I have been vaguely following the South Dakota vs. Wayfair case. The law of the land is supposed to be the Quill 1992 decision that says states can only extract sales tax from companies with a physical presence in their state. But my experience is that most states ignore that rule and collect from anyone they can browbeat into collecting for them.
There are some stores that stand out like BH Photovideo, which is a go-to place if you have a large electronics purchase and live outside New York. I have to confess I do not pay much attention to the sales tax. If I am buying something on a website with multiple vendors offering at the same price, I will look for one that is out of state.
The only difference I see from the case is that it will make the states even bolder when the Quill case is overturned. Kennedy is on record saying that he wants to do that and you can bet that the four leftists on the court will vote to overturn so it is a done deal.
p.s. If someone from my state tax collectors is monitoring I OF COURSE always religiously keep track of my online purchases and pay the full use tax on them.
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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
B&H Photovideo will charge CA sales tax starting April 1, 2019
This is a very touchy subject but also a very good topic. Have you ever noticed how the Court adheres loudly and strongly to stare decisis except when doing so becomes inconvenient and starkly contrary to the wishes of the elites and swamp dwellers? When the elites want something, of course, stare decisis goes out the window fast! What a sack of crap.
And you can ALWAYS count on Justice Kennedy to be at one with the people . . .
no . . . wait . . . That guy cannot retire too soon IMO.
Anyway, sure, the elites on the Court and elsewhere are conjuring a way to collect tax across the board (in states having a sales tax) on internet purchases. When they arrive at an approach upon which they all agree, they will roll it out and hit us over the head with it.
And like SO many other things going on now, this is not one party against the other. Both Democrats and Republicans, many of them, are swamp creatures. And this will be the swamp against the American people.
I liked things better years ago when there were two political parties in this country. Today we really have just a single political party . . . similar to the situation in Red China. And even President Trump is on the side of the swamp on this one! So the ENTIRE government is against us!!
This has not been my experience. Even aggressive states have to show some form of physical presence (click-thru nexus, etc). I’ve never experienced a state claiming the ability to force a company to collect sales tax that had no physical presence whatsoever.
The Quill case (actually Bellas Hess which Quill followed) established a bright-line rule. If you read the Quill case you’ll see that even the Court isn’t wild about its rule, but found it necessary to establish the bright-line rule so that every statute isn’t challenged and the Court wouldn’t have to deal with the issue over and over again. Without the bright-line rule, many states will certainly change their laws to force collection of sales tax.
This probably won’t end up being a politically motivated decision. My guess is that Roberts is going to want a unanimous opinion here. Not saying this is what’s going to happen, but its possible they repudiate Quill’s physical presence requirement, but still strike down the law as unconstitutional. That probably won’t happen, but if they do that it provides a rule to other states so that they don’t go as far as SD, but still have some leeway. If they just do away with the physical presence requirement, they have to create another rule so that states know what is required to establish sufficient nexus. If they just strike down the SD law, they don’t have to come up with a rule, take the easy way out, and let the circuit courts come up with more specific rules. Again, I don’t think this will happen because of the likely ensuing chaos, but its not unprecedented for the Court to cop-out.
If you’re in favor of strict application of stare decisis, you’d have a lot of problems with the history of state tax cases. If I recall the Quill opinion goes into a bit of detail about the history of state tax cases, and the rulings have changed substantially over time. Things change; they need to be looked at again. E-commerce basically wasn’t a thing in 1992. Don’t you think wrong decisions should be able to be looked at by the Court again?
The physical presence requirement is about the burden on interstate commerce. In 1992, having to collect sales tax for states where companies didn’t have physical presence was a significant burden on companies; it can be argued that it’s not the same today.
I’m surprised by your position here. I would’ve thought you’re more of a states’ rights Republican. The physical presence requirement is basically federal regulation of a state’s ability to tax.
The lack of out of state tax collection based on physical presence definitely needs to be looked at. The Quill decision of 1992 was basically based on mail orders from catalogs since internet commerce was embryonic back then. Most people did not have an email then.
And overturning it would have some massive advantages for the states. The use tax reporting is a joke. Unless you do very little online purchasing and keep meticulous records, it’s virtually unusable by most taxpayers.
But it’s true that repealing the physical presence test would increase the tax collecting and remitting burden, especially on small businesses. But I can see a LOT of cash-strapped states eagerly awaiting the SCOTUS overturning of that 1992 decision.
FullDisclosure: “This has not been my experience. Even aggressive states have to show some form of physical presence (click-thru nexus, etc). I’ve never experienced a state claiming the ability to force a company to collect sales tax that had no physical presence whatsoever.”
Apparently Alabama and South Dakota (maybe others) have laws requiring collection of sales tax without physical presence.
"In June, an internet retailer filed suit against Alabama claiming its new rule that requires all retailers who sell more than $250,000 in goods annually to collect sales taxes—regardless of whether the retailer has a physical presence in the state—is unconstitutional. " http://www.csg.org/pubs/capitolideas/enews/cs67_2.aspx
FullDisclosure: "This probably won’t end up being a politically motivated decision. "
You may be right. I read that the Trump Administration is going to argue to overturn Quill. Of course, the President signed the $1.3 trillion omnibus budget–not exactly a conservative position. So who knows where the four conservatives end up. But with Kennedy voting to overturn it does not matter–it’s a done deal IMO.
