This is why sales tax (use tax) is such a complicated issue. It is not only different in each state…there are local, regional, county, city… laws governing sales.
I’ve never heard of anybody in my area getting a permit for a yard sale, or a craigslist sale…Hope I never do!
We do need permits I was wrong on sales tax. The permits are for the sale itself taking place in a residential area. (Whether that be a yard sale, garage sale, estate sale)
The sales tax is at State level. It allows up to $3000/yr without collecting and remitting sales tax (or two items without a $3k limit) IF one does not have a sales tax permit And if it’s also only items originally purchased for personal use.
It’s rare for a locality to impose it’s own sales tax rules on transactions that cross borders (as opposed to, for instance, liquor sales in restaurants where you only need to know the rules where you actually operate). It’s usually just a different rate, but state law still governs the taxability.
Same thing happens with other taxes too though, not just sales tax. There are more complications and variations among states with regard to income tax than sales tax. And some states allow localities to impose different types of income taxes.
Life in the USA does not generally come with speedy court decisions. However:
The end of June is the end of the SCOTUS year. Just like in school when you would not cram for the big test until the night before, our SCOTUS becomes more focused as June thirtieth approaches. Too bad for those old farts that June does not have thirty-one days, which would allow them to dawdle even longer Anyway, here is a lift from Bloomberg yesterday:
–– Internet sales taxes: Traditional retailers and cash-strapped states are eager to overturn a 1992 Supreme Court ruling that lets many internet retailers avoid collecting sales taxes from their customers. That ruling, Quill v. North Dakota, says merchants don’t have to collect taxes unless they have a physical presence in the state.
The court accepted a South Dakota appeal that takes direct aim at that ruling. But arguments in April were inconclusive, with some justices indicating that they would prefer to leave the issue to Congress.
Such a ruling would be a victory for internet retailers that don’t always collect taxes. Those include the three companies fighting South Dakota: Wayfair, Overstock.com and Newegg. Amazon.com, the biggest online retailer, isn’t directly involved.
Point is it’s almost time for our SCOTUS to piss or get off the pot. Look for them to rule any time, but surely before the end of this month . . . unless they can conjure an excuse to delay even longer!!
Keep an eye out for 10am tomorrow, otherwise we’ll likely have to wait until next week.
Quill overturned. decision here
Result was expected but I was totally wrong about the sides:
majority: Kennedy wrote opinion, Alito, Ginsburg, Gorsuch, Thomas
dissent: Breyer, Kagan, Roberts, Sotomayor
Kennedy brushes aside concerns about small businesses:
Startups and small businesses may benefit from the physical presence rule, but here South Dakota affords small merchants a reasonable degree of protection. Finally, other aspects of the Court’s Commerce Clause doctrine can protect against any un- due burden on interstate commerce, taking into consideration the small businesses, startups, or others who engage in commerce across state lines.
In other words: not to worry … all you little guys can spend $millions to fight the rapacious states through the lower courts and we will take care of you. Yeah right.
I was not wrong about Kennedy being the deciding vote but I was really disappointed in Gorsuch. I am now getting very worried about him being a Manchurian leftist like Souter. The government union political dues case, Janus, will be very telling.
Why don’t I have any of these small business clients that are willing to spend millions on sales tax issues?
Relating to today’s SCOTUS ruling, but limited to the state sales tax aspect which right now is certainly the principal focus of discussion:
I anticipate fraud. I foresee sellers in one state withholding (i.e., charging) customers for sales tax which is never remitted to (whatever) distant state. I mean for example:
How is the State of Maine gonna ride herd on sellers in Mississippi who sell to Mainers? And the Mainers, having dutifully paid their tax to the Mississippi seller, are not going to turn around and pay again, personally, to their home state of Maine. That will not happen. Now multiply that example by tens of millions of interstate transactions each year.
This is nuts. It is a mess with a capital “M”!!
Full_disclosure
Why don’t I have any of these small business clients that are willing to spend millions on sales tax issues?
I left off my /sarc tag.
Amazon etc already spent the $millions to write their sales tax software so this will give them even more advantage against the little guys.
Even not so little guys like my go-to site BHPhotovideo are screwed.
shinobi:
This is nuts. It is a mess with a capital “M”!!
That is what is so disappointing that the so-called conservatives supported this. Quill was rightly decided. Failing action by Congress, the states cannot unilaterally tax interstate commerce. Now my favorite chocolateier Mom and Pop shop in Eau Claire, Wisconsin has to figure out how much CA sales tax to charge and then remit it to my CA city, county, and local tax district.
Kennedy writes:
other aspects of the Court’s Commerce Clause doctrine can protect against any un- due burden on interstate commerce, taking into consideration the small businesses, startups, or others who engage in commerce across state lines.
Of course, our all-powerful black-robed rulers will make their decrees and solve the little peoples’ problems. Noblesse oblige and all that. 
Well stated, Chief Justice Roberts being the sole exception, of course. But your point is nevertheless very well taken.
The split in the Republican Party apparently extends even up to the Court. My opinion:
The Chamber of Commerce is un-American and it SUCKS!!
The software to collect and remit tax isn’t that expensive. Also, this could be good for small businesses selling into a state where they lack physical presence. A small business with less than 100k in SD sales would not have to collect SUT. But the big guys would. So that gives the mom and pop shops an advantage over the big players.
On the other hand I do 100% agree that Amazon was able to take advantage of the then law to grab tremendous market share. I agree that it sucks for newer companies now because they cannot use that competitive advantage to grow. It’s certainly a valid complaint. However, that’s just how things work when laws change. Are you in favor of the TCJA? There are many provisions in that law where the same could be said.
