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Thursday, June 21, 2018

Too little, too late

The Supreme Court finally forces online sellers to collect and pay sales tax:
States will be able to force shoppers to pay sales tax when they make online purchases under a Supreme Court decision Thursday that will leave shoppers with lighter wallets but is a big win for states.

More than 40 states had asked the high court to overrule two, decades-old Supreme Court decisions that they said cost them billions of dollars in lost revenue annually. The decisions made it more difficult for states to collect sales tax on certain online purchases.

On Thursday, the Supreme Court agreed to overturn those decisions in a 5-4 ruling. The cases the court overturned said that if a business was shipping a customer’s purchase to a state where the business didn’t have a physical presence such as a warehouse or office, the business didn’t have to collect the state’s sales tax. Customers were generally responsible for paying the sales tax to the state themselves if they weren’t charged it, but most didn’t realize they owed it and few paid.

Justice Anthony Kennedy wrote that the previous decisions were flawed.

“Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States. These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause,” he wrote in an opinion joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch.
This is the right decision, but over a decade too late. The effect of those earlier decisions was to favor big nation-wide retailers over traditional distribution channels and local retailers. Unfortunately, most of the damage has already been done.

Labels:

87 Comments:

Blogger Snidely Whiplash June 21, 2018 12:54 PM  

The effect of the current ruling is to advantage Amazon over, well, everybody else really.

Blogger Timmy3 June 21, 2018 12:57 PM  

Shouldn’t the tax go to seller’s state instead of the buyer?

Blogger Snidely Whiplash June 21, 2018 12:58 PM  

It is funny that a decision like this can be overturned, but obviously wrong decisions like Wickard v Filburn and Roe v Wade are completely outside the ability of the court to address.

Blogger Snidely Whiplash June 21, 2018 12:59 PM  

Timmy3 wrote:Shouldn’t the tax go to seller’s state instead of the buyer?
Sales tax is paid by the purchaser. It is only collected by the seller.

Blogger Nathan June 21, 2018 1:01 PM  

Well, fuck it. We're all going to be living under the EU's presumed regulatory authority over the internet soon, anyway.

Blogger Wade R. Potts June 21, 2018 1:02 PM  

I pay sales tax with Amazon.

Blogger SDaly June 21, 2018 1:03 PM  

@1 is exactly right. Smaller online competitors will not have the resources to collect the taxes. Amazon and the big players can afford to do so - now!

Blogger Snidely Whiplash June 21, 2018 1:13 PM  

Wade R. Potts wrote:I pay sales tax with Amazon.
Precisely. Amazon already has operations in most states, making their sales taxable there under the previous ruling. Forcing every other seller to also collect the tax gives them the advantage.
Imagine you're a small operator, making $20K/yr selling family-style widgets as a side business. How are you going to calculate and collect the tax for every possible jurisdiction in the US, and how will you get the money to them? The cost of that alone could easily swallow your profits.

Blogger DreadIlk June 21, 2018 1:14 PM  

SDaly wrote:@1 is exactly right. Smaller online competitors will not have the resources to collect the taxes. Amazon and the big players can afford to do so - now!

Not true. It's relatively easy to collect taxes. Small shops do it all the time. Their register charges you the tax right away.

I don't like paying taxes but this was a clear loop hole that they were going to get around to closing.

Blogger Steb June 21, 2018 1:18 PM  

But that business won't have built their own payment platform, it will be from a third party who will now add sales tax logic based on the address

Blogger James Dixon June 21, 2018 1:18 PM  

> Not true. It's relatively easy to collect taxes. Small shops do it all the time.

In the state where they're located, for the state where they're located. One set of taxes. Now any online store will have to collect for all 50 states, each with different tax rules. It'll be a nightmare.

The proper way to handle this was with a single federal online tax with the money divided to the states in a predetermined manner.

Blogger Patrick Kelly June 21, 2018 1:20 PM  

The small shop register only calculates and charges tax for the jurisdiction the retailer is physically located in, but now the retailer has to calculate the appropriate amount and make payments to all the jurisdictions of his online customers, not just the state he resides in.

Blogger basementhomebrewer June 21, 2018 1:22 PM  

DreadIlk wrote:SDaly wrote:@1 is exactly right. Smaller online competitors will not have the resources to collect the taxes. Amazon and the big players can afford to do so - now!

Not true. It's relatively easy to collect taxes. Small shops do it all the time. Their register charges you the tax right away.

I don't like paying taxes but this was a clear loop hole that they were going to get around to closing.


Not the same thing. Your local store can collect sales tax easily because they are selling in exactly 1 location with 1 sales tax rate to keep track. Your cousin running a part time online craft business is going to have sales all over the country. As a reminder, municipalities in addition to States charge sales taxes. That means your cousin has to keep track of at least hundreds but more likely thousands of sales tax rates.

This does help level the playing field for local brick and mortars as you point out. But those companies are still disadvantaged by the overhead of owning a store front and reduced access to potential buyers. They are still going to end up losing out.

Blogger Servant June 21, 2018 1:27 PM  

Not the most enforceble decision. I'd you are making 20k a year selling stuff online just don't collect. It's a fine. Think Florida will fund an investigation in Washington and attempt to enforce for small potatoes?

Blogger VD June 21, 2018 1:29 PM  

In the state where they're located, for the state where they're located. One set of taxes. Now any online store will have to collect for all 50 states, each with different tax rules. It'll be a nightmare.

