Get ready to pay more state tax

bassboy1

Senior Member
For those more in the know than me, is there some idea of how many states will do something along the lines of SD (exempt under $100k or 200 sales)?

Depending on the outcome of those exemptions, it may make sense to stop selling to some states rather than take on the additional burden of paperwork.
 
For those more in the know than me, is there some idea of how many states will do something along the lines of SD (exempt under $100k or 200 sales)?

Depending on the outcome of those exemptions, it may make sense to stop selling to some states rather than take on the additional burden of paperwork.
Do what? This is sales tax we're talking about. There aren't going to be any exemptions and nobody is going to stop selling their dreck in any state because of a sales tax.
 

bassboy1

Senior Member
Do what? This is sales tax we're talking about. There aren't going to be any exemptions and nobody is going to stop selling their dreck in any state because of a sales tax.
https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf

The case was SD v. Wayfair. South Dakota enacted a law requiring out of state merchants to collect and remit sales tax, but did allow an exemption for businesses that sell small amounts within their borders.

The Act covers only
sellers that, on an annual basis, 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.
When other states follow suite (now that the path is opened up for them), how likely is there going to be a minimum sale exemption, or are they going to start requiring collecting/remittance from $1 from an out of state seller?
 
https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf

The case was SD v. Wayfair. South Dakota enacted a law requiring out of state merchants to collect and remit sales tax, but did allow an exemption for businesses that sell small amounts within their borders.



When other states follow suite (now that the path is opened up for them), how likely is there going to be a minimum sale exemption, or are they going to start requiring collecting/remittance from $1 from an out of state seller?
There will not be an exemption in most states and especially not blue states. In Georgia all sales to the end user are taxable whether you sell $1 or $1,000,000,000 worth of goods in Georgia. Sellers do get a 3% "Vendor's Compensation" credit against their sales tax liability for "voluntarily" collecting, reporting and paying in the tax provided the return is filed and payment is made by the due date of the return.

I wouldn't bet the ranch on SoDak being the bellwether state for exempting retail sales from sales tax.
 

bassboy1

Senior Member
I'm aware of how Ga works, I pay them every month. That 3% that they are so kind to give us pretty much just covers the credit card processing charge on the amount of the sales tax. But, that's also because I have a nexus in Ga. It's a different issue (or at least could/should be) for sales with no nexus.

The problem gets to be if a 1-3 person business sells just a few items in a state in a given year. They don't have a nexus in that state, but they still have a few random people in that state that order something from a webstore. The paperwork costs for filing a tax form in every state every month, quarter, etc is substantial. That's fine if you are a large operation with an accounting department. Bit of an issue if you are a one man shop, and have 5 sales in Arizona in a year.
 
I'm aware of how Ga works, I pay them every month. That 3% that they are so kind to give us pretty much just covers the credit card processing charge on the amount of the sales tax. But, that's also because I have a nexus in Ga. It's a different issue (or at least could/should be) for sales with no nexus.

The problem gets to be if a 1-3 person business sells just a few items in a state in a given year. They don't have a nexus in that state, but they still have a few random people in that state that order something from a webstore. The paperwork costs for filing a tax form in every state every month, quarter, etc is substantial. That's fine if you are a large operation with an accounting department. Bit of an issue if you are a one man shop, and have 5 sales in Arizona in a year.
Then you need to head over to GTC and sign up. You can pay your sales tax via ACH debit and avoid the CC processing fee. You can file the return on line too.

When it comes to one man bands and 5 sales in AZ you have to weigh the costs of compliance v the costs of non compliance. If you're a multi state operator, yeah that's a problem. Increase your prices to cover the costs.
 

bassboy1

Senior Member
Then you need to head over to GTC and sign up. You can pay your sales tax via ACH debit and avoid the CC processing fee. You can file the return on line too.

When it comes to one man bands and 5 sales in AZ you have to weigh the costs of compliance v the costs of non compliance. If you're a multi state operator, yeah that's a problem. Increase your prices to cover the costs.
By credit card processing fee, I mean the fee my credit card processor charges me on the sale of a widget to my customer. I do have my sales tax set for ACH debit.

It's definitely going to shake things up for a lot of small companies. I have around 300 individual transactions a year, mostly custom orders, and usually hit about 45 states in a year. When you figure that around 60 of those sales are to Ga, that leaves a lot of transactions spread thinly through the country.

I can see why Amazon loves this.
 
By credit card processing fee, I mean the fee my credit card processor charges me on the sale of a widget to my customer. I do have my sales tax set for ACH debit.

It's definitely going to shake things up for a lot of small companies. I have around 300 individual transactions a year, mostly custom orders, and usually hit about 45 states in a year. When you figure that around 60 of those sales are to Ga, that leaves a lot of transactions spread thinly through the country.

I can see why Amazon loves this.
Amazon has the point of sale software ready to go so all they have to do is load the rate table by state and they are rocking. Not only does it assess the tax on the transaction it does the bookeeping, files the returns and pays the tax electronically.

