New Taxes / Fees on orders.....

[Opus]

Thank the cry babies in south dakota

They were told to do it. It was all a political game. It was known the court would most likely rule in favor of it and South Dakota was just the test case to get to the courts.

 

[EdsReefOdyssey]

Right now it is the Wild West and the horses are loose. It’s going to be insane hard to manage all this.

After the court ruling we are going to have to collect sales tax from every state that has a law requiring the collection which is quite a few. I’d expect all but a few will have one by the end of the year.

while there is software to manage this last time i checked the best one was going to cost $250k a year . Bet they increase that cost now. There are 12,000 state, county and city tax codes to follow, 50 states that can now audit businesses, and a seemingly limitless amount of rules on what is taxable and what isn’t.

The horses are running wild and the Tax Collectors are at the door!

12,000 different tax codes and $250,000 software, that’s just insane!! Washington is going to have to do something. A flat 5% internet sales tax would be quick and easy but as we all know Washington never does anything quick and easy.

@Ryanbrs Can you put up a list here or on your website of which States so far are requiring the collection of sales tax?

 

[EdsReefOdyssey]

They were told to do it. It was all a political game. It was known the court would most likely rule in favor of it and South Dakota was just the test case to get to the courts.

The States want the money and it wouldn’t surprise me to find out Amazon lawyers/lobbyists are HELPING the States write their tax codes. What better way to get more business on your website then have the Government help you kill off your competitors. I’ll stop now before I go on one of my Crony Capitalism rants. :mad:

 

[ReefWithCare]

IMO they should exempt business who make less than $10M in revenue a year. That being said both BRS and MD both make more than that and I’m fine with them having to charge sales taxes. Gives smaller sellers a chance.

I think we’ll start seeing exemption laws put in place for smaller businesses.

Even without the new law, BRS and MD both has it coming —- you establish nexus as soon as you go to a trade show out of state (boots on be ground establish nexus). Also, if you sell through fulfillment by amazon you automatically have nexus in 13 states. If you use affiliates - you have nexus in the state they live in as well (this was likely the reason why BRS avoided affiliates - MD has affiliates so they pretty much have nexus everywhere)

Source - I’m a CPA

 

[Brew12]

I have no problem paying sales tax for online orders.

I don't understand how smaller companies can comply with this and stay in business. Can you imagine some guy selling coral out of his home having to figure out how to comply with this?

The problem is that I don't see an easy legislative fix. The Federal government cannot dictate to the states and cities how to collect revenue. Each state, county, and city would need to decide either to stop collecting all sales taxes or to stop collecting sales taxes for online sales. I don't see that happening any time soon.

 

[ReefWithCare]

If only it were that simple. Some states tax clothing, others don’t tax food or other items at different rates. So it’s not just the state>country>city you bought it from but also what you bought.

Ryan - look into taxjar - pretty certain it integrates with the magneto system you use. I’ve used taxjar for FBA sellers who get stuck with having to report taxes in 13 states. The vast majority of them have revenues less than 500K and report to all 13 states.

 

[Opus]

IMO they should exempt business who make less than $10M in revenue a year. That being said both BRS and MD both make more than that and I’m fine with them having to charge sales taxes. Gives smaller sellers a chance.

I think we’ll start seeing exemption laws put in place for smaller businesses.

Even without the new law, BRS and MD both has it coming —- you establish nexus as soon as you go to a trade show out of state (boots on be ground establish nexus). Also, if you sell through fulfillment by amazon you automatically have nexus in 13 states. If you use affiliates - you have nexus in the state they live in as well (this was likely the reason why BRS avoided affiliates - MD has affiliates so they pretty much have nexus everywhere)

Source - I’m a CPA

Why does BRS "has it coming". They are at fault for following the law or because they are not a "smaller business".

 

[ReefWithCare]

Why does BRS "has it coming". They are at fault for following the law or because they are not a "smaller business".

Because they were going to tradeshows they were establishing nexus and they have grow quite a bit. MD should have implemented first though because they use affiliates.

A common misconception before this ruling came out was companies though you didn’t have nexus if you only went to tradeshows. Many states had rulings about this before this last big ruling for the Feds. Texas is a good example of this being highly aggressive (if you spend one day in Texas at a tradeshow —- Nexus [emoji29])

 

[jasonrusso]

New Hampshire has no sales tax or income tax, go figure. I live in Massachusetts, but shop in New Hampshire because it is convenient.

From what I have read, a sales tax is a tax levied on the business. The business then passes it onto the consumer. This is why out of state companies don't pay sales tax to the state. If the company has an office in the state, then it is a different story. I never paid tax on Amazon until they set up an office in Boston.

No one owns the internet, especially the government so I think it is total BS that they think they can tax e-commerce.

 

[jasonrusso]

Another thing I just thought about, who gets the tax revenue? The state the business is in or the state the customer is in?