Economies of scale, right? A big online retailer should be able to do it more efficiently and effectively, right?

Blogger Jack Ward June 21, 2018 1:32 PM  

A lot of buyers, on line, did not have to pay taxes. Many times this gave them the little extra to make a buy. Now. Well, now I suspect a fair amount of sales will go away. Barter anyone? Find the right yard sale? Do without? Name your poison.
I see it that anything having to do with the extortion of tax money from citizens is just another form of control and near slavery. Remember that the income tax was promised to never be more than 3%? The PTB are really doing their best to kill of the goose laying those golden eggs. I can pretty much guarantee that it will kill off a bunch of online retailers. Probably was the idea. Where I live the going rate is about 10% and the states WILL want that 10 % from any on line sales. If the monies were going mostly for really needed stuff, ok. But, when I see much of Mexico, to name just one, having come here illegally and sucking off the government tit...well.

Blogger VD June 21, 2018 1:37 PM  

I'd be fine with sales taxes being abolished - though income taxes would be better. But the only thing worse than taxes applied to everyone are taxes that are applied to the powerless and not to the powerful.

Blogger Snidely Whiplash June 21, 2018 1:42 PM  

Servant wrote:Not the most enforceble decision. I'd you are making 20k a year selling stuff online just don't collect. It's a fine. Think Florida will fund an investigation in Washington and attempt to enforce for small potatoes?
I can't speak for Florida, but Washington definitely would. I personally witnessed a Washington state tax auditor visiting a Middle School fair, warning the teenage craft vendors and bakesale ladies about the dangers of not giving the state it's vig.

Blogger Snidely Whiplash June 21, 2018 1:43 PM  

VD wrote:Economies of scale, right? A big online retailer should be able to do it more efficiently and effectively, right?
Which is why Amazon has been pushing for this for 10 years.

Blogger rekrapt June 21, 2018 1:43 PM  

I have a friend where I live who is President of the City Council. He said that the big problem is that the sales taxes collected go to the state and not the city where you live. I don't mind paying sales tax, but I'd hate to think that it will go to our state instead of my city. We use those sales taxes to pay for road and drainage repairs, police and fire, and other city services.

Blogger August June 21, 2018 1:48 PM  

I think this is the wrong direction- of course, what existed before was a mess too, but what I want is my state saying to itself- 'SELF! I can't make any money if I don't make it easy for people to make and sell stuff here.'
But instead my state keeps doing stupid stuff, and now they get to do stupid stuff with other people's money. It makes sense if tax is applied in the state of the seller, because then that state gets rewarded for actually creating a good business environment. It doesn't make sense to prop up the idiots.

Blogger Thomas W June 21, 2018 1:49 PM  

The rise of online retailers is due more to the convenience of one stop shopping than lack of sales tax. Part of Amazon's rise may have been lack of sales tax but a bigger part was being able to order a book (and later anything) without driving to a store to find that it's out of stock or not carried.

While this ruling will tend to prefer large retailers a lot of smaller online sellers go through larger sites (Etsy, eBay, PayPal, etc), all of which can support sales tax as a simple "add sales tax" button, probably also remitting the tax to the state involved.

Blogger pyrrhus June 21, 2018 1:53 PM  

So SCOTUS overruled the long established law in this area, interesting...
But the practical problem is that it isn't only States, but counties and even cities and towns, that have sales taxes. Presumably the online retailers will have to collect taxes for all of them. Wonder if all that data i currently available.

Anonymous Anonymous June 21, 2018 1:53 PM  

Note the hideous alliance of the chief justice, the Court's second-ranking jew, and Obama's lunchladies defending Woke Capital in the dissent.

Blogger The Deplorable Podunk Ken Ramsey June 21, 2018 1:54 PM  

There are huge downsides to this for small shops. Keeping track of all those taxes is a nightmare. MOAR PAPERWORK.

Okay, set up with a payment processor, then, such as PayPal, Square or Swipe. Whoops, non-SJWs need not apply! How odd that all the anti-SJW action from these guys came right before the SCOTUS ruling, btw. A coincidence? I'm way too cynical to believe that anymore!

Blogger Matt Robison June 21, 2018 1:58 PM  

This is brutal in the short term for small online retailers. Collecting sales tax for just one state is a pain. Now they will need to keep track for 50 states. The technical problem is nothing - most shopping cart and ecommerce software will have the functionality available.

The burden is in the underlying accounting and paperwork. Each state has different filing rules and forms.

In the long term, this opens up an opportunity to create businesses that will service this new need. Many smaller businesses already outsource their accounting. This will become another add on service, or someone will come along that handles this particular aspect of tax payments automatically.

Blogger Matt Robison June 21, 2018 1:59 PM  

I also imagine sites like Etsy will be coming up with their own solution to the problem for their sellers.

Blogger Anne June 21, 2018 2:11 PM  

My parents were in Amway for a time, and they charged us taxes on what they believed to be our town's tax rate. We don't actually live within the city limits, so that was improper of them, but they did have the correct rate for that town.

Blogger DonReynolds June 21, 2018 2:13 PM  

Timmy3 wrote:Shouldn’t the tax go to seller’s state instead of the buyer?

