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U.S. Supreme Court rules in favor of internet sales tax

rbarron316rbarron316 Posts: 154Member

Hey V2.  This is going to be a nightmare as each state will be coming up with their own rules.  Here is a new law going to effect in GA January 1:

Online retailers who make at least $250,000 or 200 sales a year in Georgia must either collect and remit to the state sales taxes on purchases or send “tax due” notices each year to customers who spend at least $500 on their sites.

Personally, I would rather you charge the sales tax as part of the purchase than have you send a form saying I bought however much from your site.  Mistakes happen and if a screw-up occurs in reporting, who do you think is going to be left holding the bag to convince the government the seller made a mistake?

For me, as of January 1 I am going to limit myself to only those online vendors who charge sales tax as part of the sale.  This would be for vendors where I expect to spend more than $500 a year.  I'm not going to subject myself to an inevitable mistake some seller out there is going to make when reporting stuff to the government.


  • David1886David1886 Posts: 636Member

    The Australian Government has imposed a 10% tax on international online shopping sites like eBay & Amazon will charge the tax on international purchases and also tax the shipping cost at time of purchase from the 1st July 2018.

    Other overseas retailers will avoid paying the tax as Australian Customs only charge tax on purchases over $1000.00 AUD which is also the Duty Free limit for Australians and is impossible to collect for smaller online purchases as the cost of collection would be more than the revenue received and a nightmare for customs as they would have to contact every buyer and hold the customs clearance until the amount was paid.

    Australian shoppers that purchase online within Australia the 10% GST tax is already included in the purchase price the 10% is also charged by the Federal Government on any purchases even your supermarket items gas and water bills and everything else you purchase.

    We do not have any tax charged by the individual states as the Government gives each state based on population a percentage of the 10% Goods & Services Tax.
  • rbarron316rbarron316 Posts: 154Member

    This is going to be a very big deal for a great many online vendors.  It would be one thing if the federal government developed a national online sales tax rate and then divvied it up with the 50 states.  Nope.  Each state can choose whatever they legislatively want for their state.  Rates, rules, sales thresholds, purchase thresholds, penalties, etc.,  

    I've finished a reading of the GA bill.  Tax rate will be 4% in one section and the greater of 4% or what the vendor charged (pretty poorly written bill).  Too, the vendor must show certain verbiage prior to the completion of each sale.  So, if vendor doesn't comply, they are hit with penalties. Also penalties if they don't send sales tax statements to both purchasers and the government if and when required.

    This is just one state.  Take that by potentially 50 states with each doing their own thing.  I'm sure there are software vendors out there who've already developed software for handling taxes.  Question is can smaller retailers handle the cost and paperwork associated with selling in 50 states.  This is just a nightmare in the making.
  • David1886David1886 Posts: 636Member

    It looks like the states can do as they please and penalize online retailers and as you mentioned with 50 states all possibly with different taxes and also having to send sales statements could end up increasing  online retail prices in addition to the new tax to cover the cost of complying with the new new GA Bill and other States are likely to do the same thing.

    In Australia the Government has made the 10% GST for oversees online sales to try to make shopping locally a better proposition to the Australian population and very few companies will charge the extra 10% as if not charged at the point of sale will not be collected when there purchase arrives in Australia.

    Reading online the only 2 companies that have been forced to charge the extra tax are eBay and Amazon. People will still buy from them even with the tax as is still much cheaper than purchasing many items locally.

    Our states don't charge sales tax for normal purchases we pay 10% GST to the Federal Government who split it up among the states plus additional taxes on other items purchased, cigarettes, alcohol and luxury items, imported goods.

    I have a small eBay store and last month received an email stating from the 1st July my monthly invoice for selling fees will no longer come from eBay Australia and will be from eBay in the Netherlands so eBay by changing there billing country are now avoiding paying Income Tax in Australia for all fees and commission on every sale made and also from 1st July the commission they charge for each item and also charge it on the postage cost the buyer pays have increased by 1% which might not seem much but overall is a much bigger profit.

    In the USA with 50 states will be a nightmare and costly for small online sellers the bigger companies might handle the extra tax much easier adding it to the sale price  but as you previously stated the tax should be charged when you make your initial purchase as the last thing a consumer needs is a bill from the Federal Government as many people do a large amount of online shopping.

    I would have thought that in the US you already pay a tax on any purchase made in a store or online like we do 10% GST in Australia and now included is overseas online purchases.

    It looks like the States in the US are hitting the consumer with just more taxes and if they also impose a tax on e-cigarettes they are just being greedy.

    In the US and now Australia with overseas online purchases many people purchase items like clothing as much cheaper and are in low income family's or live in remote locations where there are limited stores available and with your state GA what tax percentage are they proposing and with this Bill many states will follow is there a maximum limit on what tax they charge.

    It looks like they will hit the low income families as every dollar saved helps with the weekly budget and the amount of people that purchase online must be huge in the USA.

    What about online purchases from overseas are you taxed on these when they arrive in the US.
  • rbarron316rbarron316 Posts: 154Member

    Final GA bill.  https://www.documentcloud.org/documents/4430609-HB-61.html

    The state sales tax rate in GA is 4%.  Then each municipality can add on to that.  The highest combined sales tax rate in GA is 8.9%, depending upon the municipality in which the purchase was made.  No idea whether the bill is allowing for municipalities to add on to the 4% sales tax rate.  That is why I indicated it appears to be a poorly written bill.  One section states every purchaser making a purchase from a dealer outside the state is subject to the 4%.  Then it goes on to say any dealer who makes a retail sale outside the state for goods to be delivered to the state is subject to the greater of 4% or the amount of sales tax collected by the dealer.  Who knows.  As far as purchases from retailers outside the U.S., my initial reading is that it applies to any goods delivered to the State of GA.  If correct, no idea how the U.S. can regulate those retailers.   

