The number of in depth articles keeps coming, although it does seem to be abating.
https://salestaxnews.blogspot.com/2018/06/more-sd-vs-wayfair-articles.html
Tuesday, June 26, 2018
Saturday, June 23, 2018
Thanks for the welcome back, Supreme Court
I would like to thank the Supreme Court for their welcome of me back to the world of Sales Tax*.
They really shouldn't have dropped a nuclear bomb though. A nice card would have been fine. I like ones that play a tune (hint, hint).
I was going through my Nexus presentation slides after I read the opinion and ... well... gee...there's nothing left. I'm going to have to put a big "THIS IS GONNA CHANGE" slide at the beginning and it will pretty much apply to everything else in the deck. By the way, I'm going to be doing a NEW nexus webinar covering this topic. Watch this space.
I've spent the last couple of days reading articles about this and I've listed some of the better ones at the bottom of this post. If you haven't been reading, please do so. Maybe you'll catch something I've missed.
Here's my take (subject to correction by smarter people than me):
1. The nexus rules requiring a physical presence in a state before being subject to that state's jurisdiction...poof! There is no physical presence required. The law we've been relying on since 1967? It's all gone, man! All that is required is having substantial nexus, which can be achieved in several ways - including simply having a lot of customers in the state. No people, real estate or stuff necessary anymore (argh..my seminar!).
2. Congress better get on the case. The Supreme Court has left the landscape devastated and only Congress can fix things. Otherwise, there are going to be a lot more court cases in the next few years (oh heck, probably in mere months). The Supreme Court has passed the ball to Congress essentially saying, "Hey we blew everything up. We sure hope you have some ideas."
Congress has three bills that they've been looking at, but nothing has been happening. They really hate touching taxes if they don't have to. But I'll bet things will happen now.
I actually wonder if the Supreme Court justices were all sitting around the conference table arguing over who got extra mayo on their roast beef and someone said, "Oh, the hell with it...blow it up. Maybe that will get Congress to do something." Convince me I'm wrong.
3 If the Supreme Court justices ran for election, I would wonder about the contributions they received from the software companies. Because you're gonna need software. And it isn't just big companies that need software. Small businesses will too. If you invested in sales tax software stock before last Thursday, congratulations. I think you and I are long lost cousins, and I'd like a loan please.
4. As of now, regardless of your business size, you may have nexus in a whole bunch of states. Some states, like South Dakota who started this mess, at least put a safe harbor in place so that companies that didn't sell much in South Dakota didn't have to worry about it (200 individual sales or $100,000 in sales, annually). But others don't give that break. Some states might begin, on MONDAY, to enforce the new rules, regardless of the size of the sellers.
The Supreme Court used South Dakota's rules to show an example of what substantial nexus is. But states might go nuts anyway! The Supreme Court did not say that South Dakota's threshold was THE rule, but they sure do like it. I wonder if the reason the Supreme Court decided to take this case was because South Dakota was smart enough to provide an agreeable safe harbor that the Supreme Court could point to as guidance.
5. So what do you do? I'm not going to say, "don't panic," because you may want to, you know, panic. One thing to do would be to write your Congressman/woman. Congress can fix this. But they just need to have the gumption to do it. Maybe take care of the tip at lunch.
But we know how useful they are. So watch the states you sell to, for both stuff and services. If you sell more than the safe harbor rules that South Dakota provided, then you're definitely going to to have to deal with more states asking you for money. Avalara put together a nice article summarizing the situation for each state. Thanks, Avalara.
Speaking of software companies, all those brochures and emails you've been ignoring? You probably want to start looking at them.
Oh, this is so nasty.
Finally, if I see the words, "level the playing field" one more time (grits teeth)... You'll see why if you read just a sampling of the links below.
*I've been pretty much off for the last year+ for a whole collection of reasons. Let's just say it has not been a great year. But all is now well. Except for the Supreme Court going nuts.
I'm baaacccckkkkk.
