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What no one is talking about here is how this would be handled, especially for a small online sellers. There are almost 10,000 tax jurisdictions (https://www.wa
by kels 8y ago
What no one is talking about here is how this would be handled, especially for a small online sellers. There are almost 10,000 tax jurisdictions (https://www.washingtonpost.com/blogs/fact-checker/post/mcconnells-claim-that-there-are-nearly-10000-tax-codes-nationwide/2013/04/26/a6b3bef4-aeaa-11e2-a986-eec837b1888b_blog.html?noredirect=on&utm_term=.c97e1f8f782e https://www.washingtonpost.com/blogs/fact-checker/post/mccon...) and you're not allowed to collect sales tax unless you register for that jurisdiction. There is also a fee collected by most jurisdictions to register and most make you send in periodic reports, even if you didn't collect any taxes for them.
- tomrod 8y agoSounds like a business opportunity.
- johns 8y agoAvalara just went public and is benefitting from the ruling: https://www.geekwire.com/2018/avalara-stock-soars-following-supreme-court-e-commerce-sales-tax-decision/ https://www.geekwire.com/2018/avalara-stock-soars-following-...
- ecommerceguy 8y agoTax Jar is another. I dont have a problem paying the fees but as stated above, the filing in all jurisdictions is such a pain it will knock out alot of small sellers online. The seller will have to pay a bond in nearly every state and some cities which can add upto thousands of $$. No clue how the Chinese sellers will handle it, they probably just wont remit. I think eBay and Etsy side hustle sellers especially should be worried. This helps large internet retailers like Amazon. They have the systems in place to charge and remit sales tax for 3rd party merchants, they've just been waiting until this ruling happened.
- notheguyouthink 8y agoFunny, I hear anti-competitive not business opportunity. It's a business opportunity now, but as with many government laws, in the future businesses end up depending on government forcing their markets existence. So then they lobby for the government to keep the system, even if it's out dated or badly thought out. We can't stream line anything, because entrenched businesses don't want anything to change. It makes me sad the world is this way.
- DoctorOetker 8y agoit really is sad, but a petition is always an option? https://news.ycombinator.com/item?id=17367669 https://news.ycombinator.com/item?id=17367669
- DoctorOetker 8y agoWith fee, do you mean that you have to pay a yearly fee for simply registering as possibly collecting taxes for that jurisdiction? Not sure what most is, but ~30-50 pay-to-play fee's a year will certainly hurt the small businesses. I think it's good to start harmonizing the sales taxes, but such a fee (if I understand you correctly) should be removed...
- kels 8y agoI'm in Colorado and I had to pay $66 up front. $50 is a deposit and $16 is the fee every two years. I see that California doesn't have a fee but I know other states do. TaxJar will register for you in the States that you need for ~$100 per state, plus their fees (https://www.taxjar.com/state-registrations/ https://www.taxjar.com/state-registrations/) -- I'm sure Avalara does something similar but that's ~$5000 that a small business probably won't have.
- DoctorOetker 8y agowhat do you think about this idea ? : https://news.ycombinator.com/item?id=17367669 https://news.ycombinator.com/item?id=17367669
- cmurf 8y agoColorado has home rule cities with their own tax license, rules, submission. Even due dates van be different per municipality. It's a system designed ages ago, not only pre-internet, but even pre-car. For internet businesses it's really unworkable to require they submit anything other than state sales tax but even that is onerous due to registration fees and old and nonstandardized submission systems.
- beberlei 8y agosuddenly the EU VAT system looks awesome :-)
- Tloewald 8y agoThe US system of local sales taxes doesn't look awesome ever. If there were one economic reform I would push in the US it would be advertised price is final price (i.e. if you say "I'm selling this for $9.99" then that's all you pay, and the taxes are all inclusive) this would pretty much force underlying tax reform as businesses lost their shit having to deal with the insanity. Note that the disaster area that is US regulatory overlap means passing a law like this is probably impossible without constitutional amendment. Right now in the US it's often difficult, and sometimes impossible, to know how much you'll actually be paying in any transaction. It's ridiculous, and from a pure Econ 101 perspective it's a first order problem in the market.
- soared 8y agoIts worst at the liquor store where taxes are some significant percentage more, so the price is $18.99 but I know I'll pay some amount between $22 and $27.
- ecommerceguy 8y agoTax Increment Financing is used so much (abused) by local jurisdictions for infrastructure improvements, sales tax will never go away. It's a mess.
- jmj42 8y agoTIF is a property tax financing scheme. Abuse or not, its use has very little impact on sales tax.
- jessaustin 8y agoIt has a very large effect on what shows up next to the "sales tax" label on your receipt. Sure if they were honest it would say "fee to make the developer's interest payments", but it never says that.
- Animats 8y agoSee [1]. Sales tax as a service is available from seven different providers. Shopping cart integration is available. You pay one bill, they handle the rest. [1] http://www.streamlinedsalestax.org/ http://www.streamlinedsalestax.org/
- sp332 8y agoWhere do you get to see the list of providers?
- lightbyte 8y agoSo this is another needless regulation that creates more useless rent-seekers?
- eli_gottlieb 8y agoSo the internet imposes a moral requirement for all states/provinces to have uniform sales taxes or value-added taxes?
- michaelt 8y agoNot moral, but some would say being a single country imposes a certain practical requirement that the taxes not be too complicated, if we agree commerce is a good thing and waste is a bad thing.
- gnopgnip 8y agoThere is a threshold in the South Dakota bill for $100k in sales in the state. Small online sellers are not affected
- arbuge 8y agoThat's just the exemption SD chose to apply, and which they could change at any time. Other states may choose to not have such an exemption. You are also now open to tax audits from all other states, since you may need to prove you are below any exemption limit. It's a bad deal for small business no matter how you slice it. I think that if your revenue is below ~$100m annually, the future is beginning to look bleak. Very helpful to the big players like Amazon in killing off small competition.