    I have absolutely no problem paying sales tax on every online purchase.  The key is that I want that to be an upfront transaction as part of my purchase.  I don't want any retailer sending me and the government anything when the year ends saying I spent this amount of money and am subject to whatever tax.  With all the technology foul ups (including hacks) by companies over the past 20 years, I don't want to, for instance, spend $500 with a retailer and due to an error by the retailer it is reported that I spent $5,000 or $50,000 and the next thing you know the government is on my back for taxes on a misreported amount.  Or I only spent $50 with a retailer, which doesn't require reporting, but an error occurs in the retailer's system and they said I purchased $500.  Computer errors, coding errors, company errors.  These are all a fact of life and happen.

    As this decision by our Supreme Court just came down yesterday, it is going to take a while for the states to figure out how to get the most out of it.  GA has been working on their bill for a while and was really awaiting the Supreme Court decision.  No question virtually every state is going to come up with something to tax all online purchases.  My initial feeling is that I will no longer make purchases from any retailer who does not charge the sales tax upfront.  

    When Equifax (a company who has our most confidential and personal information) was hacked last year, I went ahead and put a freeze on all my credit reports.  If the second largest credit bureau in the world can't get it right, why would I put my faith into a small retailer who makes a mistake with my information?
  • David1886David1886 Posts: 636Member

    Totally agree with your comments and is a very confusing tax they are proposing and yes I also would only purchase from an online retailer that charges the tax at the time of purchase.

    The GA bill is a complete mess in it's current proposal.

    As I mentioned the 10% tax on international online purchases eBay & Amazon are the only 2 companies forced to charge at the time of purchase.

    The taxation office has stated that other online companies if they refuse to charge the 10% there is nothing they can do and the purchase will still be delivered.

    Also from the 1st July online digital content from paces like Google & Apple stores plus Netflix will have to charge there customers at time of purchase. 

  • rbaker1009rbaker1009 Posts: 1,268Member
    In California we've been paying online sales tax since 2012 and it's calculated, collected and included at time of purchase by the online vendor so no change here. As long as they don't start taxing eLiquid with nicotine like a tobacco product I'm cool.

    The hassle, cost and obstacles that poor @David1886 has in Australia to get vaping supplies makes even California and New York seem unregulated by comparison. My condolences..
  • rbarron316rbarron316 Posts: 154Member
    edited June 22

    So, when you make a purchase from V2, they are charging you sales tax on your purchase?  If so, that makes me feel a bit better that V2 will hopefully do so for all the other states which jump on board the sales tax gravy train. 

    By the way, a number of states (about 10) are now adding excise taxes to eliquid.  Not sure the customer sees these as the distributor is likely taxed and the tax is built within the price of the product.  Some are reasonable, some outrageous.  The outrageous ones are expected to drive out all the vape shops.  Not sure whether nexus determines applicability of the excise tax.  Does it only apply if the product originates in that state?  Dunno.

  • rbaker1009rbaker1009 Posts: 1,268Member
    I guess I'm a little confused @rbarron316 (who isn't) with regards to what has changed in CA and what hasn't and how that relates to sales tax and V2. 

    No, V2 hasn't charged me tax nor have I received any other sales tax bill. I order most everything else from Amazon who does charge me CA sales tax at time of purchase. I ordered a $2,500 All-In-One computer from Lenovo online and they also collected CA sales tax at time of purchase.

    Here is CA online sales tax law as of 2012. Perhaps V2 does not meet one of these criteria and perhaps the Supreme Court decision you posted here changes all this:

    California’s Amazon Law

    Under a law that went into effect in 2012, larger Internet retailers with no physical presence in California are required to collect and pay California’s sales tax under certain conditions. More specifically, an out-of-state retailer must collect sales tax from California customers if that retailer:

    • has an agreement with a person or persons located in California to pay for customer referrals obtained via a link on the California seller’s website (a click-through arrangement)
    • the out-of-state retailer’s total cumulative sales to purchasers in California exceeds $10,000 during the preceding twelve months, and
    • the out-of-state retailer also has total cumulative sales to purchasers in California exceeding $1,000,000.

  • rbarron316rbarron316 Posts: 154Member
    edited June 23

    Yeah, they had a Supreme Court decision in 1992, Quill vs North Dakota.  Supreme Court ruled if a seller didn't have a physical presence in a state, then no sales tax had to be charged.  Then as a result, they came up with the nexus of the product, seller, and buyer.  So, if a product had any connection to a given state and depending on where the seller was, the state could charge sales tax.  Amazon was really only forced to start charging sales taxes because they had by virtue of all their warehouses around the country a nexus to the buyer's state.  They didn't do it out of the goodness of their hearts.  Amazon is still not out of the woods.  Of their sales, 52% are by third party sellers who will now have to start charging sales tax and comply with whatever state laws are in effect or will soon be in effect as a result of this Supreme Court decision.  This is going to have a huge effect on Ebay sellers as well who heretofore have not been charging sales tax.

    This new decision wipes out the earlier Supreme Court decision.  Now all states can charge sales tax, irrespective of the nexus of the product and seller.  This is where the nightmare begins for many sellers and buyers.

    What is especially galling is that here in GA the law requires the seller to report the date of purchase, amount of purchase, and the category of each purchase.  Excuse me?  Where does the government have any right to know what I purchase.  This sounds like some Chinese or Russian big brother law.

    Let the games begin.  V2.  I hope you are going to be proactive and step up to the plate and start charging sales tax. 
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