Another Possible Ramification of State Sales Tax Collection for Online Marketplace Purchases

[tiramisu41]

If other states follow WA/PA's example of putting the burden of collecting/remitting sales taxes from online sales on the "marketplace facilitator" that may well be a death knell for smaller e-commerce sites that are eBay clones/wannabees -- and/or a significant deterrent to the launching of new ones.

Just don't see how most will ever be able to afford the cost of handling such an enormous bookkeeping/accounting task when many, especially niche sites and start-ups, operate on very lean budgets/staffing/fee structures.

As a result, it's possible there may be fewer marketplace sites "left standing" after the internet sales tax thing plays out.    Good news for the "big guys" in terms of there being less competition, but bad news for sellers, especially smaller ones who will have fewer options/alternatives of places to sell their wares.  

IOW, for all those who regularly get fed up with eBay and announce they're off to sell elsewhere, in the future there may be very few "elsewheres" out there to which to go.  Just a thought...

[ersatz_sobriquet]

But I also believe this tax rate table will be readily available on the net and for free. Word will get out and people will copy and paste this table all over. Independent sellers will have to keep on top of it as states either change their rates. I don't think it will be difficult even for the small seller with their own website to figure the tax, it will be some additional programming though for check-out, but nothing difficult if you know some basic programming, assuming it is all figured by zip code. More work for all, yes. Impossible--no.  This is assuming congress doesn't pass some other law that supercedes whatever states impose.

[agent006140]

last week,a company which provides software for tax compliance ,its stock rockets to the moon,so there are software out there to handle this situation.

[jabarno54]

Congress is too busy getting 40,000,000 illegals legalized then to worry about small online sellers.

[luckythewinner]

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@jabarno54 wrote:
Congress is too busy getting 40,000,000 illegals legalized then to worry about small online sellers.

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By most reliable estimates there are around 12.5 millions illegal aliens in the United States. 

The bills that Congress has been debating would allow 3.6 million dreamers to apply for green cards, but would also tighten asylum standards and also make it easier to detain and deport illegals. 

I'm not sure where your "40 million illegals" number comes from. 

[tiramisu41]

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@agent006140 wrote:

last week,a company which provides software for tax compliance ,its stock rockets to the moon,so there are software out there to handle this situation.

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Though the company I believe you're talking about @agent006140 does provide a useful service it's also very expensive -- a bone of contention and a common complaint amongst a lot of people /companies looking for or using them as an automated solution to the problem.    

Whether free tax tables emerge or expensive turn-key solutions are out there, I just can't see small and/or casual sellers dealing with this issue.   Whether they will have to will depend on how any subsequent laws are written. 

If other states follow WA/PA's lead (and it looks like already many have/already are, as for example, there's a new law in CT all ready to go into effect later this year that reads eerily similar to the WA/PA versions), small/individual sellers won't be the ones that are required to collect/remit applicable taxes due, it will be the responsibility of the "marketplace facilitator."

That's why Etsy and Amazon started collecting/remitting sales taxes on behalf of their sellers earlier this year for sales made to WA/PA consumers.  eBay decided to wait things out -- perhaps to see how the SCOTUS ruling would turn out, or more likely because unlike Amazon/Etsy, they didn't manage the sales transaction process (yet)-- one of the conditions in the WA/PA laws which determines whether a marketplace is compelled to comply.

But all of that will change beginning this fall when eBay begins managing their own transactions internally and using Adyen as their payment processor.  

Given how the WA law is written in particular, I don't see how eBay won't be compelled to start collecting/remitting sales tax on behalf of their sellers for sales made to consumers in at least these two states where internet sales tax laws are already in effect.

If they do, it'll cost them a pretty penny to implement, and no doubt sellers will be footing the bill in higher fees just like has just recently been announced over at Etsy.   But it does resolve one problem -- individual sellers won't be burdened with the need to collect/remit and keep track of it all which I think most sellers, especially small/casual ones,  would prefer.

[sharingtheland]

The bills that Congress has been debating would allow 3.6 million dreamers to apply for green cards, but would also tighten asylum standards and also make it easier to detain and deport illegals. 

You forgot that any bill includes $25B-$75B for The Wall.  You know, the one Mexico is paying for...

[somanypostcards]

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@ersatz_sobriquet wrote:

But I also believe this tax rate table will be readily available on the net and for free. Word will get out and people will copy and paste this table all over. Independent sellers will have to keep on top of it as states either change their rates. I don't think it will be difficult even for the small seller with their own website to figure the tax, it will be some additional programming though for check-out, but nothing difficult if you know some basic programming, assuming it is all figured by zip code. More work for all, yes. Impossible--no.  This is assuming congress doesn't pass some other law that supercedes whatever states impose.