I would tend to agree with you, but the law does not. Every state has their own version of the state sales tax, so there are variations, but in the main the sales tax is paid by the buyer and it is actually illegal in some states for the seller to pay the sales tax for the buyer. Sales tax is not a tax on business revenues but a tax on the consumer, primarily intended as a tax on their own citizens, but out-of-state individuals end up paying it when they shop in the state.

The tax has always been levied at the point of sale....essentially in a retail environment at the cash register, which records the sale and provides a receipt. Everything seemed neat and tidy, until the telephone was invented. That started a debate over the point of sale. One argument being that the tax is on the buyer, so local sales tax should apply from wherever the call originated. Another argument countered that the buyer is the one making the offer to buy and it is actually the seller who is accepting their offer over the phone, so the retailer is still the point of the sale...where the tax is levied.

To my own mind, the retail giants of decades ago already settled the argument with catalog sales....the original problem. Sears and Montgomery Ward and J.C. Penney were probably the three biggest, especially the first two, and that should have set the pattern for the internet online businesses. Fortunately or unfortunately, the internet seems to have taken the bulletin board (BBS) and radio swap-meet approach to retail sales....specifically these were traditionally used goods that were not normally subject to sales tax, as you commonly see on Craiglist these days.

Once the marketing geniuses discovered a growing market online, very quickly new goods outgrew the used goods in volume and so the issue of sale tax bubbled to the surface. A number of states now tax used goods as well, so for them the distinction between new and used means nothing. Other states exempt the sale of used items below a certain dollar amount from sales tax or even broad categories of goods (like farm equipment or services), which brings up another issue.

Traditionally, the sales tax was levied on the sale of goods and not services. It was difficult to argue that self-employment be subject to sales taxes but employers paid no sales tax on employees. A difficult issue, especially now that the sales tax can exceed 10 percent in a number of jurisdictions.

Back to the original question, I believe the Supreme Court has made a bigger problem out of a smaller problem. They are saying that every online seller must now have fifty tax id numbers and keep up with the tax code in fifty different states to be able to sell online in fifty different states (or limit sales to specific states). Before, the seller did not even give a hoot who was buying, except that he needed a delivery address. Now the seller will have to be well informed not only of the sales tax he must collect, but also aware of all the other regulations and restrictions that each state imposes on their citizens. We are not just talking about mail-order rifles and meds. There are literally thousands of restrictions that apply at the point of sale in each of the fifty states.

So why did the Supreme Court do this? Because this will move all regulations to uniformity and the only way they can make the rules uniform is to make them Federal. We live in a time when the Federal government is becoming the Central Government and it is a major change. Everything seems to have become a Federal Matter.

Blogger Dirk Manly June 21, 2018 2:15 PM  

This "loop hole" has existed since the invention of mail-order. Mail order businesses have never been required to collect and pay state sales taxes.

How does getting an order via internet vs. getting an order via a piece of paper in an envelope change the essential nature of the business and whether or not they should collect taxes?

All this is going to do is create a new rent-system for software plugins to charge the right tax based on the purchaser's zip-code.

Blogger One Deplorable DT June 21, 2018 2:29 PM  

I don't see how this is the right decision. Unless Congress decides to use Federal authority over trade between the states to enforce state sales taxes, state A has no authority to collect anything from a supplier or vendor in state B.

What say does New York have over my actions if I live in California? And what power to enforce their say? Sales taxes are also collected at the county and city level. Will NYC issue a warrant for someone's arrest in Montana if that person does not collect and remit city sales tax for a shipment to NYC? And before someone says that the USSC decision only applies to the state level: will NY state do the same on behalf of NYC?

This violates Congressional authority and state's rights. It's also a logistical nightmare. States will now be encouraged to go on legal witch hunts across the country any time they need more revenue. Many small businesses will simply not sell out of state, or just close shop. Power will be further consolidated into the hands of a few big online payment processors who have the ability to untangle the absolute mess of local and state laws. And those payment processors will become targets for SJW convergence (if they are not already fully converged).

This will encourage some companies to operate and ship from other countries. It will encourage buyers to purchase big ticket items from other countries. And it will encourage some sellers and buyers to go 'dark net' and only deal in untraceable cryptocurrencies.

And the court's reasoning? "The rule is outdated." "It's unfair to state businesses." "The poor states are losing billions of dollars." I didn't know we could disregard things like Congressional authority because we think something is "outdated" or "not fair" or because we're "losing money" we imagine we are entitled to.

If that's the basis for deciding law then I deem all drug laws and the DEA "outdated." It's also "not fair" that the U.S. military can have thermonuclear warheads but I can't. And to hell with patent laws because stoping me from copying something I want to manufacture causes me to "lose money."

I can only hope that somehow the God Emperor moves Congress to pass a law which slaps the USSC down on this issue.

Blogger Nick June 21, 2018 2:30 PM  

This is a terrible, pro-tax, anti- conservative ruling. Shame!

Blogger Don't Call Me Len June 21, 2018 2:33 PM  

There are already companies set up solely and specifically to deal with this issue (for example, Avalara AvaTax). Not sure what sort costs this may add, but it hardly seems apocalyptic for small online retailers.

Blogger DonReynolds June 21, 2018 2:38 PM  

Dirk Manly wrote:This "loop hole" has existed since the invention of mail-order. Mail order businesses have never been required to collect and pay state sales taxes.

How does getting an order via internet vs. getting an order via a piece of paper in an envelope change the essential nature of the business and whether or not they should collect taxes?

