The Supreme Court is giving South Dakota the chance to argue why merchants with no physical presence in the state should have to collect and remit sales tax on transactions made to South Dakotan residents. South Dakota v. Wayfair, Inc, Overstock.com, Inc., and Newegg Inc. would, in effect, overturn the Court’s 1992 decision, Quill Corp. v. North Dakota.
eBay filed an amicus brief in support of the retailers in the case in the case, explaining how the issue of sales-tax collection has a bearing on its own sellers.
“Should the Quill decision be overturned, it will greatly undermine the growth opportunities available to the hundreds of thousands (if not millions) of independent small businesses that sell online and represent a vital segment of the national economy,” eBay stated in a press release.
Currently eBay leaves it to sellers on whether to and where to collect sales tax. Many sellers are casual sellers or micro businesses, and in many cases operate out of their home.
In its brief, eBay said if the court rules in favor of South Dakota, online sellers would face crushing burdens, causing many to curtail operations. “Online sellers would have to (1) themselves master the tax laws of these myriad jurisdictions or (2) purchase expensive tax assistance.”
eBay said overturning Quill would subject online sellers to numerous compliance burdens, including audits in states around the country, litigation for under-collecting tax, and consumer fraud suits for over-collecting.
eBay reinforced its argument by citing the difficulties of determining whether a product is taxable – one example it cited: “When shipping to Texas, deodorant is subject to sales tax at the State rate of 6.25% (plus any local rates); but deodorant with antiperspirant would be exempt.”
eBay also said free or inexpensive software does not solve the compliance problem: “we tried it – and discovered that South Dakota’s free software is no solution at all, making errors and containing omissions that would serve as a trap for unwary or unsophisticated vendors.”
The burdens it described would fall disproportionately on small and microbusinesses, it said, which compose “a particularly valuable, but vulnerable, segment of the economy.”
eBay said “hundreds of thousands of commercial sellers with annual sales that exceeded $10,000 but were less than $1 million” used its platform in 2014, and it said others relied on other sites:
“Additional business owners rely on other platforms (like Etsy) and on social media sites (like Facebook and Instagram) or non-marketplace platforms (like Symphony Commerce, Squarespace, Magento, CommerceHub, Drupal Commerce, and Shopify) to launch and run their small and micro-businesses. So it is certain that there are many hundreds of thousands, and more likely millions, of small businesses operating today in the United States that sell their products and services online.”
eBay then got specific, describing how five of its sellers would be impacted by a change to Quill. One company, 411Marine, has annual net revenues of approximately $60,000, “barely enough to cover the $8,000 (plus innumerable hours and stress) it has cost to respond to an audit in Mr. Bright’s home State of South Carolina.”
eBay said it would cost 411Marine $50,000 to hire an additional employee to ensure compliance with tax rules in jurisdictions across the nation.
You can find eBay’s press release with a link to its amicus brief on this page of its eBayInc.com website.
I operate my e-com business by myself, and there’s no way that I would be able to handle the collection and filing for 50 states, let alone knowing the intricacies of the tax laws. No software would change that – and even if it could, the compliance costs for using it (and constant upgrade costs) would eat up half of my profits.
The obvious answer would be to require the venue to collect and remit taxes. Most sites already handle the payments and distribute to the sellers, so it’s no extra issue for them. They also have the staff (and lobbyists) to look after their interests. But to leave it to small entrepreneurs like myself – “crushing burden” does not express it adequately.
I already file sales tax returns in several states because I sell there on one or two weekends a year. States with destination-based sales taxes are particularly difficult. Sellers located in Washington State must break down eBay sales by location and report each taxing district rate separately, a time-consuming process, even if sales are captured in a relational database like SixBit based on Microsoft SQL Server. Because eBay has only one sales tax rate, Buyers are either overcharged or undercharged. I haven’t seen anything to suggest that sellers would be exempt from paying county, city or Regional Transit Authority (RTA) taxes allowing a statewide flat rate.
Not sure what it is like in your state but based on the lack of adequate staff in my state – I find it laughable that a state would think they are capable of going after the millions of mom and pop internet sellers to collect said sales taxes. Let them send me the bill and I’ll deal with it then – till that happens I’m not worrying about it. States are desperate for funds to support all their illegal crimes against taxpayers – this is just the latest scam.
Exactly as @whatever1234 states: If any tax jurisdictions want their money, and have the time and staff to determine what is owed, they can issue a payment request at their expense. And we will go from there.
It will NEVER be cost-effective for ANYONE to administer a program such as this- there would be way, way too much bureaucratic red tape for very little in return!!
As the main job of the Supreme Court is to uphold the United States Constitution, it (the Constitution) states that taxes cannot be collected when goods are shipped from one state to another state. End of story.
And if, by chance, our government does require taxes to be collected and remitted, each state would have to enact a flat tax. No more varying laws and rules for different locations, this would just be way too confusing.
The marketplaces, not their sellers, would be then required to remit the correct amounts to the states. Yes, the same entities which bombard their sellers with their silly rules and excessive fees. Would be very interesting to see the shoe on the other foot!!
I agree with the flat tax.Should that happen. I also think this may be why ebay has raised there store fees in May. To compensate for the sellers, that will fall out should the internet tax pass. I personally think it will pass, because the Government is always chronically broke.As well as every state.
According to Ebay the sky is falling again……How funny.
I agree with the other sellers. It’s tax,tax,tax. For everything. Is China going to fall under this internet tax? They sell on the internet like ebay. All this does is force the little seller out.Money, in general always finds its way back to the government anyway. I think after awhile no one will buy or sell on the internet it will be too expensive. Unless, your one of the big powerhouses like Walmat,Amazon.Etc. I could go on writing pages how this would hurt sellers, but this enough for now.
Don’t let ebay take care of the taxes for us, they will end up charging 10% just like they do for shipping!!!