US Supreme court decision on online sales tax

Started 4 months ago | Discussions thread
Michael Fryd
Michael Fryd Veteran Member • Posts: 8,868
Re: It was amazing...

JJoyce4699 wrote:

Michael Fryd wrote:

JJoyce4699 wrote:

...

Cheating ends with yesterdays change. Now states can force ALL companies start charging the tax up front. Before they only could force collection if the company had a physical presence in the state.

No. not all companies. The states can only force companies with a substantial connection to the state. Selling a few items for a few hundred dollars isn't covered by this ruling.

The particulars of this case was that they upheld a law that applied to those selling more than $100,000 per year, or 200 separate transactions into a state.

You misread things, that is SD's rules for taxes. Other states can do what they want.

Four of the Justices that voted against the ruling thoughts were: "Those who argued against overturning Quill said the decision could allow states to go far beyond the model legislation that South Dakota passed, requiring collection by retailers with a single sale in a state or perhaps trying to force the companies to comply retroactively."

Read the decision itself.

What it found was that the previous "Quill" test that required a physical presence was incorrect. A physical presence is no longer a necessary element for a state to require a merchant to collect sales tax.

The court found that other methods of establishing a substantial connection were acceptable. In particular South Dakota's requirement of 200 transactions or $100,000 per year was an acceptable requirement.

They specifically did not rule on whether a state could tax a smaller volume retailer, and suggested that a very small volume of sales would not be enough.

The court was very clear that the only aspect they were ruling on was the physical presence requirement of the previous Quill case. They did not rule whether or not the law was constitutional on other issues, as none were considered in this case.

All that we know is that a state may now consider selling a substantial volume into the state as a constituting a nexus, and the states may require those companies to collect sales tax. We don't have a firm limit on the volume of sales required. Nor do we have an answer on whether such laws can be enacted retroactively (although the ruling suggests that a retroactive law would not be allowed).

====

Also, if you read the article, it's an official from Etsy that says that it would be an unreasonable burden if small sellers had to collect tax from all states.  He never says that the ruling allows that.  Only that he is worried about such issues.

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