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My Zip code has at least two different sales tax rates.  Worst case is zip code 57717 which spans 3 states (Montana, South Dakota, and New York) and six different counties.  If you copy and paste the table of rates I guantee you will be undercharging or overcharging taxes in some cases, thus possibly subject to audits, lawsuits, and fines.  This is difficult, even for large sellers.  Never underestimate to complexity of 12,000 sales tax jurisdictions and growing.

[the*dog*ate*my*tablecloth]

Hopefully the plus four gives enough detail.

[somanypostcards]

Here is what Etsy says about collecting taxes for its sellers:

"4. South Dakota may suggest that the burden of tax collection simply can be transferred from microbusiness sellers to the marketplace operators used by those sellers, such as Etsy. Some States already have taken partial steps in that direction; as discussed above, Washington puts marketplace operators to the choice of either collecting sales taxes for their sellers or providing onerous annual reports of purchases to marketplace customers. Supra at 15. Shifting the sales tax collection burden from sellers to marketplace operators is neither feasible nor fair. As an initial matter, shifting the collection burden to marketplace operators would hardly address the problem for all microbusinesses, as not all microbusinesses sell through a third-party online marketplace. Moreover, to the extent States such as South Dakota base a seller’s sales tax collection and reporting obligations on whether the seller’s sales volume into a State exceeds a particular threshold, marketplace operators cannot reliably enforce those thresholds because microbusinesses often sell their goods on multiple platforms. “The majority (58%) of Etsy sellers [in the United States] promote or sell their goods in other venues.” Etsy Census at 8. Etsy has no way of tapping into information about a particular seller’s sales through other channels. And even if it did, the burden of reviewing outside sales activity for 1.9 million sellers—Etsy’s seller base as of December 31, 2017—would be overwhelming even for an established marketplace operator. Finally, and most importantly, there is no practicable way for even a single business to ensure that it is accurately classifying its products in accordance with the laws of thousands of jurisdictions (and to account for the jurisdictions’ varying exemptions for certain purchasers and for certain uses). Doing so often requires detailed knowledge of a product’s characteristics—for example, whether a food product contains flour, or if a customer purchases a dog collar meant for a guide dog.23 Supra at 15-18. Requiring a marketplace operator to master such information for millions of sellers, selling tens of millions of products, in order to ensure each seller’s compliance with thousands of jurisdictions’ tax codes, is entirely unrealistic. "

The entire Etsy brief filed for South Dakota v. Wayfair, No. 17-494 is available here:

https://www.supremecourt.gov/DocketPDF/17/17-494/42288/20180404124615050_17-494%20bsac%20Etsy%20Inc....

[somanypostcards]

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@the*dog*ate*my*tablecloth wrote:

Hopefully the plus four gives enough detail.

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What is "the plus four?"

[tiramisu41]

Zip code + four -- the last four digits corresponding to the exact location within the zip code area of the delivery address.   As in: 55714-8562.

[p7050]

I also have Etsy and they take care of the taxes in fact besides Wa,Pa, they just starting taking taxes out on Oklahoma August 1

Dont know how true this is but eBay is trying to get out of it and have the sellers on eBay to pay the taxes

[the*dog*ate*my*tablecloth]

Most sellers on Ebay will be disqualified by the sales requirements. Most sellers don't sell over 10K or 200 items to any particular State.

I think Ebay is trying to get out of it because most State laws so far require the marketplace facilitator to handle the payment and pay the seller. Ebay doesn't do that right now but they will once they implement Adyen.

[jen_8417]

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@somanypostcards wrote:

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@ersatz_sobriquet wrote:

But I also believe this tax rate table will be readily available on the net and for free. Word will get out and people will copy and paste this table all over. Independent sellers will have to keep on top of it as states either change their rates. I don't think it will be difficult even for the small seller with their own website to figure the tax, it will be some additional programming though for check-out, but nothing difficult if you know some basic programming, assuming it is all figured by zip code. More work for all, yes. Impossible--no.  This is assuming congress doesn't pass some other law that supercedes whatever states impose.

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My Zip code has at least two different sales tax rates.  Worst case is zip code 57717 which spans 3 states (Montana, South Dakota, and New York) and six different counties.  If you copy and paste the table of rates I guantee you will be undercharging or overcharging taxes in some cases, thus possibly subject to audits, lawsuits, and fines.  This is difficult, even for large sellers.  Never underestimate to complexity of 12,000 sales tax jurisdictions and growing.

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How can a zip code include MT, SD and New York? It's physically impossible