All this is going to do is create a new rent-system for software plugins to charge the right tax based on the purchaser's zip-code.



There was never much of a chance that the post office could make the argument that a phone call and mail order were both mail. Ma Bell would never sit still for that one.

The Constitution gives the Federal post office a monopoly over the delivery of the mail and they used that power to put the Pony Express out of business more than a century ago. So I am much more anxious about the post office making the argument that e-mail is still the mail and should be subject to the post office and postage must be paid. E-mail has been the worst thing in the world (to the post office) and they would love to recover some of that money....and authority over all mail. They lost the monopoly over parcel post a century ago with UPS and they are probably wanting another title fight if they can find a sympathetic Supreme Court.

Blogger WillBest June 21, 2018 2:42 PM  

If you live in Vermont and drive to NH and buy something, and drive back to Vermont, you are obligated to pay a use tax in Vermont. The NH Seller in this instance isn't obligated to do anything but collect NH taxes on the sale but since NH doesn't have sales tax that ends that.

Now lets assume instead of driving to NH you hand a courier money to go buy the item and bring it back to you. Again the Seller had nothing to do with Vermont. The courier did, but that isn't the NH Sellers concern.

And that is basically what an online transaction is. You tell the seller to contact your credit card company to collect payment from them (who is in a 3rd state most likely). The credit card company releases funds to the seller (probably from a bank in a 4th state). The seller delivers a package from its distribution center (probably in a 5th state) to a 3rd party delivery service (that takes is headquartered in a 6th state, takes the package to a hub in a 7th state traveling through states 8,9 and 10) in order to get the package to the buyer.

And in all of this, the Seller is now required to collect taxes for a state that he didn't conduct business in because a buyer from that state connected to his servers in his own state. And it can get even more complicated if you want.

What this ruling allows a state to do is sue an out of state retailer in their courts, get a default judgment against them, then head to the retailer's courts and make that state garnish the retailers bank accounts for the money.

And why stop at retailer? States can go after hobbyist on etsy, and people selling off their parents estate on ebay.


Now all of this (unlike Wickard) is straight up Interstate Commerce, and Congress could pass sane threshold to preempt states from going after anybody that hasn't built up a decent sized platform. But don't except the Fortune 500 that controls how economic regulation gets written in this country to be interested in making it easier for startups to challenge them.

Blogger artensoll June 21, 2018 2:44 PM  

"Okay, set up with a payment processor, then, such as PayPal, Square or Swipe. Whoops, non-SJWs need not apply! How odd that all the anti-SJW action from these guys came right before the SCOTUS ruling, btw. A coincidence? I'm way too cynical to believe that anymore!"

Isn't it something to see prophecy being fulfilled before our eyes?

Blogger Gen. Kong June 21, 2018 2:48 PM  

Snidely Whiplash wrote:
VD wrote:
Economies of scale, right? A big online retailer should be able to do it more efficiently and effectively, right?

Which is why Amazon has been pushing for this for 10 years.


Another typical Anthony Kennedy decision to prop up the oligarchy. Wonder how many trips to Epstein's Island he's made? All part of the chokepoint strategy. It's the kind of decision Soros, Bezos, et al wanted - now. Two decades ago they wanted the opposite. As always with this type, the calls for stare decis only apply when the precedent upholds their agenda. The brick and mortar local shops are already mostly destroyed by now.

Blogger James Dixon June 21, 2018 3:00 PM  

> As a reminder, municipalities in addition to States charge sales taxes.

It's questionable whether a municipality sales tax is covered by the ruling. But your point is valid nonetheless, as that's sure to be the next step.

> I don't see how this is the right decision. Unless Congress decides to use Federal authority over trade between the states to enforce state sales taxes, state A has no authority to collect anything from a supplier or vendor in state B.

Bingo. Under the Constitution no state has any authority to tax interstate commerce. Period, exclamation point. Regulating interstate commerce is solely the province of the federal government. But a) what the Constitution says hasn't meant anything for over 100 years, b) That went out the window when the Supreme's OK'ed use taxes.

Blogger DonReynolds June 21, 2018 3:01 PM  

J.P. Morgan put together US Steel, primarily by purchasing the (Andrew) Carnegie steel empire of the time. Sharp guys with even sharper pencils, who knew the steel business picked over the Carnegie empire to pick and choose which plants and parts they wanted to make US Steel.

The two men went on a cruise in the Atlantic to seal the deal, in order to avoid paying New York state sales tax.

Blogger One Deplorable DT June 21, 2018 3:15 PM  

@38 - Bingo. Under the Constitution no state has any authority to tax interstate commerce. Period, exclamation point. Regulating interstate commerce is solely the province of the federal government. But a) what the Constitution says hasn't meant anything for over 100 years, b) That went out the window when the Supreme's OK'ed use taxes.

You are right of course. But I'm still furious every time the Constitution is ignored.

Blogger OGRE June 21, 2018 3:17 PM  

My problem this decision is that the Court has basically ignored any due process considerations here and instead focused solely on the dormant Commerce Clause. While a state has the power to tax transactions that terminate in its borders, I don't see how the state has the power to enlist an out of state seller to collect its taxes if it couldn't establish in personam jurisdiction over the seller in the first place. In essence, this permits a state to compel action by an out of state entity based on the actions of an in state entity (or in some cases another out of state entity receiving delivery in state).