It looks like you're averaging 5.33 sales per state per year but I'm guessing it's not divided up evenly by state. I don't advocate breaking the law but you have to do a cost/benefit analysis. If you have half a dozen states with one sale per year for a de minimis amount the cost/benefit equation may dictate the risk associated with non compliance is less than the cost of compliance. No state is going to spend any audit time or money chasing one sale for $3 worth of sales tax. Their audit effort is focused almost 100% on the big guys. Big pond = lots of big fish. Little pond = small number of little fish.

Sooner or later somebody will publish a small fry point of sale app that does it all. Until then - keep on doing the compliance/noncompliance cost/benefit analysis.
 
I really think it is about time that they leveled the playing field with brick and mortar stores. I have to charge sales tax on everything I sell to the end user. It makes it hard to compete with the online sellers, because right off the bat, they are 7% cheaper than I am on pricing. People use my place of business to come look at an item see if that is really what they want, and then go home and order it over the internet because they save the 7%. Or they will look it up on the internet and want us to price match, less sales tax and such. It is not fair to local businesses.

I wish people would realize when they do things like this, they are really just hurting the local economy. If I can't sell enough to stay in business, I can't pay the several employees that I have. I don't pay the thousands in local real estate taxes or school taxes each year. Most don't know it, but in Georgia, I have to pay taxes on the building, plus taxes on any inventory, plus taxes on any profit I happen to be able to muster together that year. If you think taxes are rough on your home, try paying taxes on 500,000 in inventory that does not receive any discounts for home exemptions. $500,000 assessed at 40% = $200,000 x millage rate of .16 for school taxes = a tax bill of $32,000. That is before you pay the taxes on the real estate too.
 

bassboy1

Senior Member
Amazon has the point of sale software ready to go so all they have to do is load the rate table by state and they are rocking. Not only does it assess the tax on the transaction it does the bookeeping, files the returns and pays the tax electronically.
Precisely why they like this. I have one production product that I'll put on Amazon when I have extras in stock (rarely - custom orders my bread and butter), but if I don't have a surplus, I'll keep it on my website as Amazon has a pretty high fee.

With this setup, the cost of compliance is lowest by simply listing on Amazon instead of my site. Instant win for them.
 

bassboy1

Senior Member
I really think it is about time that they leveled the playing field with brick and mortar stores. I have to charge sales tax on everything I sell to the end user.
Frankly, I think Walmart had a greater affect on the demise of brick and mortar than online, and that final nail had been driven before online became a big deal.

I'm not necessarily disagreeing with you, but could stomach it a lot better if it was origin based, not destination based. The paperwork requirements make it only a big companies game when there are 50 states in play.

Mom and pop stores are still very much around , but they are no longer brick and mortar, we're all selling online. This potentially does to us what Walmart and big box stores did to your industry.
 
I really think it is about time that they leveled the playing field with brick and mortar stores. I have to charge sales tax on everything I sell to the end user. It makes it hard to compete with the online sellers, because right off the bat, they are 7% cheaper than I am on pricing. People use my place of business to come look at an item see if that is really what they want, and then go home and order it over the internet because they save the 7%. Or they will look it up on the internet and want us to price match, less sales tax and such. It is not fair to local businesses.

I wish people would realize when they do things like this, they are really just hurting the local economy. If I can't sell enough to stay in business, I can't pay the several employees that I have. I don't pay the thousands in local real estate taxes or school taxes each year. Most don't know it, but in Georgia, I have to pay taxes on the building, plus taxes on any inventory, plus taxes on any profit I happen to be able to muster together that year. If you think taxes are rough on your home, try paying taxes on 500,000 in inventory that does not receive any discounts for home exemptions. $500,000 assessed at 40% = $200,000 x millage rate of .16 for school taxes = a tax bill of $32,000. That is before you pay the taxes on the real estate too.
I sympathize Pap but what retail end user customers are interested in is the product at the lowest price.
 
Thread starter #20

Robert28

Senior Member
I really think it is about time that they leveled the playing field with brick and mortar stores. I have to charge sales tax on everything I sell to the end user. It makes it hard to compete with the online sellers, because right off the bat, they are 7% cheaper than I am on pricing. People use my place of business to come look at an item see if that is really what they want, and then go home and order it over the internet because they save the 7%. Or they will look it up on the internet and want us to price match, less sales tax and such. It is not fair to local businesses.

I wish people would realize when they do things like this, they are really just hurting the local economy. If I can't sell enough to stay in business, I can't pay the several employees that I have. I don't pay the thousands in local real estate taxes or school taxes each year. Most don't know it, but in Georgia, I have to pay taxes on the building, plus taxes on any inventory, plus taxes on any profit I happen to be able to muster together that year. If you think taxes are rough on your home, try paying taxes on 500,000 in inventory that does not receive any discounts for home exemptions. $500,000 assessed at 40% = $200,000 x millage rate of .16 for school taxes = a tax bill of $32,000. That is before you pay the taxes on the real estate too.
With all those taxes you’d think the government would have plenty of your money to give away.
 
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