U.S. Supreme Court Silently Passes Law — Internet Tax Collection — Will Kill Small Businesses

[dynamo]

July 5, 2018
By Aaron Kesel
U.S. President Donald Trump has vowed to drain the swamp in Washington, DC and claims to be for the people, so much so that he just encouraged imposing yet another tax on American citizens’ backs which will result in raising corporate retail prices online. A new Internet collection tax will allow states to collect — (steal, rob, plunder) [taxation is theft] you get the point — from any retailer across the U.S. who sells products online. In short, the newly approved law will kill small businesses.

“For us, an internet sales tax would mean the certain end of our business,” one family who owned a trading card shop wrote in USA Today.
Another small business owner wrote in The Wall Street Journal that it takes her an entire business day each year to pay in-state taxes. She emphasized that if she had to do this for the other 44 states with sales taxes as well, she’d lose 45 business days a year.
To detail what’s happening, we need to go back to 1967 when the Supreme Court first set what was known as the “physical presence” standard in its Bellas Hess decision. The idea was that states and localities could only tax a sale if the business conducting it had some kind of brick-and-mortar establishment within the state’s own borders. Back then, this applied to almost all transactions.
The Court revisited the issue in 1992 with the Quill ruling. By then, the growth of mail-order catalogs was raising the question of sales where the customer certainly has a physical presence in a state or municipality, but the business does not. Still, it was a minor enough problem that the Court reaffirmed its previous ruling. A few years later, in 1998, Congress effectively codified the Court’s “physical presence” standard into law.
Then the Internet was invented and online stores were created for consumers to purchase goods and receive them directly to their doorsteps.


Here’s where things get interesting and should make you think about why allowing states to tax all Internet purchases by businesses not in those states is a bad idea. Nineteen of the 20 biggest online retail chains, including Apple, Target, Macy’s, and Walmart, already collect sales taxes from all their customers who purchase products online.
While major online retailers — like Overstock, Newegg, and Wayfair — still don’t collect sales taxes. Obviously, this gives these companies a competitive advantage against the bigger online retail stores.
Trump is undoubtedly targeting Amazon because it applies sales taxes to its own transactions; but it also serves as an online platform for third-party vendors, who often don’t collect any sales taxes. This is as much as half of Amazon’s business. The lack of a sales tax on those transactions helps Amazon, and it obviously helps the smaller online businesses working with Amazon to grow their online stores.


President Trump has previously urged the U.S. postmaster general to double shipping rates for Amazon.com and other companies amid months of his continued criticism that the online retailer is costing the Postal Service “billions” of dollars in revenue.


South Dakota v. Wayfair wasn’t just the states against online retailers, it pitted some of the largest online retailers against others. And it made the large online retailers question what to do when collecting sales taxes against the smaller business who don’t.
The new decision by the Supreme Court doesn’t just mean all those small businesses with online sales will now lose more revenue to taxes. It means they’ll also have to spend money on systems that can keep track of their various tax obligations. That’s 45 states, each with its own particular sales tax law with different rates, not to mention many, many more city and local government sales taxes. This means that online small or not so small businesses will have to comply with more than over 10,000 state and local taxing jurisdictions, Associated Press reported.


The court ruled on the 2016 law passed by South Dakota, which said it was losing out on an estimated $50 million a year in sales tax not collected by out-of-state sellers. Legislators in the state, which has no income tax, passed a law designed to directly challenge the “physical presence” ruling. The law requires out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and send it to the state.
Chief Justice John G. Roberts Jr. dissented, ZDNet reported.

Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress. The court should not act on this important question of current economic policy, solely to expiate a mistake it made over 50 years ago.

Aaron Kesel writes for Activist Post. Support us at Patreon. Follow us on Facebook, Twitter, Steemit, and BitChute. Ready for solutions? Subscribe to our premium newsletter Counter Markets.

[Tam]

Well, this is just terrific. The US government doing a stellar job, as always.

I wonder how my mother's small, online businesses will fare after all of this. Sounds like a nightmare.

I'll try and remember to update this post with any impact this legislation will have on her business.

[genevieve]

Don't know if this might be pertinent, but I've read that some folks have successfully billed the IRS for acting as tax-collecting agents when paying their own income taxes (I think their fee matches their supposed tax so there is no payment made from either direction). This pretty much stops the IRS from forcing someone to pay income taxes because collecting taxes and forwarding it to the IRS without being paid for their services is slavery.

Maybe something like this would work for on-line sellers: Sellers could give proper legal notice on their webpage of their fees for acting as a collection agent for any entity that demands taxes be paid on sales shipped to their jurisdiction. Maybe?