Apparently all it takes now is a web presence and the willingness to ship a product to a jurisdiction in order to be subject to that jurisdiction. This decision can lay groundwork for greatly expanding the reach of all kinds of jurisdictions and their laws into the interwebs, not just those related to taxation.

In this decision the Court focused almost exclusively on the large sellers, and for them the decision does make sense as they will often have a much stronger connection to a jurisdiction than a small seller would as the large retailer is much more likely to avail itself of the laws and benefits of the remote jurisdiction, thereby justifying it being subjected to that jurisdiction. But the small sellers with no contact to a jurisdiction other than a customer wanting a product shipped there make no use of the benefits provided by that state, and the state should not have the power to compel action on the part of the small retailer.

I don't see how Congress can sit on the sideline now; it almost has to step in and exercise its Commerce Clause powers to provide some organization here. And if done properly that should alleviate the economic inequalities that may have arisen under the previous holdings, and those that may arise from this one. But it won't erase the underlying premise of this decision, which is likely to erode the limitations on the reach of a government's long-arm jurisdiction.

Blogger Brett baker June 21, 2018 3:18 PM  

They're teaching them young to hate taxes, at least. (Trying to be optimistic here.)

Blogger pyrrhus June 21, 2018 3:23 PM  

In Illinois, and most likely many other States, the "sales" tax is actually a retailer tax....It is not technically on the buyer...So the Court is buying into a legal fiction of the worst variety in order to obtain more tax money for certain large States. And prior decisions were also based on the idea that taxes should go to the government entity that is providing the protective services involved, which would be the State of the seller.
So just another 'Obamacare' decision, if you ask me....

Blogger pyrrhus June 21, 2018 3:29 PM  

This decision explicitly allows States to tax sellers in other States...One of the main reasons for the Constitutional Convention was to do away with such interference in commerce and generally the affairs of other States. So we have come full circle in a mere 220 years.

Blogger KSC June 21, 2018 3:49 PM  

How does this affect something like Castalia House?

Blogger Calvin Dodge June 21, 2018 3:49 PM  

This ruling is to Amazon's advantage. But I'm sure Vox will approve when Castalia House has to implement this policy for ebooks it sells directly.

Blogger YIH June 21, 2018 3:56 PM  

You think that's fun? Try Florida, each county has it's own sales tax rate. Go from Kennedy Space Center to Orlando, and the rate goes from 7% (Brevard) to 8% (Osceola) to 6 1/2% (Orange co./Orlando). Bezos deserves it :)

Blogger Hammerli280 June 21, 2018 4:05 PM  

As others have noted, this will hit the small retailers hard. Which is why Amazon pushed it...they can force the small retailers to sell through Amazon and skim off the top.

Not to mention that the biggest sufferers will almost certainly be firearms businesses. They're at ground zero for political targeting in any case, and this just makes things worse.

Blogger Lance E June 21, 2018 4:11 PM  

"state A has no authority to collect anything from a supplier or vendor in state B."

Of course they do, if the buyer is in state A. It's the same reason why, if you want to do business in Europe or Canada, you have to follow European and Canadian rules, including VAT/HST.

This isn't rocket science. It's constitutional originalism, Gorsuch's specialty - treating individual states as sovereign (well, quasi-sovereign) entities.

If you think this violates the laws against states "regulating interstate commerce" then you don't understand those laws.

Blogger DonReynolds June 21, 2018 4:11 PM  

One thing that goes unmentioned but I will bother now....

Since this is not an Act of Congress but a decision by the Court, it does not start on a particular date. A Court decision means it was always the case and uncollected taxes are now due. Many states routinely reach back three years on unpaid tax and some even more.

This could mean, but no one has said, that suddenly thousands of online sellers are subject to interest and penalty in unpaid taxes owed to states (with which they have never had any relationship or communication)....which they did not collect from the buyers in the first place. The states will still expect to be paid the tax owed and we will have to see if any of those online sellers go back on credit cards with "corrected" debit charges for sales made as much as three years ago.

I would not be in the least bit surprised.

As other commenters have already pointed out, the pre-occupation of business is the elimination of competition, particularly when a great deal of money is involved. Amazon, Wal-Mart, and a few others would be totally delighted to be the ONLY retailers selling direct to the consumer online.

Just like in the retail gasoline business, once big oil took an interest in retailing gasoline, they had to come up with a gambit to drive out all the mom and pop gas stations. They found it with underground gasoline storage tanks. Worked like a charm.

Blogger Dirk Manly June 21, 2018 4:13 PM  

@46

"This ruling is to Amazon's advantage. But I'm sure Vox will approve when Castalia House has to implement this policy for ebooks it sells directly."

Is Castalia House in the U.S.?

Blogger Austin Ballast June 21, 2018 4:14 PM  

You are wrong on this one Vox. It favors large online retailers like Amazon and even WalMart. It will create a severe load to many smaller online retailers, something that will reduce competition once again with the big boys.

Amazon already pays taxes as was noted. This only helps them keep out competition.

Also figuring it by the buyer address does not fit normal behavior now. If I drive to a store in another local city, I pay their tax rate, not mine. It may be I am supposed to file whatever to pay any more due where I live, but that is rarely enforced and would never refund an overpayment for buying in a higher tax location locally, or even if I was on vacation in another state.

Failed logic in both cases.