Jim Frazier
The Sales Tax Guy http://salestaxguy.blogspot.com
See the disclaimer on the right.
Here's some recommended reading:
http://www.leveragesalt.com/blog/2018/6/companies-without-a-physical-presence-in-a-state-may-now-be-required-to-collect-sales-tax
http://taxprof.typepad.com/taxprof_blog/2018/06/5-4-supreme-court-clears-way-to-collect-sales-tax-from-online-retailers-in-todays-wayfair-decision.html
http://taxprof.typepad.com/taxprof_blog/2018/06/holderness-south-dakota-v-wayfair-the-more-things-change-.html#more
https://www.jdsupra.com/legalnews/the-u-s-supreme-court-changes-sales-and-65422/
http://money.cnn.com/2018/06/21/technology/wayfair-vs-south-dakota/index.html
https://taxfoundation.org/supreme-court-decides-wayfair-online-sales-tax-case/ along with a discussion of the brief they filed in this case
https://www.avalara.com/us/en/blog/2018/supreme-court-rulesthatsouthdakotacantaxsalesbyoutofstatesellers.html
https://www.jdsupra.com/legalnews/south-dakota-v-wayfair-inc-what-it-98145/
https://www.jdsupra.com/legalnews/breaking-news-us-supreme-court-32978/
https://www.salestaxsupport.com/blogs/industry/small-business-ecommerce/with-quill-dead-you-could-now-have-sales-tax-nexus-everywhere/
This article, from Avalara, discusses the way states to watch in the near term
Finally, I've also read the Supreme Court's opinion. I'd encourage you to read it. It's interesting reading and not as difficult as you might think.
Friday, May 19, 2017
Monday, February 27, 2017
Tuesday, January 24, 2017
Why do I have to pay sales tax on the car I bought from a guy on Craigslist?
In my surfing adventures looking for material for my other blog, I often come across questions that people have asked on various online fora*. And sometimes they're grist for my blogging responsibilities.
The question is at the top of this article. Here's my poor attempt at an answer:
When you buy a car from a dealer, they are going to charge you sales tax on the sale of the car. I think we all kind of understand that. Easy. Unpleasant, and maybe a surprise, but nevertheless - we get it.
When you buy a used car from a dealer, they are still going to charge you sales tax on the sale of the car. "Whoa," you say, "what are you talking about? It's used! Sales tax already has been paid on that car."
It doesn't make any difference. You see, a common misconception is that sales tax is on the item being sold. It's actually on the sale itself. That's why it's called a sales tax. That car might keep getting traded in, and every time a dealer sells it, it's subject to sales tax.
However, there is another way you can buy a used car - from Jim on Craigslist. That's how I sold my 1997 Pontiac Grand Prix**
I put an ad on Craigslist and someone called within a couple of hours and handed me cash later that day. And I, as the seller, didn't have to charge Joe sales tax. And before you ask "why?" I'll tell you. Because I was making an occasional sale (often called a casual sale). These are sales by sellers who are not in the business of selling the item being sold. Since I wasn't in the car sales business, I didn't have to charge tax on the sale of Eleanor (yeah, I called her Eleanor).
That's also why you don't have to charge tax when you have a garage sale - you're making an occasional sale.
But here's the thing. Cars are probably the most expensive thing that most of us will ever buy that's not real property (like a house). The state doesn't want to give up the sales tax just because Joe didn't buy the car from a dealer. But they also have trouble imposing the responsibility of charging the sales tax on me because I'm probably going to screw it up. Since I don't sell cars very often (like once every 20 years), I'm unlikely to know about a rule that says I have to collect the sales tax. So most states have an alternate plan. They collect the tax when Joe registers the vehicle and gets his new plates. Joe, of course, is surprised and complains about it on an internet forum. ***
So I, the seller, am off the hook. But Joe is in for a surprise when he goes to the DMV.