Peace Love Joy & Harmony,
genevieve

[Satori]

Posted by genevieve (here)
Don't know if this might be pertinent, but I've read that some folks have successfully billed the IRS for acting as tax-collecting agents when paying their own income taxes (I think their fee matches their supposed tax so there is no payment made from either direction). This pretty much stops the IRS from forcing someone to pay income taxes because collecting taxes and forwarding it to the IRS without being paid for their services is slavery.

Maybe something like this would work for on-line sellers: Sellers could give proper legal notice on their webpage of their fees for acting as a collection agent for any entity that demands taxes be paid on sales shipped to their jurisdiction. Maybe?

Peace Love Joy & Harmony,
genevieve

You may have heard or read this, but I assure it is not the case that any taxing authority will recognize any such claim, deduction, exemption or exclusion from tax liability.

First, what service has been provided to a tax collection agency when the cost charged for the "service" results in no tax being collected and thus no tax paid?

Second, any fee for service would have to be reasonable in relation to the effort expended in providing the service So, for instance, if I spend 2 hours preparing my income tax return and I owe $500 in additional taxes, maybe charging $500 is reasonable. But what if you spend 2 hours and the additional tax you owe is $5,000? But note, I said additional taxes. Payment of additional taxs arises as to income taxes, typically.

Third, as to sales taxes, and the like, what service has been rendered upon which to claim the exemption from tax liability? As a "consumer" when one purchases goods or services, one is not providing the goods or services, one is buying the goods or services. How can one then claim an exemption or deduction as a purchaser and not a provider?

And what about income taxes withheld from our wages by our employer and then paid by the employer to the tax authorities? As the employee/taxpayer, what service have we provided to the tax authority in collecting and paying the tax? The services we provide are to our employer. The employer collects and pays the tax. Yes, we are paying the tax becomes it comes out of our pockets, but the "service" of collection and payment sits with the employer. Of course, if one is self employed the analysis is different, but we get back to a reasonable fee for service analysis.

In the final analysis, charging tax collection agencies or tax authorities for the "service" of paying taxes, whether income taxes, sales taxes, use taxes, excise taxes, compensating taxes etc... will not fly. It never has and never will. Right or wrong, paying taxes is classified as a civic duty, not a service.

Heaven knows I'm no fan of income taxes and other types of taxes! We are being taxed to death, literally.

But any notion that one can avoid tax liability on the theory that one is providing a service to tax authorities, or collection agencies such as the IRS, equal to the amount of tax owed is not only illusory, it is fiction and wishful thinking.

[waves]

I'm all for small business getting around unfair taxes any way possible, but not for leftist writers leaving out substantiation and inconvenient facts.

Posted by dynamo (here)
July 5, 2018
By Aaron Kesel
U.S. President Donald Trump...just encouraged imposing yet another tax on American citizens’ backs which will result in raising corporate retail prices online....

Trump said exactly what when where? I couldn't find any actual Trump statement saying this, but lots of statements saying 'Trump said...' - a tactic for imprinting a lie on the public.

Posted by dynamo (here)
By Aaron Kesel
President Trump has previously urged the U.S. postmaster general to double shipping rates for Amazon.com and other companies amid months of his continued criticism that the online retailer is costing the Postal Service “billions” of dollars in revenue.

Trump asked to even the playing field for Amazon who had been given a huge advantage at the US Postal expense. http://fortune.com/2017/07/16/amazon...rvice-subsidy/ The writer leaves out these inconvenient facts and it completely changes this characterization.

Posted by dynamo (here)
July 5, 2018
By Aaron Kesel
A new Internet collection tax will allow states to collect — (steal, rob, plunder) [taxation is theft] you get the point — from any retailer across the U.S. who sells products online. In short, the newly approved law will kill small businesses....

The writer conveniently left out this caveat in the Supreme Court ruling:

http://www.chicagotribune.com/news/o...703-story.html
...Also, the court did not say that a state could require every business to collect these taxes. Rather, Justice Kennedy's opinion said that a state could impose a tax only if the business had a “substantial nexus” — a substantial connection — to the state.

But what does this mean? The court said that the South Dakota law met this requirement by taxing only businesses that deliver more than $100,000 of goods or services into the state or engage in 200 or more separate transactions for the delivery of goods or services into the state. Beyond this, though, the court has left open the question of what is enough for a substantial nexus, and undoubtedly there will be a great deal of litigation on that question....


If true, wouldn't it do more to even a playing field for smaller businesses if way bigger businesses/corporations were not getting away with avoiding taxes by only selling across state lines online??

[genevieve]

Satori--Thanks for your valuable input.

I'll toss the rest of my hopium in the trash.

Peace Love Joy & Harmony,
genevieve

[Satori]

Posted by genevieve (here)
Satori--Thanks for your valuable input.

I'll toss the rest of my hopium in the trash.

Peace Love Joy & Harmony,
genevieve

My apologizes if I rained in your parade.

[TargeT]

there are several states with no sales tax... this will not affect them