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ECT News Community   »   E-Commerce Times Talkback   »   Re: No Time Like the Present to Get Up to Speed on Sales Tax Laws



Re: No Time Like the Present to Get Up to Speed on Sales Tax Laws
Posted by: John E. Hayashi and Carolyn Cotter 2018-12-21 23:18:12
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Americans are used to hearing the refrain, "We pay the sales tax," from mattress sellers and car dealerships during big sales weekends. The phrase, "You pay the sales tax," however, is something we're all going to become a lot more familiar with in the wake of the Supreme Court's ruling in South Dakota v. Wayfair . That's because the Wayfair decision reverses a precedent set in 1967 and upheld in 1992, when the court ruled that states could require companies to collect sales tax only if they had "sufficient physical presence" in the state.


This is so daunting, stressful, and scary at the same time and I have asked 10 CPAs and get 10 different answers.. A nightmare to keep track of as a small business owner. States making up their own Nexus definitions to their benefit, is just craxy to me. At the federal level, they should make a one fit all standard definition for physical and economic nexus. Since tax is based on dollar amount, the 200 tanscation requirement of some states is too extreme, as that impacts most small business, whose average sale may only be $10 to $30 dollar (with $20 being the average). A flat $100,000 total sales makes more sense here, not a low 200 transactions, as such economic Nexus threshold effects small businesses much moreso.
Someone that sales goods that cost thousands of dollars isn't the same as the common ecommerce seller that sells goods under $20 in most cases. I and I know many small mom and pop businesses whom already pay income and sales taxes in their state already, cannot survive with a thousand different tax rates and filings and constant changes of what is or is not Nexus. The 200 transcations thing is so tiny, as most online transcations are under 20 dollars with less than 10% profit margins in most cases. This means even if there are less than $400 profit made in a state, this burden exists to the small business. Also in both the Amazon and eBay US marketplaces, majority of sellers and product seems to be from overseas sellers (namely China), whom store their inventory in the USA. The US businesses in even the US marketplaces on these sites are now the minority. THis does nothing to collect the tax revenue from CHina based businesses, whom likely care less. Hoping this is greatly simplified and most ideally handled by the large marketplaces such as eBay and Amazon only. This is really too much to ask from a small business owner, other than paying the tax of their home state.
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