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Old 17 April 2018, 05:30 PM
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Judge U.S. Supreme Court struggles with e-commerce sales tax case

From Reuters.

I don't know if struggle is the right word, but the Supremes will look at a decades old law(?) that originally applied to mail order catalogs.

Here is the link in case Reuters has an issue with me linking to their site from another one: https://www.reuters.com/article/us-u...-idUSKBN1HO0I0

Dawn--no I've never had posts taken down because of that!-Storm
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Old 17 April 2018, 06:20 PM
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I can see both sides having valid arguments. On the one hand, it is unfair local businesses, especially with large-ticket items. And it does eliminate a lot of potential tax revenue.

On the other hand, having to track potentially thousands or tens of thousands of different sales tax rates would be ridiculously complex. According to this CBS article, this decision could require retailers to collect on city and county sales taxes as well. An example given in the article is that the Illinois tax rate on Snickers is different than that on Twix because Illinois taxes items containing flour at a different rate.
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Old 17 April 2018, 06:42 PM
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Originally Posted by GenYus234 View Post
On the other hand, having to track potentially thousands or tens of thousands of different sales tax rates would be ridiculously complex.
I would suspect that is already a solved problem. Brick and mortar national chains already have to track all the tax requirements and apply them on a per store and per item basis. I would suspect that there is a company (or three) that do just that kind of tracking. It would be an additional cost for the eCommerce company but they wouldn't have to develop their own in house database of tax rates.
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Old 17 April 2018, 07:04 PM
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Yeah, but a brick and mortar store only has to do that for one location when first starting out and only adds one location at a time (generally). A startup online retailer would need to start with every single city/country/state combination at one time. ETA: Or would severely limit their market. A nation wide B&M store has more money and support for multiple locations, still has a limited number of locations, and was able to add each location one at a time.

According to the article, there is such software, but the claim is that accurate software is prohibitively expensive. And such software would need to be integrated into their sales website, which could be quite complicated depending on the systems involved. Also I would guess that they would need to subscribe to an update service to get the current rates for each location.
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Old 17 April 2018, 07:14 PM
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It appears that Amazon already has the infrastructure and let's its >100,000 private vendors use it for free. It looks like Amazon is tracking not only where an item is being delivered to, but where is is being shipped from, and the "from" isn't necessarily an Amazon facility.

I would think the actual calculation of the tax isn't that big of a deal. The data aspects have been solved and are probably available pretty cheap. The bigger issue would be actually remitting the taxes to the individual states and localities.
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Old 17 April 2018, 07:25 PM
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I never claimed that such things don't exist. I'm saying that it may be that not every small online store can afford them. Amazon may provide them to their third-party sellers for free*, but I doubt they'd do the same for independent retailers.

* Probably built into whatever fees or percentages Amazon charges.
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Old 19 April 2018, 09:45 AM
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National sales tax on e-commerce, receipts given to the states on some form of pro-rata.
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Old 19 April 2018, 02:14 PM
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I'd support making online retailers collect the state sales tax for the destination state. That way it limits them to only needing to keep track of 50 sets of rules and rates without having to worry about county and city rules/rates.
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Old 19 April 2018, 04:07 PM
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That seems more fair.

But what if I buy something from my home in Oregon, but have it shipped to my sister in Wisconsin because it's her birthday present? Would I be paying the Oregon or Wisconsin tax level (which in this example is just a question of whether or not I'd be paying sales tax on it at all).
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Old 19 April 2018, 04:22 PM
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I believe sales tax is about the destination. If I ship something to my work in one city, I pay different taxes than if I ship it to my home in a different city in the same state (billing address is the same in both cases). If that stays the same, it would be the Wisconsin tax.
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Old 19 April 2018, 05:03 PM
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Quote:
Originally Posted by GenYus234 View Post
I'd support making online retailers collect the state sales tax for the destination state. That way it limits them to only needing to keep track of 50 sets of rules and rates without having to worry about county and city rules/rates.
That would reduce, but not remove, the problem of unfair competition with brick and mortar stores; and it wouldn't solve the problem of reduced funding to municipalities, at least unless the states were required to pass some of it on.