Finally, it's a technical matter, but the type of tax changes when you pay the state when you register the car. Sales tax is a tax on the sale of the car. But when the state can't impose tax on the sale, they have this other tax that plugs that loophole. It's called "use tax." This is a tax on Joe's use of the car. Some states will properly call it use tax. But others will call it a sales tax just so that Joe doesn't freak out thinking that the state is just making up taxes now.
* Yeah, I know the more usual word is "forums," but I just like the way "online fora" sounds. Trust me, I'm not trying to be a word snob. I'm not an elitist - I'm right down there with the rest of you people.
** I loved that car. It's the only car I've ever had where girls actually thought it was cool. Not me of course, but the car. Loved that car.
*** See, I can use regular people words too!
The Sales Tax Guy
http://salestaxguy.blogspot.com
See the disclaimer - this is for education only. Research these issues thoroughly before making decisions. Remember: there are details we haven't discussed, and every state is different. Here's more information
Get these articles in your inbox - subscribe at http://salestaxguy.blogspot.com
Don't forget our upcoming seminars and webinars.
http://www.salestax-usetax.com/
The question is at the top of this article. Here's my poor attempt at an answer:
When you buy a car from a dealer, they are going to charge you sales tax on the sale of the car. I think we all kind of understand that. Easy. Unpleasant, and maybe a surprise, but nevertheless - we get it.
When you buy a used car from a dealer, they are still going to charge you sales tax on the sale of the car. "Whoa," you say, "what are you talking about? It's used! Sales tax already has been paid on that car."
It doesn't make any difference. You see, a common misconception is that sales tax is on the item being sold. It's actually on the sale itself. That's why it's called a sales tax. That car might keep getting traded in, and every time a dealer sells it, it's subject to sales tax.
However, there is another way you can buy a used car - from Jim on Craigslist. That's how I sold my 1997 Pontiac Grand Prix**
I put an ad on Craigslist and someone called within a couple of hours and handed me cash later that day. And I, as the seller, didn't have to charge Joe sales tax. And before you ask "why?" I'll tell you. Because I was making an occasional sale (often called a casual sale). These are sales by sellers who are not in the business of selling the item being sold. Since I wasn't in the car sales business, I didn't have to charge tax on the sale of Eleanor (yeah, I called her Eleanor).
That's also why you don't have to charge tax when you have a garage sale - you're making an occasional sale.
But here's the thing. Cars are probably the most expensive thing that most of us will ever buy that's not real property (like a house). The state doesn't want to give up the sales tax just because Joe didn't buy the car from a dealer. But they also have trouble imposing the responsibility of charging the sales tax on me because I'm probably going to screw it up. Since I don't sell cars very often (like once every 20 years), I'm unlikely to know about a rule that says I have to collect the sales tax. So most states have an alternate plan. They collect the tax when Joe registers the vehicle and gets his new plates. Joe, of course, is surprised and complains about it on an internet forum. ***
So I, the seller, am off the hook. But Joe is in for a surprise when he goes to the DMV.
Finally, it's a technical matter, but the type of tax changes when you pay the state when you register the car. Sales tax is a tax on the sale of the car. But when the state can't impose tax on the sale, they have this other tax that plugs that loophole. It's called "use tax." This is a tax on Joe's use of the car. Some states will properly call it use tax. But others will call it a sales tax just so that Joe doesn't freak out thinking that the state is just making up taxes now.
* Yeah, I know the more usual word is "forums," but I just like the way "online fora" sounds. Trust me, I'm not trying to be a word snob. I'm not an elitist - I'm right down there with the rest of you people.
** I loved that car. It's the only car I've ever had where girls actually thought it was cool. Not me of course, but the car. Loved that car.
*** See, I can use regular people words too!
The Sales Tax Guy
http://salestaxguy.blogspot.com
See the disclaimer - this is for education only. Research these issues thoroughly before making decisions. Remember: there are details we haven't discussed, and every state is different. Here's more information
Get these articles in your inbox - subscribe at http://salestaxguy.blogspot.com
Don't forget our upcoming seminars and webinars.
http://www.salestax-usetax.com/
Saturday, December 31, 2016
Monday, November 07, 2016
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