U.S. Supreme Court declines to hear online retailers tax case

Comments (17)
DimentoGraven wrote:

Of course the Supreme Court refused this case. They don’t understand it. Most of them are so old their first computer was the abacus.

They don’t understand the importance of this to ecommerce, and given recent judgments, don’t understand commerce in general.

Dec 02, 2013 10:52am EST  --  Report as abuse
willich6 wrote:

Amazon and Overstock ‘do business’ in NY and other states in that they accept orders from NY residents, receive payment from NY residents and ship goods and services to NY residents. As the NY Court of Appeals found, this does establish a basis to pay sales tax on NY sales. Many other states already apply sales tax to Amazon; my own state of Virginia started earlier this year. It is only fair that all retailers (brick & mortar and online) are treated equitably.
The success of Amazon’s business model isn’t based on sales tax collection; they have far more important advantages that drive their business. This ultimately is an issue for Congress to address; the Supreme Court was justified to defer to the state of NY and to congress.

Dec 02, 2013 12:14pm EST  --  Report as abuse
Vandedecken wrote:

ECommerce has nothing to do with the problem. It is a mail order issue plain and simple.

No reason is cited for why the Court did not accept the case. Perhaps they are waiting for another better case to decide on.

Dec 02, 2013 12:26pm EST  --  Report as abuse
AlkalineState wrote:

Just tax them. You don’t need a ‘Physical presence.’ The point-of-sale is where the buyer pays for and receives the goods (Their home). It’s not that complicated. Right now, if you buy a car in another state that does not have a sales tax…. and your state does….your home state will tax you when you bring it home and register it. Try it. Pay there or pay here. Online sales should be the same way. Revenue matters.

Dec 02, 2013 12:49pm EST  --  Report as abuse
beefrits wrote:

As one who spent many years running a retail business, it never made any sense to me to allow an out of state competitor the unfair advantage of bypassing the collection of sales taxes that I was obligated to collect for the state. It was particularly perturbing in that my company provided local jobs, yet often lost sales based on the sales tax it was required to collect.

The argument against requiring all out of state retailers to collect sales taxes was always that the complexity of dealing with the maze of tax laws over 50 states made the task unreasonably difficult to collect, but today a simple program would solve the problem. There is no good reason to continue this uneven playing field.

Dec 02, 2013 1:07pm EST  --  Report as abuse
chekovmerlin wrote:

The Court is waiting to see if there is a law passed by Congress. States CAN collect taxes where the company has a nexus in the state. Otherwise, no. Let’s just see if a state will have the chutzpah to sue a company in the state in which it exists, not the state that wants the money. For example, a company in Oregon being sued by California. The Company has no physical presence in California but does mail order business there. Just how far do you think that will get? NOWHERE!

Dec 02, 2013 1:09pm EST  --  Report as abuse
Jameson4Lunch wrote:

Regulating interstate commerce is the purvey of Congress. It’s the actual valid reason for the Commerce Clause, rather than the sweeping interpretation the Court has used since Wickard vs. Filburn. It’s a rare case where Congress actually has the authority to do something, and hasn’t, rather than the other way around.

Puzzling that the SCOTUS won’t see the case though. This doesn’t fall under the 10th Amendment, as it’s a power delegated to the Federal Government. I’m not sure why NY law has any relevance here.

Dec 02, 2013 1:14pm EST  --  Report as abuse
NYS-PGMER wrote:

I have been developing software for wholesalers, retailers, and catalogers for 30+ years. Large on-line companies have no idea of the horror show they are walking into. NYS sales tax system is a MONSTER!

NYS sales tax system is far more complex then the combination of the other 49 states put together. Sales tax has to be accounted for each county, and some counties have multiple catagories. Sometimes there are different tax rates for which side of the street you are on. Sometimes you collect taxes for the county, but not the state. Other times, the rate is different for different times of the year. Different products have different rules. The regulations are written vague so that NYS can take advantage of retailers. In my 30+ years only one retailer was able to get thru a sales tax audit without paying something. Not uncommon for NYS to destroy the retailer they are auditing.

Then there are resale certificates. Up until recently contractors were forced to be double taxed. Then there are multiple forms. The retailer is REQUIRED by NYS to know what kind of company they are, and if they can use a resale certificate. Lots of abuse by NYS. Oh yeah, your customers are required to update the certificates every 3 years. Sort of an unwritten rule that is heavily enforced.