Different states fund things differently; but, in New York, the towns/cities/counties are often required to pay for things that are very poorly funded; and they can't levy income tax, and are therefore stuck with sales tax and property tax as the only sources. Both of those are very poorly correlated with ability to pay.
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Old 19 April 2018, 05:14 PM
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Quote:
Originally Posted by GenYus234 View Post
I believe sales tax is about the destination. If I ship something to my work in one city, I pay different taxes than if I ship it to my home in a different city in the same state (billing address is the same in both cases). If that stays the same, it would be the Wisconsin tax.
I believe you are correct, but something just occurred to me - why wouldn't it be for the state where the transaction takes place - i.e. the originating source. If you were to have purchased the item in a Seattle brick-and-mortar store, then drove to Wisconsin to give it to your sister, you would have paid Washington's sales tax (along with a whole bunch of state's gas taxes along the way). Just spitballing here, why wouldn't a mail-order or internet tax work the same way? (answer 1: because the "originating source" may be Russia or Australia or...; shipping source could be selected to have the cheapest tax; site of purchase (billing location) removes some of that selection)
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Old 19 April 2018, 05:37 PM
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Quote:
Originally Posted by thorny locust View Post
it wouldn't solve the problem of reduced funding to municipalities, at least unless the states were required to pass some of it on.
True, but that's a whole 'nother issue and happens with brick and mortar stores too. There's a car dealer that is in unincorporated county land. They used to run radio ads about how you should buy there and save yourself city sales tax.

Quote:
Originally Posted by Dr. Winston O'Boogie View Post
I believe you are correct, but something just occurred to me - why wouldn't it be for the state where the transaction takes place - i.e. the originating source.
I don't know if there is a logic behind it. Also, I just learned that it isn't universal, Arizona is one of several states where the tax is based on the location of the seller (origin-based) not where the person takes possession (destination-based). Except if you are an online retailer with a state presence, in which case taxes are destination-based.

A link in that article talks about a proposal where taxes would be as you describe, collected based on the seller's location and then remitted to the destination state.
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Old 20 April 2018, 06:17 PM
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Quote:
Originally Posted by GenYus234 View Post
I believe sales tax is about the destination. If I ship something to my work in one city, I pay different taxes than if I ship it to my home in a different city in the same state (billing address is the same in both cases). If that stays the same, it would be the Wisconsin tax.
At the company I work for, yes, sales tax is dependent on the destination address. (We sometimes get puzzled/irate callers from states like Oregon that don't charge sales tax, wanting to know why they were charged tax on an item shipped elsewhere.) We not only have to track sales tax on at least the county level (it's all keyed to zip codes), but also what items are taxed, since many of our products are food items that are not always subject to tax; states also vary as to whether the tax only applies to the price of the item, or if shipping and/or handling charges need to be taxed.

Fortunately it's not my department, but yes, it's doable. We are a fairly large company, but it's a common enough thing that I'll bet there are third-party vendors that will track and compute this stuff for you.

It's another one of those things that gives advantages to large established companies over small start-ups, though.
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Old 21 April 2018, 01:54 AM
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I would think there could be an easy solution to the destination tax. Since most items sold on the internet have UPCs, the states that want to charge taxes should put up a Tax interface on there Tax website for e-commerce sites make a webservice call with a UPC and a selling price and destination zip, and have each state calculate the taxes. For Items that don't have a UPC, ie etzy/hand crafted items, the can determine what the "generic" tax should be. All Tax remittances could go to the state, and they can divide up the proceeds to the cities if need be. The states could come up with a common interface for any e-commerce site to use. That would remove the burden from the retailers/sellers and put it on the states that want to collect the taxes.
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