Right, these are specific kill Quill laws though - about 7 or 8 states enacted them. They were enacted to overturn Quill. Alabama hasn’t enforced its rule as far as I know, and the Wayfair case came from a declaratory judgment action filed by the state, so they didn’t attempt to enforce the law.
I’m a staunch Trump supporter . . . . or at least I WAS a solid supporter until he signed that asinine and insane omnibus spending legislation.
I do appreciate his tax bill which will save me a couple grand each year. But then he turns around and vigorously supports inescapable taxation of internet commerce. In the old days there was a descriptive phrase for this:
The Lord giveth and the Lord taketh away
I just Googled that and apparently it is from Job. There is more, but at this point nobody should confuse Trump with the Lord and bless his name.
I think it should be noted that this is not a new tax. It’s simply a better way to collect a tax that would otherwise be due anyway.
The practical effect is that it may be a new expense to some, but that’s because those people/companies (no judgment here, I include myself in this group for my personal purchases) just weren’t paying what they were already obligated to pay under the law.
This makes the argument that people will have to pay more in taxes a bit untenable.
I agree. That may be the result of the overturning but it was the law already (duty to pay use tax).
I’m still not convinced that it’s entirely a done deal based on the language of the initial Quill ruling that says that it would othewise place a burden on interstate commerce.
I could see many retailers arguing that lifting their de facto tax-free advantage for out of state purchases would put them - due to shipping costs - at a competitive disadvantage.
Also, if Quill gets overturned, it could disrupt current distribution strategies. There’d no longer be incentives for retailers to keep their distribution schemes centralized to avoid exposing themselves to having to collect state tax if they are going to collect it anyway. The burden on them to shift their distribution scheme and warehousing to remain competitive (to lower shipping costs and times) may be an argument.
That said, looking at how much ecommerce has grown and taken away market shares from B&M stores, it’s hard to deny that there’s been a competitive advantage for online retailers. I think that may win the day ultimately. But it’s a sad testimony of our Congress’ disfunctionality that such momentous economic decisions are left for 9 Justices to decide and not the elected representatives of the people.
Very interesting ideas. There are some really cool arguments in the amicus briefs including lots of really good arguments against the SD law specifically (which is why I feel that SD screwed up). One that I like is a Washington group which has one argument that the SD law doesn’t even implicate Quill. Etsy’s is decent as well.
If you want to read an awful one, I’d recommend the Cato Institute - they completely misunderstand this case.
This is a new tax! It may not be a new law, but if use tax collection was formerly not enforced and now it suddenly is… that is new.
Taxes are never fair. But ask anyone and they will say they pay their fair share. I say let the Koch Bros pay more of their fair share and let me pay less. They seem to have plenty of cash to spend on political contributions.
If I buy something at a yard sale - that is considered a casual sale and not taxable. Now if I buy it from ebay(giant yard sale) which is it … casual or taxable?
Personally I wouldn’t mind if they taxed the internet at a penny per email/tweet/chat… and put all that money into policing the internet and reducing scams/spams.
I want something extra for my money if they are going to tax me extra.
Yup. This is a bigee for me. If they start collecting for activity on “the Bay” it’s a tax that’s gonna bite, no question about that. Just exactly how they would implement such a tax, though, is an open question. But still:
When it comes to confiscating our money, the “powers that be” are unendingly creative!!
It was and is enforced on business purchases. It’s rarely enforced on small personal purchases because it’s just too difficult to deal with for such a small exposure. In my experience states are more focused on revenue generation in their audits than the IRS. They won’t go after small amounts unless it’s low hanging fruit.
The casual sale exception is generally with regard to sales tax collection and reporting. You would still owe use tax on the purchase. The exception also is not universal or uniform. It’s a legislative grace, and the state can decide what they want it to apply to. So in answer to which one is it would just depend on what the state wants to do. Most states now are talking about Ebay, Amazon (by seller), etc. in a separate “marketplace” category. If Ebay or Amazon are the ones required to collect and remit the tax, the rationale behind the casual sale exception would not really apply. That’s not to say that a state may decide to exempt them anyway.
I’d be in favor of something like this. Not a charge for all emails, but maybe for every opt-out email list as opposed to opt-in. Though I’m not sure if it should be done through a regulatory framework or tax framework, and I’m not familiar enough with constitutional principles as they relate to federal tax law, so not sure if this would be possible as a tax.
I’d pay an extra 1% on my top marginal income if they could get rid of all those annoying spam phone calls.
ETA: The crux of the Quill case isn’t about whether sales tax is charged on a particular transaction as different states will always have different rules. It is only about whether states are allowed to impose a collection and remittance requirement on certain companies. So if Quill is overturned, and you’re opposed to sales taxes on certain purchases, you can still convince your state not to require collection on certain purchases. Or, as has been argued by proponents of the limitation of the salt deduction, just move to a different state.
The problem with email is the same as the problem with phone calls – it runs on an international system with an agreement that all incoming communications are accepted. You can’t impose a per-message tax on something that is not centralized (chat or email). Taxing tweets would … make it another implementation of Citizens United (money = speech).
That yard sale description doesn’t match our local law, anyways. We are allowed a maximum of (two?) garage sales a year, requiring purchase of a permit. The permit fee covers only the first $500 in sales and you’re legally required to remit sales tax if sales are in excess of $500. Garage sales are not exempt from sales tax. Are you sure you also aren’t required to purchase a permit, which explicitly only covers a token amount of sales tax?