Then there are sales tax audits. These are the most feared audits in the United States. Vague rules result in big abuse by NYS. You need to hire a tax atty, CPA firm, and a computer consultant. When they find a violation, which they surely will, they multiply it by 44 and then add interest and penalties. If you decide to tax everything possible, you will be fined for overtaxing customers too. The audit consumes about a full month of the entire accounting department’s time.

Retailers are also forced to sign-up on-line. When you do this, you MUST grant them permission to take whatever they want out of your checking account. So, they have FULL access and legal rights to your checking account.

For decades, software developers have tried to develop a software system to handle NYS sales tax. All have failed. Possible for other states, but not for NYS. Then you have counties constantly changing the rates. But, retailers are rarely notified. Now, NYS refuses to allot new sales tax numbers, which makes it an unbelievable mess to manage.

This is an unbelievable monster that you cannot even begin to comprehend. And, it will not be just for on-line retailers. It will be for all companies that sell products outside of their state. Certain states have been “itching” to go after companies in other states. This will be the green light for them. Instead of having two possible audits, they will now have 51 possible audits. There is not enough money to come even close to covering the high administrative cost of the audits. It will have unbelievable and catastrophic outcomes for many companies. This will be government at it’s worse. For me, I will make a lot more money helping these poor companies.

Dec 02, 2013 4:43pm EST  --  Report as abuse
chekovmerlin wrote:

What a fast way to drive more companies out of the U.S? Easy, just try enforcing a sales tax for ALL out of state stores. Then people will go to Mexico, the Cayman Islands, Philippines, Canada and elsewhere. That’ll fix the states. They will take all of their money out of the U.S.

Dec 02, 2013 6:17pm EST  --  Report as abuse
Butch_from_PA wrote:

It has nothing to do with retail fairness or current tax law. The lobbying with the biggest under the table gifts will win the day. Plain and simple.

Dec 02, 2013 6:50pm EST  --  Report as abuse
abester wrote:

It might be interesting to watch the citizens’ reaction if the online retailer simply refused to sell to a customer with a New York zip code. I wonder how many would react with anger at the retailer, versus how many would react with anger at the state legislature. Even a die hard tax-and-spend fanatic often changes their mind once their job is on the line.

Dec 02, 2013 6:56pm EST  --  Report as abuse
AlkalineState wrote:

Charge the tax directly to the buyer’s credit card at the time of purchase. Every online purchase includes a shipping address. Local tax authorities already know the sales tax rate for that spot. Rather than deal with tens of thousands of vendors, simply deal with the handful of online payment options there are (Visa, Mastercard, Paypal, etc.). This is not complicated.

Dec 02, 2013 7:22pm EST  --  Report as abuse
Nurgle wrote:

@chekovmerlin – That’s a good point I’ve already costed out for customers – everything just ships out of a warehouse in Mexico where the “office” is located. Not cost-effective for most companies, but it sure could be if circumstances change. I also agree that NY sales tax is very convoluted, but they’re certainly not alone. The administrative burden is real, and almost makes a federal law to supercede states desirable. Problem is, then you’d have both systems as states won’t give up the $$.

Dec 02, 2013 10:14pm EST  --  Report as abuse

The article describes a viewpoint, not a 100% true fact.

“In states where Amazon has no physical presence, the company does not generally collect the tax, GIVING IT A PRICING EDGE over traditional brick-and-mortar merchants.”

Purchases on-line (from Amazon or any other on-line) have the PRICING DISADVANTAGE of $hipping co$t$ which can WAY exceed the $ales tax costs. To the consumer, money spent… is… money spent. Out of pocket… gone… .

Delivery is delayed! Traditional brick-and-mortar merchants provide the traditional touchE-feelE shopping experience and HERE-and-NOW instant gratification that is so critical required when you remember the wife’s birthday at the last minute. Have a nice Day :-)

Dec 03, 2013 4:10am EST  --  Report as abuse
EEdson wrote:

Hey Amazon & Overstock, move to the Silk Road and we’ll all be better off.

Dec 03, 2013 8:59am EST  --  Report as abuse
EEdson wrote:

How about if they stop taxing Brick & Mortar.

Dec 03, 2013 9:01am EST  --  Report as abuse
AlkalineState wrote:

You can tax goods from Mexico. Or from any country. You can either put a tariff on it, or simply charge the online card payment, not the vendor. Going overseas with this achieves nothing.

Dec 03, 2013 11:32am EST  --  Report as abuse
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