Does your Wisconsin mom and pop shop have 100k in sales per year into California?
I don’t think that is relevant. All this court case did was open the doors. California has not yet passed a law requiring out of state businesses to collect and remit sales tax from it’s residents. When it does, this court decision does not require California to exempt out of state businesses with less than $100k in sales. That just happens to be the how the South Dakota law is written (SD also subjects businesses to collect taxes if they have 200 transactions). California and other states just have to write a law defining what retailers have an “economic presence” and then they can be subject to the tax laws. At least that is how I understand it.
I 100% agree. My only point was that a state can’t just say - you have one sale delivered by common carrier into the state, and you have to register and collect sales tax. Complete Auto still applies.
How does Complete Auto stop a state from requiring sales tax be collected by a business with only one transaction? (serious question because I am not familiar with Complete Auto)
Also, even if Complete Auto applies, couldn’t the states still easily do it because, as @onenote points out, the mom & pop place that sells 12 widgets in California each year does not have the resources to take them to court?
It established a 4 prong test for constitutionality of state taxes under the Commerce Clause. Substantial nexus, burdens on interstate commerce, fair apportionment (not really relevant to this discussion), and a 4th one I can’t recall at the moment.
There will be larger corporations that are in similar positions. The 3rd string kicker still gets a ring even though he never has to play. And everyone is watching these laws that states are about to push through. There are organizations that would gladly take on these cases in support of their smaller members (e.g., DMA).
And I think it was discussed up-thread or in the other thread about the statement that Kennedy wrote related to small businesses not having to worry. IMO, this wasn’t really him trying to console small businesses, it was a message to the states not to try to go overboard. Basically saying, our prior interpretations still apply to the nexus requirement. Just because we are getting rid of the bright-line test, doesn’t mean every taxpayer is subject to your state’s laws.
Good point in rebuttal to my and @onenote 's concern.
Do you know what the interpretation for “substantial nexus” is? 200 transactions doesn’t seem that large to me, but SCOTUS seems to think it counts as “substantial.” What about 100? What about 50? What about 25? Without a bright line, won’t we see numbers all over the map… all over the map?
SCOTUS hasn’t taken an income tax nexus case since before Quill. We don’t really know, and it’s generally a gray area. The law is generally comfortable with gray areas. But several states do have “factor presence” standards for income tax nexus that are similar to this (certain number of transactions and dollar amount of sales/ receipts). I find it likely that SCOTUS doesn’t agree to hear cases trying to differentiate these numbers, instead leaving it up to the lower courts.
What’s more interesting to me about the opinion is what SCOTUS didn’t say:
They didn’t say the law was constitutional, and they didn’t say the substantial nexus standard is the same for SUT as it is for income tax.
Additionally, we will certainly see different rules in different states. Even if SCOTUS had said the minimum is 50 transactions, some states may still pass laws requiring 100 transactions, etc. For income tax nexus, some states assert jurisdiction for any activity that would not exceed the state’s authority under the US Constitution, but not every state does.
After reading parts of the decision, I am astounded by the opposing sides of the decision. The majority includes three who style themselves as conservatives and Kennedy who votes with conservatives except when it matters.
What was the hurry to rule on this? Roberts writes in the dissent:
The Court proceeds with an inexplicable sense of urgency. It asserts that the passage of time is only increasing the need to take the extraordinary step of overruling Bellas Hess and Quill … The factual predicates for that assertion include a Government Accountability Office (GAO) estimate that, under the physical presence rule, States lose billions of dollars annually in sales tax revenue. …But evidence in the same GAO report indicates that the pendulum is swinging in the opposite direction, and has been for some time. States and local governments are already able to collect approximately 80 percent of the tax revenue that would be available if there were no physical presence rule. Among the top 100 Internet retailers that rate is between 87 and 96 percent. Some companies, including the online behemoth Amazon,* now voluntarily collect and remit sales tax in every State that assesses one—even those in which they have no physical presence. … To the extent the physical-presence rule is harming States, the harm is apparently receding with time.
He writes further:
The Court, for example, breezily disregards the costs that its decision will impose on retailers. Correctly calcu- lating and remitting sales taxes on all e-commerce sales will likely prove baffling for many retailers. Over 10,000 jurisdictions levy sales taxes, each with “different tax rates, different rules governing tax-exempt goods and services, different product category definitions, and different standards for determining whether an out-of-state seller has a substantial presence” in the jurisdiction… A few examples: New Jersey knitters pay sales tax on yarn purchased for art projects, but not on yarn earmarked for sweaters. Texas taxes sales of plain deodorant at 6.25 percent but imposes no tax on deodorant with antiperspirant. Illinois categorizes Twix and Snickers bars—chocolate- and-caramel confections usually displayed side-by-side in the candy aisle—as food and candy, respectively"
The burden will fall disproportionately on small businesses. One vitalizing effect of the Internet has been connecting small, even “micro” businesses to potential buyers across the Nation. People starting a business selling their embroidered pillowcases or carved decoys can offer their wares throughout the country—but probably not if they have to figure out the tax due on every sale
It is inexplicable to me that conservatives would decide as the majority did. I need to put my paranoid tin foil hat on. There is something screwy going on.
You have to distinguish between Conservatives, the good guys, and no-longer-so-good Republicans. I think some of those in the majority were voting as Republicans. I left that political party back in 2004 as it swung more and more to the left. I have never suffered even one day of regret.
But this was not so much leftist leanings showing forth among those Republican court members as it was their unfortunate and misguided love for the Chamber of Commerce, placing the Chamber’s interests ahead of those of the vast majority of people in this country. The ruling was, and is, disgusting . . . . and it is manifestly harmful to America.