Blogger Dirk Manly June 21, 2018 4:15 PM  

@49

"
Of course they do, if the buyer is in state A. It's the same reason why, if you want to do business in Europe or Canada, you have to follow European and Canadian rules, including VAT/HST."

We don't have VAT or HST in the U.S.

Blogger Austin Ballast June 21, 2018 4:19 PM  

How does this affect something like Castalia House?

I am sure they will jump up to pay all local taxes to be consistent! /sarc

Blogger James Dixon June 21, 2018 4:29 PM  

> But it won't erase the underlying premise of this decision, which is likely to erode the limitations on the reach of a government's long-arm jurisdiction.

One would almost think that was the desired outcome, wouldn't one? But that's just conspiracy theory talk, right?

> How does this affect something like Castalia House?

It doesn't, directly. They're not based in the US.

> Of course they do, if the buyer is in state A.

No, they don't. That's interstate commerce and regulation thereof is specifically reserved to the federal government by the Constitution. Which is what makes this ruling so inane.

Blogger James Dixon June 21, 2018 4:32 PM  

> If you think this violates the laws against states "regulating interstate commerce" then you don't understand those laws.

We understand plain English quite well. It take a law degree to be able to misinterpret to the extend you seem to think it should be.

Blogger Snidely Whiplash June 21, 2018 4:32 PM  

Under the constitution, a state may not charge customs duty. Period.
So the situation is entirely distinct and unrelated to shipping to Canada or Europe.

Calvin Dodge wrote:But I'm sure Vox will approve when Castalia House has to implement this policy for ebooks it sells directly.
Castalia is based in Finland, and the legal address is in London.
This doesn't affect Castalia at all.

Blogger Lance E June 21, 2018 4:43 PM  

Imposing a sales tax on buyers in your state is not "regulating interstate commerce". The fact that the goods were manufactured in a different state does not confer some magical immunity. At least, not anymore.

The other option, aside from sellers charging the tax, is the "importing" state going after importers directly. But in order for that to work, you would need to have a customs system, and that would be unconstitutional.

Blogger Dire Badger June 21, 2018 4:48 PM  

Well, fuck.

Blogger Lance E June 21, 2018 4:49 PM  

Aside: what is with the "Muh Constitution" arguments, anyway? I know that's a big deal for civnats, but thought it was generally acknowledged here that the U.S. Constitution is a dead animal. The law of the land is whatever the culture is willing to enforce.

Blogger DJT June 21, 2018 5:12 PM  

This decision is fucking INSANE and tremendously GAY.

I work for a small internet business and we ship product all over the country. Are you telling me we will now have to calculate, charge, and pay sales taxes to every damn state in the Union? Maintain a tax registration, cut checks, and keep abreast of changes to the laws in every damn state?

This is completely antithetical to federalism, and it is going to be a logistical nightmare. But I guess it's great for the big guys like (((Amazon))) and (((Walmart))), who can afford to pay armies of accountants to do this.

It was already hard enough for a small business to get ahead. Way to go, keep on killing the American Dream!

Blogger Unknown June 21, 2018 5:14 PM  

VD: I'm having a hard time reconciling your support for this on the one hand, and your loathing of paperwork and regulations gone over so clearly in the other thread.

As someone getting going with online sales, at a very small volume that makes hitting all states in all years highly unlikely, I see this as nothing to me but a potentially vast expansion in the tax paperwork and potential for legal trouble. Last I heard I am legally forbidden to collect tax without applying to the state ahead of time, which is paperwork to begin with, and without that I'm in a legal no-win situation.

Without a significant threshold under which this doesn't apply, I can't see how this will fail to feed the oligarchy. If you must, I suppose you could consider sales of smaller sellers to be taxed as a local sale, but I'm not sure that's a good idea either.

Blogger DJT June 21, 2018 5:14 PM  

But in order for that to work, you would need to have a customs system, and that would be unconstitutional.

We already have a customs system. It's called the Commerce Clause (which has long been mutilated and used to justify literally every federal encroachment you can imagine) and the US Supreme Court.

Blogger Killua June 21, 2018 5:23 PM  

The only thing worse than taxes applied to everyone are taxes that are applied to the powerless and not to the powerful.

What a fantastic quote! Gotta to remember it for future discussions.

The reason why many rich liberals such as Warren Buffet and big corporatists support higher taxes is mainly to keep the barrier of entry high and prevent possible competitors from becoming a threat in the future. Huge corporations can afford armies of lawyers to help them avoid taxes, a luxury that small and medium companies can't afford.

Blogger Anne June 21, 2018 5:28 PM  

Can you give me an example of something that is interstate commerce, since having the buyer and seller in different states apparently doesn't qualify?

Blogger DJT June 21, 2018 5:30 PM  

The only thing worse than taxes applied to everyone are taxes that are applied to the powerless and not to the powerful.

But that's not what this ruling does. Large and powerful companies like Amazon and Walmart are already collecting and paying sales tax in every state because they have operations in every state.

This ruling forces small and powerless business to operate by the same rules as Amazon, and small businesses don't have the resources to easily comply.

Many businesses may have to fire an employee and pay some accounting specialist to help them comply, which will put more pressure on the other employees to make up for the one who was let go. A certain percentage of customers won't want to pay sales tax, and so sales will also decrease, further putting strain on the bottom line.

I fail to see how this ruling is good for anyone except for state bureaucrats and their pet projects that will now get funded with all the new gibs.

