hold your hand and show you how to run your business. That's not how it works in the US, at least.
        • You realize that this is a problem whose solution has existed for decades, right? Retailers and consumer sales systems (catalog, phone, online, etc.) with nexus in various cities have had this requirement for as long as I've been building systems (early 80's).

          We've used Vertex frequently but there are multiple companies providing services in this area, it's not a new problem.

          • Re: (Score:2)

            by tepples ( 727027 )

            You realize that this is a problem whose solution has existed for decades, right? Retailers and consumer sales systems (catalog, phone, online, etc.) with nexus in various cities have had this requirement for as long as I've been building systems (early 80's).

            The difference is that this ruling gives an online seller the equivalent of nexus in every single state, county, city, and sub-city jurisdiction to which the seller offers to ship.

    • The court decision will have no immediate effect, but it will eventually lead to a completely untenable situation for all but the largest of businesses.

      More likely, it would just create a new class of service provider that handles the calculation of the correct sales taxes based on location of seller, location of buyer, category of product, phase of the moon, etc. and of paying the right entity with the right documentation. Companies that already have departments to do this will probably spin up a new service business.

    • Another dimension on the problem is time. Some places have "tax holidays" when they don't tax certain items.

  • Sales Tax is bad (Score:3)

    by rossdee ( 243626 ) on Saturday June 23, 2018 @11:58AM (#56833602)

    Income tax is much fairer - the rich pay a higher rate.

    The only sales that should be taxed are tobacco and other smokes, and motor fuels (to pay for roads and bridges etc)

    • Re: (Score:2)

      by PPH ( 736903 )

      and motor fuels (to pay for roads and bridges etc)

      Then electric cars, bicycles and pedestrians can stay off the roads that I pay for.

    • How about distributing the load? That is the fairest. Iow both sales and income.
  • The decision requiring taxation of internet sales is just another step in the direction of the coming complexity collapse. You just cannot keep doing good-sounding things that layer on more and more complexity without knowing that sooner or later things must start to unravel.

  • = = = The Verge writes that "the case may be litigated for years to come to figure out how to account for the over 10,000 state jurisdictions that govern sales tax across the country. = = =

    You subscribe to a service that takes the 9-digit zipcode and the Dept of Commerce product classification and returns the appropriate tax amount. Such services are available as single-transaction web pages up to 1,000,000 transaction/hour back end services. At the end of the quarter the service provides you with a lis

  • Seriously, the only way to do this is to have a single easy rate, such as 10%, applied to any retail that moves over a border , and have the shipping company collect it. Then 9% ( or 9.5 ) is turned over to the feds who then gives 8-9.5% to the end state. At that point, the end state has to decide how to split it out. This is a simple approach that is manageable by retailers and shipping companies.

    • Re: (Score:2)

      by PPH ( 736903 )

      Sounds simple enough. But the state and local governments will scream. Because it removes one of their primary means of social engineering by maintaining multiple tax categories. It's not just that they were losing money on Internet sales. They can't impose different tax rates for food, medical products, soft drinks, ammunition, etc. And some of them would rather starve than give up the ability to micromanage your life.

      • Even simpler, Congress can decide that the States cannot tax goods moviing between States, as that is a burden on interstate commerce. Set the single easy rate to 0%.

        • Which is foolish. Local gov need taxes esp sales taxes. In addition, this levels the playing field between brick and online, esp for coming from overseas.

          • Local government doesn't need sales taxes. I live in New Hampshire, which doesn't have a general sales tax, and the same is true in Oregon and (I think) Montana. The simplest way to "level the playing field" between brick and online (including overseas) is to abolish the sales tax. That also eliminates the overhead caused by having to track the amount and remit the payments.

            • there are only 5 states or 1/10 of the states that do not have sales tax.
              If your state does not want it, fine. The tax can remain with the feds and be used to pay down the GOP's debts

  • Simple software already exists for computing sales tax due in each zipcode. What everyone is afraid of is not collecting the tax, but the complexity of submitting the renevue to each state. States will be forced to come up with a simplified signup scheme, now that all these fistfuls of money are about to be thrust upon them. Because it means getting proffered money faster, simple signup will be magically accomplished in a twinkling.

  • If they want to charge tax on the internet. Then just come up with a single standard tax across all 50 states(say 2%). Having to figure out 2000+ sets of complicated rules is just crazy. Make it payable to the states so no one has to figure out any local tax BS.

    • How about not charging tax on interstate sales?

      • That would work too but I don't see those greedy bastards going that way. At least with my solution it would be simple and have a very low compliance cost to businesses.

  • What this will do is put independent sellers and entrepreneurs out of business. The largest companies, like Amazon and Wal-Mart, with the infrastructure to cope, won't miss a beat. Everyone else... won't be able to comply. eBay will fall farther behind, if not collapse entirely, because they don't sell anything themselves and aren't configured to be in the business of selling anything themselves.

    This is bad for consumers and bad for the economy. And it will lead to large firms with regulatory capture dominating e-commerce. It's one more step in the centralization of the 'net as a deeply controlled profit source for a handful of megacorporations.

    • Re: (Score:2)

      by DogDude ( 805747 )
      This is a good thing for the economy. We'll finally collect the taxes that Internet companies have been skirting for years. Companies that can't or won't devote the resources to paying their taxes properly should be shut down and the owners should be prosecuted. It's shameful that the government has allowed such an unfair playing field for so long. Competent small businesses can and will continue to thrive.

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