 

[MnFish1]

New Hampshire has no sales tax or income tax, go figure. I live in Massachusetts, but shop in New Hampshire because it is convenient.

From what I have read, a sales tax is a tax levied on the business. The business then passes it onto the consumer. This is why out of state companies don't pay sales tax to the state. If the company has an office in the state, then it is a different story. I never paid tax on Amazon until they set up an office in Boston.

No one owns the internet, especially the government so I think it is total crap that they think they can tax e-commerce.

You're incorrect. Sales tax is not levied on the business (its collected by the business from the consumer). Sales tax is a consumption tax, and is generally charged on the sale of products from retailers to individual consumers.
The reason that out of state companies dont pay sales tax to the state is because its the consumers job to pay their own state's sales tax, not theirs (until this Supreme Court ruling)

 

[MnFish1]

Another thing I just thought about, who gets the tax revenue? The state the business is in or the state the customer is in?

The sales tax goes to the state the customer is in. It is the customer that is responsible for paying the tax - not the business (until now).

 

[Opus]

Because they were going to tradeshows they were establishing nexus and they have grow quite a bit. MD should have implemented first though because they use affiliates.

A common misconception before this ruling came out was companies though you didn’t have nexus if you only went to tradeshows. Many states had rulings about this before this last big ruling for the Feds. Texas is a good example of this being highly aggressive (if you spend one day in Texas at a tradeshow —- Nexus [emoji29])

That is true and that will kill the WWC and JF of the world and any other small company that has setup a booth at MACNA.

 

[ReefWithCare]

That is true and that will kill the WWC and JF of the world and any other small company that has setup a booth at MACNA.

Yup - that’s why I said there should be a exemption for a business making less than $10M in revenue a year.

Taxjar is pretty solid at taking care of it though given you have a modern shopping cart system. Like I said I have worked with folks making around $500K in revenues a year selling on FBA and reporting 13 states with minimal issues.

 

[Opus]

The sad part about this all the states will still say they are broke even though they are now collecting 100's of millions of dollars in new revenue.

 

[MnFish1]

Yup - that’s why I said there should be a exemption for a business making less than $10M in revenue a year.

Taxjar is pretty solid at taking care of it though given you have a modern shopping cart system. Like I said I have worked with folks making around $500K in revenues a year selling on FBA and reporting 13 states with minimal issues.

I actually don't see how this is a major 'programming' problem for a website. I'm charged sales tax on stuff I buy from BRS because I live in MN. I assume that based on my zip code whatever software used on the webpage has a database of tax rates in MN and its automatically calculated (many locations have different sales tax rates in MN). I can't see how adding a tax rate database for the rest of the country would be that difficult. I do see how it would be onerous to prepare sales tax reports for 50 states for a small business... I wonder if state auditors from one state have the jurisdiction to audit a company in another state.

 

[ReefWithCare]

I actually don't see how this is a major 'programming' problem for a website. I'm charged sales tax on stuff I buy from BRS because I live in MN. I assume that based on my zip code whatever software used on the webpage has a database of tax rates in MN and its automatically calculated (many locations have different sales tax rates in MN). I can't see how adding a tax rate database for the rest of the country would be that difficult. I do see how it would be onerous to prepare sales tax reports for 50 states for a small business... I wonder if state auditors from one state have the jurisdiction to audit a company in another state.

Most software will do the reporting for ya as part of an add on service [emoji6]. The main issue with the programming side is constantly changing laws and rates.

 

[Brew12]

I actually don't see how this is a major 'programming' problem for a website. I'm charged sales tax on stuff I buy from BRS because I live in MN. I assume that based on my zip code whatever software used on the webpage has a database of tax rates in MN and its automatically calculated (many locations have different sales tax rates in MN). I can't see how adding a tax rate database for the rest of the country would be that difficult. I do see how it would be onerous to prepare sales tax reports for 50 states for a small business... I wonder if state auditors from one state have the jurisdiction to audit a company in another state.

I don't think the problem would be bad if it were just the 50 states. The challenge is that almost every city and county also have their own taxes. And, it isn't always separated by zip code. As an example, my zip code is part inside city limits and part outside. A store outside city limits has a sales tax 1.3% (if I remember right) lower than one inside city limits. Some larger cities may even be spread across more than one county so could have 2 different sales tax rates.

Then you have the issue of updates. It needs to be updated continuously as cities change their rates and annex different areas. Think of the number of checks that could need to go out. Every transaction typically results in 3 different government agencies needing to be paid sales taxes. Even a small online company could need to send out thousands of tax checks every quarter.

So, while it is technically doable, I can see what it could be prohibitively expensive for a small business.

 

[KStatefan]

In my zip code there are 5 different tax rates.

City in county 1
City in county 2
county 1
county 2
Special tax zone

 

[ReefWithCare]

In my zip code there are 5 different tax rates.

City in county 1
City in county 2
county 1
county 2
Special tax zone

Next BRS video - New sales tax law and why it’s good for your local LFS [emoji848]