Blogger OneWingedShark June 21, 2018 6:34 PM  

Snidely Whiplash wrote:It is funny that a decision like this can be overturned, but obviously wrong decisions like Wickard v Filburn and Roe v Wade are completely outside the ability of the court to address.
No, not outside their ability; outside their will. For several reasons:
(1) Both cases ridiculously expanded the powers of the federal government.
(2) To admit mistakes in such foundational cases would undermine the "The Constitution means whatever the Supreme Court says" indoctrination simply by the sheer magnitude.
(3) It would necessitate a reevaluation of the Judiciary, something they do not want due to how much power they have stolen.

VD wrote:I'd be fine with sales taxes being abolished - though income taxes would be better. But the only thing worse than taxes applied to everyone are taxes that are applied to the powerless and not to the powerful.
The two biggest problems with the income tax are (1) the varying rates [ie 'brackets'], and (2) withholdings, which are an ingenious, albeit evil, application of "out of sight, out of mind". I've put a petition here using several amendments from this booklet.

Nick wrote:This is a terrible, pro-tax, anti- conservative ruling. Shame!
Why on earth would you expect anything else?

Blogger Dirk Manly June 21, 2018 6:41 PM  

@66

BINGO!

Blogger Ingot9455 June 21, 2018 6:43 PM  

I'm sure someone will set up a sales tax website which keeps track of sales taxes city by city and county by county. Subscribe to it and get the latest sales tax info for a quick lookup API.

Blogger Dirk Manly June 21, 2018 6:51 PM  

@69

At what cost?

Like I said, this decision is one only rent-seekers would like.

Blogger Avalanche June 21, 2018 6:53 PM  

@69 "I'm sure someone will set up a sales tax website which keeps track of sales taxes city by city and county by county. Subscribe to it and get the latest sales tax info for a quick lookup API."

Yes, and that subscription will no doubt cost MORE per month than the taxes owed to other states, cities, and counties. I already have to calculate sales tax within my state according to state, county, and city of the buyer.

Thankfully, I only have one in-state customer who rarely buys product. Yearly, I file either the "this year's sales tax" charged when they buy (which is about $12-$20); and a "no sales tax due" when they don't. (And electronically too!)

The SC thinks small companies will be able to manage the tax requirements of 50 states, 3,007 counties, and god-alone-knows how many cities and towns?! They're gonna drive most of us out of biz!

Blogger DJT June 21, 2018 7:06 PM  

With all of the problems painfully clear, I'm wondering what good Vox sees in this ruling?

Blogger cyrus83 June 21, 2018 7:28 PM  

Sales tax law as written is an obligation of the purchaser, although the seller is usually also obliged to collect the tax at the time of the transaction as the state's agent and remit it as directed by various state and local law. It's not much different than the government obligating employers to withhold income taxes on your behalf.

Given the crazy patchwork status across the country of whether something is or is not taxable, the varying rates, jurisdictions, and filing requirements, I suspect in the end the solution is going to take the form of something of a national system where the agent responsible for collecting sales tax will shift from the merchant to the payment processor (as was done with 1099s a few years back). Visa and Mastercard will probably howl, but Big Brother will certainly not mind getting a detailed monthly/quarterly/annual return of your taxable purchase amounts. Merchants would only be responsible for cash transactions, until hard money gets outlawed for "the public benefit" as it were.

Blogger James Dixon June 21, 2018 7:30 PM  

> Imposing a sales tax on buyers in your state is not "regulating interstate commerce".

Immaterial. Forcing a business not located in your state to collect it is.

> The other option, aside from sellers charging the tax, is the "importing" state going after importers directly.

What do you think a use tax does?

Blogger James Dixon June 21, 2018 7:38 PM  

> I'm wondering what good Vox sees in this ruling?

Allow me to quote: "he effect of those earlier decisions was to favor big nation-wide retailers over traditional distribution channels and local retailers."

Which is absolutely true. The fact that they also aligned with the Constitution on the matter is a separate issue.

As I said, the long term solution is for the federal government to outlaw state sales taxes on interstate commerce (and use taxes while they're at it) and instead institute a single federal sales tax on same, dividing the money up amongst the states. That's what will probably happen now. It may even be what Gorsuch intended.

Blogger The Overgrown Hobbit June 21, 2018 8:13 PM  

Since most of the small local business in the poorer (and more conservative) of one of the small towns near us survive based on additional sales via the internet to their niche customers across the U.S.A. I forsee our local economies cratering.

Just another way to take out Trump's America. Vox Day is wrong on this one.

Just another way for the Feds to take out Tru

Blogger justaguy June 21, 2018 9:21 PM  

I note that too many of the objections are about the pragmatic issues arising from this well overdue ruling. As the SC Decisions says, the assumptions that the Court made to not allows states to collect sales taxes were out the window years ago. States have tremendous authority over those within the states and the power to tax them. States of course can charge a sales tax on their citizens and have the retailer collect it. They do at every store in their boundaries. The SC said that any internet sales retailer did not have enough action/commerce within a state to allow the state jurisdiction over it to force that retailer to pay tax. That is obviously not true now so the SC admitted the obvious but by only a 5-4 line-up.

That Congress needs to fix the problem has been obvious since mid 00s but as always Congress lacks the unity to do anything. 1/2 of Congress wants everything to give the Federal govt more power, 1/2 wants whatever the lobbyists want and only a few care about things like more freedom or liberty.

