34 States Now Require Sales Tax from Online Buyers

Potentially. But if you're small-time, a lot of states (as I understand it) have reporting exemptions for those not meeting a certain dollar threshold of transactions within the state.

Do all states have that exemption? I don't know. And my hobby is coin collecting, NOT tracking state-level sales-tax legislation.

 

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Of course that means the small business also has to track THAT just in case they do go over and now have to submit taxes. (and if they go over and have to remit taxes do they have to remit for those sales made before they went over the threshold which they didn't collect taxes for? That could be a nasty surprise.)

 

Yup. And some states start with the transaction that put you over, some as much as 90 days later.

The only saving grace here is the relatively high limits. Only a few states went below the $250K that South Dakota used. iMHO if they went to first dollar or the $500 in state limit there might be a different case for an undue burden.

If you are selling $250k into each of 50 states, you better have aa competen financial team.

 

Actually the South Dakota v Wayfair economic threshold is $100,000.00 in sales or 200 sales transactions. The Court ruled interstate commerce conducted within a state of this amount is sufficient for establishing substantial nexus. While the Court ruling did establish a bright line concerning nexus equal to or above this amount of commerce exactly what amount of commerce where substantial nexus is created is still a gray area. Each individual state is free to adopt any threshold they choose. While most states have chosen to adopt the South Dakota threshold; some have adopted a larger one. None that I am aware has chosen to adopt a threshold smaller and I doubt any will. But it is possible. If a states does establish a smaller threshold - I'm sure it would be challenged in court. That's when the true bright line would be established.

 

Thanks for the corex, memory is a slippery thing.

Some states have adopted AND 100K and 200 transactions.

These people have a summary chart w/ links to the state regs:

https://www.salestaxinstitute.com/resources/remote-seller-nexus-chart

The eBay notice was likely in part to cover this piece (quoting Texas but I'm sure others have similar):

Also, note the potential problems down the road

You have to keep records.

And notice YOU retain the responsibility for correctly classifying your sales (taxable or exempt).

https://texreg.sos.state.tx.us/publ...c=&p_ploc=&pg=1&p_tac=&ti=34&pt=1&ch=3&rl=336

So your quarter eagle sale is tax-exempt, but if they're made into earings it's taxable.

 

It appears that Texas has taken the same approach as my state and designated a sale made through a marketplace facilitator as a sale made by the facilitator and is not considered a sale of the actual marketplace seller. Therefore the facilitator (Ebay, Amazon, etc) is responsible for collecting the sales tax from the purchaser and remitting the tax collected to the state. The actual marketplace seller has no tax responsibilities or tax liability in this situation.

Remote sellers should also keep in mind when selling into states that have shifted the sale tax responsibilities to marketplace facilitators - that their sales made through Ebay, Amazon, etc are not considered or applied against in determining whether a seller has reached the state's economic threshold.

 

That is a very, VERY interesting perspective in light of all the counterfeit coins that still sell on eBay, don't you think?

 

No. It's just for sales tax purposes. You aren't going to be able to hold fleaBay accountable under Texas law.

Not quite - you are responsible to provide the information to the marketplace about the tax classification of the item for sale. If you don't they have no responsibility and you are on the hook.

https://capitol.texas.gov/BillLooup/Text.aspx?LegSess=86R&Bill=HB1525

I think it's also interesting that the remote seller regulation says the comptroller won't enforce under 500,000 and makes no mention of marketplaces...

https://texreg.sos.state.tx.us/publ...8&p_ploc=1&pg=2&p_tac=&ti=34&pt=1&ch=3&rl=286

I'm not a lawyer, definitely not a Texas tax lawyer, but I'd be very careful if I was of enough size to come close to tripping the limits and have some very competent legal help.

 

No. It's just for sales tax purposes. You aren't going to be able to hold fleaBay accountable under Texas law.

Not quite - you are responsible to provide the information to the marketplace about the tax classification of the item for sale. If you don't they have no responsibility and you are on the hook.

https://capitol.texas.gov/BillLooup/Text.aspx?LegSess=86R&Bill=HB1525

I think it's also interesting that the remote seller regulation says the comptroller won't enforce under 500,000 and makes no mention of marketplaces...

https://texreg.sos.state.tx.us/publ...8&p_ploc=1&pg=2&p_tac=&ti=34&pt=1&ch=3&rl=286

I'm not a lawyer, definitely not a Texas tax lawyer, but I'd be very careful if I was of enough size to come close to tripping the limits and have some very competent legal help.

 

Didn't really think so. Legislators seem not to be real big on logical consistency.

 

I still say the legislation adopted by Texas and my state - by designating a sale made through a marketplace facilitator as a sale of the facilitator and not a sale of the actual seller promotes the formation of facilitators outside US jurisdiction. Similar to the formation of offshore internet gambling in the Bahamas and etc a decade ago.

 

They define the place of sale as the delivery or pickup, but if you were based in a tax haven and the seller direct ships, not sure how they could enforce it.

I'm also not sure it's worth it - somebody like fleaBay has a significant US presence and that is subject to pressure - to make it work you would need to have NOTHING connected to the US... no bank could process credit cards for them, etc.

For the offshore gambling sites, the inability to pay out winnings killed them.

 

I recently talked to an executive of one of the big auction houses. He said that the extra administrative costs of collecting and remitting sales taxes to additional states was already at $70K and rising. If sales taxes have to be collected at all, he favors a national clearing house, which would substantially decrease the administrative costs.

Cal