Why I stopped buying world coins on eBay or from US dealers … sales tax

Every state would get what it gets now in sales taxes. It would just be delivered differently. Cal

 

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It would still be up to the states to decide what gets taxed and the sales tax rate for their state and its various subdivisions. There would just be an annual amount that they would get as a lump sum from the IRS to distribute according to that state's laws. The pool of money accumulated by the IRS from merchants for sales tax would be adjusted accordingly each year. The situation in the states would be as complicated as ever. But then each state would have to deal with it instead of merchants all over the nation.

Cal

 

As soon as you let the states "decide what gets taxed", you can't let sellers just track "lump sums" per state. They've got to keep track of what each state counts as taxable or non-taxable. At that point, you've already lost.

Everything is simple once you over-simplify it.

 

You make a good point. Yes, merchants would have to report to IRS the taxable sales sent to each state. So, yes, they or their accountant would have to know what is and isn’t taxable in each state they ship to. And they would need to send their database of taxable shipment values and destination addresses for the states to use for distribution to their subunits. Then the states would do the work of figuring out how much total tax is due and which subunits get it. Merchants would still have only one sales tax bill to pay per year (or maybe quarter) for out-of-state shipments.

I’ve wondered how a state can force an out-of-state merchant who has no physical presence in a state to collect sales taxes on items delivered to that state. Yes, the Wayfair decision states they are supposed to pay it, but how is it enforced? For example, suppose a merchant in Idaho, who has no physical presence in Nevada, sells and ships taxable items to Nevada residents. If the Idaho merchant refuses to collect Nevada sales tax, what then? Can Nevada sue the Idaho merchant or bring criminal charges? If so, would it have to be in an Idaho state or federal court? Are there federal laws that require merchants to report out-of-state sales?

Cal

 

From a UK perspective some of the shipping cost from the USA are ridiculous. For instance you can buy a coin for £5 and pay £16 shipping. This to me closes off the American market even if I see a coin I want the shipping costs put me off why should I pay up to 10 times the price of the coin to have it mailed to me.

 

That's a great question, and just one of the parts of Wayfair that seems nonsensical to me. As best I understand it, a state would come after a seller in another state in court, just as they would an in-state seller. One presumes that that would only happen if the seller does enough business in the state to make it worthwhile. Or if someone in the state didn't like the seller, and decided to make trouble.

 

It depends how you ship it. If I was sending a five pound coin to the UK I'd use a $1.45 international stamp in an envelope. But there's no tracking and some people insist on tracking, which is about $17. It's the same on MA Shops though. A lot of the sellers there charge $20 or more to ship to the U.S.

 

It’s a State by State sales tax law. In Ma we get charged 6.25% on every online sale. Some States charge more, some less. And this wasn’t always the case. When internet sale started taking off, the brick and mortar businesses were forced to collect taxes on sales while online sales didn’t. Lots of businesses closed while online sales grew. Can’t lose all that Tax revenue! It’s part of doing business today. BTW, NH is one of those no sales tax State. Buy a home in NH and avoid sales tax.

 

You need to find a buddy in the states to ship to.
They can save up your coins and send them to you in lots a couple times a year or each month depending on how you feel.

 

The Supreme Court decision is South Dakota v. Wayfair.

https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf

From the Syllabus (summary), which is actually not part of the decision, but rather written by a Supreme Court clerk of vast experience...

This implicitly approved SD's annual value of sales and/or number of transactions to require collection and remittance of sales taxes even if you don't have a presence in the state.

After Wayfair, most states quickly passed some kind of business and marketplace taxation law allowing them to tax sales delivered to state residents. The easiest way is simply to pass a law requiring sellers and marketplaces to register for a sales tax permit and collect/remit taxes once they pass the threshold. Apply all the same rules as to what is / is not taxable and poof. More tax revenue.

Some states put in a grace period or look-back - you only start collecting/remitting if you were required to in the previous year, or in the quarter after you pass the thresholds.

The exact values of $100,000 and 200 were not adopted by all states, but I'm not aware of anybody trying to challenge states that picked lower limits.

Generally, the rules apply equally to sellers and marketplaces (such as fleaBay). If you sell $100k of soap, or a $100k tractor, or $100k of bullion - if it's taxable in SD, you have to collect/remit the taxes.

 

OK, the Wayfair decision states a merchant is supposed to pay sales tax on out of state sales, but what happens if a merchant refuses to pay the tax? For example, suppose a merchant in Montana (which BTW, doesn’t have sales tax) has no physical presence in South Dakota and sells merchandise there but won’t collect and send sales tax to SD. Is there any case law on this?

I’m not a lawyer but would guess the Montana government and courts would not be very useful to SD in this matter. Montana boasts of its lack of sales tax to attract businesses; see the link below. So, it’s probably not going to be vigorous in collecting sales tax for other states. Federal court in Montana? Maybe. But, if it’s a jury trial, Montana jurors might be a bit more sympathetic to a Montana merchant than the government of SD.

Is there a Federal law requiring compliance with Wayfair? If so, what are the enforcement and penalty provisions?

Cal

https://choosemontana.com/Business-Climate

 

I'm not a lawyer either. But unlike somebody in the news recently, I remember what I learned in Law 401 at Business School.

Yes, there is. It's called the Constitution of the United States.

Courts are legally bound to honor the judgments of other courts. US Constitution, Article IV, Section 1 - https://constitutioncenter.org/the-constitution/articles/article-iv/clauses/44

Specifically in this case, I think you would be unpleasantly surprised. It might not happen quickly - depends on whether the merchant fights it in South Dakota and in Montana or not. But they will lose. And it would never get to a jury.

South Dakota would file a suit against the Merchant. Merchant either fights it and loses (Wayfair is pretty clear) or they don't fight it and they lose to a default judgment.

From there on, it's exactly like seeking child support from a dead-beat dad who moved out of state.

South Dakota files the judgment with some county court in Montana (or another state) where Merchant does have a physical presence. It would be treated like any other out-of-state judgment. It's not related to Wayfair, it's a valid order from an out-of-state court. The local court will perfect the judgment and hand it off to the county Sheriff to execute.

Sheriff seizes assets worth at least the amount of the judgment and sells them at auction. The amount of the judgment is sent to SD and the rest... depends on state law. Might go to the state, or be returned as cash to Merchant.

Are you really going to risk your Gulfstream B-Jet for a measly few thousand dollars? Any lawyer you hire will tell you to suck it up and pay what you owe.

 

Start buying coins worth $5k and more and you won’t care about shipping costs anymore :-D

 

Know of any cases where Wayfair was enforced as you outline? Not saying it didn't happen. But I lived in Missouri for a while. So, show me.

Cal

 

The internet sales tax thing is a total debacle. It's only as good those who choose to comply. Forcing compliance is next to impossible, because state governments generally don't care what other states want or do. Just try and get your own state government to answer simple questions over the phone or online about simple things like occupational licenses or certifications. Good luck!