Congress can easily fix this-- and they should but I am not holding my breath.

Blogger Some Guy June 21, 2018 11:50 PM  

Because now they have distribution centers in every state and they want their competitors to have to pay as well.

Blogger AnvilTiger June 22, 2018 12:27 AM  

This is a terrible ruling. Mail order houses like LL Bean, located only in Maine (originally), only collected sales tax from purchasers in Maine. Purchasers from the other 49 states (plus territories) were untaxed.

There is a reason for this, beyond the difficulty calculating sales taxes for all those other areas - sales tax originally was to reimburse local municipalities and states for the cost of infrastructure. Someone purchasing from a business received benefits from police and fire protection, roads used for deliveries to the business and for the customer to access the business, and so on and so forth. Sales taxes were designed to cover the infrastructure overhead that benefited customer. Thus why the taxes were collected at the point of sale. Note that the taxes are not on the business, but on the buyer of the goods or service.

However when ordering via mail order, the only impact on municipal infrastructure is the delivery vehicle using the road, and this is quite small. Thus no sales tax.

The internet just replaced the paper catalog, and so the principle was the same. However as ecommerce became more prevalent, local businesses did not like the competition and complained to their representatives, and the municipalities and states saw an opportunity to increase their revenue. Thus the push to apply sales taxes to out of state business.

As pointed out by other posters, this will mainly impact small businesses. Big companies like Amazon don't care at all - the cost of the sales tax software (which they renew yearly) as a module plugged into their ecommerce software, and the cost of remitting the taxes to the states, is very low for them compared to revenue. But for a small business this is a killer.

Blogger Jack Amok June 22, 2018 1:14 AM  

Count me as against this ruling too. I'm far less interested in mom-n-pop retail than I am in mom-n-pop producers, and this makes it harder for producers.

Blogger Jack Amok June 22, 2018 1:20 AM  

Think Florida will fund an investigation in Washington and attempt to enforce for small potatoes?

Nah, they'll do what the county I live in does for pet licenses. They demand vets turn over customer records (on pain of regulatory assault) and then send out letters demanding payment to everyone. They figure the people who already paid the license will either dig up their receipt, or - even better - just send in a double payment. The work is all on the "customer".

Blogger DonReynolds June 22, 2018 4:23 AM  

There is another aspect of this that no one seems to have noticed.
If this had been done by Act of Congress, there would be a beginning (future) date when this change would go into effect (probably October 1st).
Since it was done by Supreme Court decision instead, there is no start date.
The Court is saying that it was LEGAL for states to do that all along!
.
I do not doubt that some (or many) of the states will take this fine point very seriously and reach back three years for the taxes that they did not collect from the online retailers. Of course, since the online retailers never collected the sales taxes owed, there may be some online retailers that may try to make debiting corrections to the credit card amounts already posted. (The fact that they are acting on a Supreme Court decision may make these charges irresistible.) And finally, since the sales taxes that were not collected, were not paid to the state when owed, the state can expect to add interest and penalty charges to the amounts owed, which the online retailers will not be able to adjust as a late hit on the credit cards. That part may come out of their own pockets. When I worked for state Revenue, the interest charged was not nearly as high as the 25 percent PER MONTH in penalty. Yes, this could turn into a "chunk of change".
.
We should mention, only in passing, that a certain number of internet shoppers are going to claim that the ONLY reason they bought online was because they did not owe a sales tax and the online retailer has effectively cheated them. They may return whatever merchandise they bought along with a curt note demanding a full refund.....rather than paying the old sales tax due. The only winners in this entire affair may be the shippers getting paid to do "free shipping" back to the online retailer for merchandise that may be up to three years old......and the state revenue offices.

Blogger DJT June 22, 2018 6:15 AM  

James Dixon
Allow me to quote: "he effect of those earlier decisions was to favor big nation-wide retailers over traditional distribution channels and local retailers."

But this decision hurts small Nationwide web based businesses. It does not affect Amazon or Walmart at all.

Blogger cyrus83 June 22, 2018 9:57 AM  

DonReynolds wrote:Since it was done by Supreme Court decision instead, there is no start date.

The Court is saying that it was LEGAL for states to do that all along!


Most states will have statutes with nexus language in accordance with the previous Supreme Court guidance in Quill. South Dakota passed legislation with a different nexus policy that the Court agreed should have applied all along. All other states would have to pass similar legislation to amend their laws to take advantage. I suspect most will as they'd be fools not to, but they do have to go through the formality of the legislative process first.

Blogger James Dixon June 22, 2018 10:39 AM  

> But this decision hurts small Nationwide web based businesses. It does not affect Amazon or Walmart at all.

Yes. It's a bad decision. And the "strict Constitutionalist" Gorsuch signed off on it. :(

At this point, I suspect the Supremes are simply trying to force Congress to act on the matter.

Blogger Unknown June 22, 2018 4:12 PM  

I certainly hope you are right, James, that it turns out to be an impetus for something else that is workable, and promptly. Perhaps it'll give Trump an excuse to write an EO protecting the smaller retailers and especially producers doing some retailing of their own stuff to capture the retail markup on some sales.

Blogger The Aardvark June 22, 2018 7:09 PM  

Now we will be forced to pay a company to handle compliance in all 50 states, and countless towns.
That or spend triple the time doing it ourselves (It already takes a full day.)

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