- omfg 8y agoThat’s a bit of a leap. It looks like fully automated compliance from the existing services. From collection to remittance is about 3-5k a year. With more competition it will likely become cheaper.
- seandougall 8y ago> With more competition it will likely become cheaper. I wish I shared that faith in market forces. What seems more likely to the cynic in me is that a big player like PayPal will incorporate it into their merchant services, obtain some overly broad patents on the process, use those to stifle competition, and make the service a nominally cheap add-on (but only for their own customers).
- michaelmrose 8y agoWhy would it? Why in particular wouldn't the fact that you are required to pay for their services allow the entire industry to jack up prices substantially? Why wants to win by being the asshole who did it for $500 instead of say a percentage of revenue?
- 8y ago
- myrandomcomment 8y agoRead the story... "...South Dakota, whose law requires retailers with more than $100,000 in sales or 200 transactions annually in the state to pay a 4.5 percent tax on purchases" "..Kennedy’s majority opinion strongly suggested the measure was constitutional, in part because it has the $100,000 threshold and doesn’t try to impose retroactive taxation." A clear bar is set for what is covered here and what is a burden.
- mlindner 8y ago$100,000 in sales is a very low bar. That's equivalent to a business with a single employee, the owner, and they're probably not making a livable wage yet.
- nemo44x 8y agoI think that's the point. It's supplemental income for someone - not a real business.
- tgb 8y agoThat's not their entire sales, that's their entire sales to people in South Dakota.
- Obi_Juan_Kenobi 8y agoIf you do business nationally, with a million in revenue, $100k for South Dakota might not seem too bad, but $100k for California or Texas starts to feel really claustrophobic. It's an interesting precedent.
- markdown 8y agoIt's $100k or 200 transactions. 200 transactions is just 17 customers with a monthly subscription.
- ajross 8y ago$100k of South Dakota revenue is either an almost exclusively local single-owner business or a much larger internet shop. But regardless, that kind of number is a full time job. If you're selling over the internet and making a full time job out of it, you can handle computing sales tax for SD residents. Yes, it's burdensome. Yes, it would be good to have a simpler federal framework for this. No, it's not the end of the world. "No tax on the internet" sort of made sense in 1997 when it was a new and exciting market and we wanted to see what would happen. Now, it's just a giant subsidy for Amazon. We can put that money to better uses.
- dragonwriter 8y agoIt's very simple how it would be handled: (1) very large organizations with retail over a wide area as a core business focus would handle relations with taxing jurisdictions directly as a central function. (2) medium scale organizations would outsource tax compliance to specialized vendors that would handle it. (3) very small organizations would either do the same as medium orgs (assuming vendors handle them) or just not sell into many jurisdictions.
- anonymous5133 8y agoAgree lots of people here are overly sensational. In the most basic terms it simply consists of getting somethig like avalara, configuring it correcrtly and then avalara does the rest. No different than setting up quickbooks. Yet people here make it sound like it is the end of the world. Truth be told most here are just mad that their online sales tax loophole is getting closed.
- vinceguidry 8y ago3 would be a source of political pressure for those jurisdictions to simplify tax compliance.
- joezydeco 8y agoWatch Amazon offer it as an AWS service...for a 0.2% fee.
- anonymous5133 8y agoOr just buy out avalara and take over the whole market.
- cityhomesteader 8y ago> What no one is talking about here is how this would be handled, especially for a small online sellers. Strange huh? Seems like the little guy is being attacked by the elites in every manner possible. Whether it is small online sellers, small time youtubers, independent freelance journalists, small time artists, writers, etc, seems like the rules are being changed to favor corporations and the heavy hitters. Heck, even search and social media results/algorithms are changing to cater to corporations. Odd that this story hasn't gotten that much traction anywhere either. You'd think something this important would be all over hacker news and social media. I remember Bezos used to be very vocal whenever internet tax issues came up. He's been awfully quiet. Oh that's right, amzn is no longer a small time book and music seller.
- bluepeter 8y ago> You'd think something this important would be all over hacker news and social media It's the top story on... Hacker News.
- ggm 8y agoIf only we had .. machines which can look up an item in a huge list of items and find some specific properties about it.. just think! We could sell maybe two or three of these machines a year.
- coldseattle 8y agoThat’s exactly the point. Only the biggest companies with large pools of compliance accountants and attorneys will be able to do business.
- skybrian 8y agoUnless it can be outsourced? Companies providing an Internet storefront that takes care of sales tax should do well. Could Stripe do this?
- SyneRyder 8y agoI mentioned it elsewhere in this thread too, but some companies like Paddle & Fastspring (and I think 2Checkout/Avangate) already do this. As far as I know, Stripe doesn't do this, they only provide integrations for services that will calculate your tax obligations. (My guess is governments will eventually force Stripe to pay the taxes themselves directly.) Here's Stripe's page with tax calculation integration options: https://stripe.com/works-with/categories/tax-calculation https://stripe.com/works-with/categories/tax-calculation
- azinman2 8y agoUntil you pay one of many existing SaaS providers a modest fee to do this for you.
- peter303 8y agoI remember a service already available in the 1990s to compute and collect proper tax in every US zip code. Its not rocket science folks.
- jhayward 8y agoWell, since zip codes don't map to taxing districts it's pretty much screen doors in submarines. Not possible to compute taxes via zip code for the 50 US states plus territories.
- Shivetya 8y agothen states need to step in and set "online" rates that trump the local rates. many states already do similar with Ad valorem taxes on automobiles. Taxes aren't your only problem, there local restrictions on items sales that one area considers hazardous or regulated that another doesn't even acknowledge.