Author Topic: South Dakota v. Wayfair Inc.  (Read 4846 times)

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Offline ear3

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South Dakota v. Wayfair Inc.
« on: April 16, 2018, 01:33 PM »
Just wondering if the dealers on this site are aware of and/or following the oral arguments that will be made tomorrow in the South Dakota v. Wayfair case, which has the potential to overturn the state-tax "exemption" for online and out-of-state retailers (I put exemption in quotes, as by law the customer is still obligated to pay the sales tax, which I know all of us scrupulously do!).  The Supreme Court last addressed the issue in 1992, before internet sales were a thing.

This could be great news for brick and mortar dealers, but obviously could be an existential crisis for dealers who primarily do online sales.  More details here: http://www.scotusblog.com/2018/04/argument-preview-justices-to-reconsider-sales-tax-collection-in-internet-era/

Mods feel free to move thread to General Friendly Chat if deemed appropriate.
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Offline RDMuller

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Re: South Dakota v. Wayfair Inc.
« Reply #1 on: April 17, 2018, 06:35 PM »
I hope South Dakota wins.  The current system of paying taxes on out of state purchases is a joke and makes liars out of the populace!  These are the first people to complain about the roads the schools, etc

Some folks are cheapskates!

Offline neilc

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Re: South Dakota v. Wayfair Inc.
« Reply #2 on: April 17, 2018, 07:11 PM »
The large retailers are already moving to charge sales tax on out of state purchases.  Walmart, Target, BestBuy, and Amazon are there.  Other of the big buys following pretty quickly.  Not nearly as easy for small retailers.

There are several thousand taxing authorities across the US, not just 50 states.  As a small business person selling online, the amount of software, paperwork, administration and cost for them to collect and remit taxes in all of those locales would be significant.  Add to that the differing sales tax amounts on different classes of goods and it's a huge challenge.  And if they get it wrong, the last thing they'll want is an attorney general or collector of revenue from a state or locale to come knocking on their door to do an audit.  So they will likely decide not to sell online. 

When you consider that online sales only represent about 9-10% of total sales across retail categories, I don't know that this is THAT big of an issue in terms of potential revenue to states and localities.  Categories like clothing and electronics are the highest, while food is maybe 2-3% of all retail sales.

Here's a quick summary of percent online sales by category - https://www.cbre.com/research-and-reports/E-Commerce-by-Retail-Category-Finally-Revealed-by-US-Census-Bureau
« Last Edit: April 17, 2018, 07:16 PM by neilc »

Offline JimH2

  • Posts: 608
Re: South Dakota v. Wayfair Inc.
« Reply #3 on: April 18, 2018, 11:17 AM »
The excuse that the playing field is not level for mail order retailers is just a crutch for the reality that Main Street stores are not viable solutions. When Amazon started adding sales tax it did not slow me down (nor would paying slightly more). They make it too easy to shop and if there is an issue make a return and I don't have to drive anywhere.

The sales tax that the states will get will be blown just like the tobacco settlement money. If it is all of the money they are claiming then a reduction in the income tax and/or sales tax will be in order since they have gotten by for this long. The reality is that the amount of sales tax they are missing out on is getting smaller every year as more retailers start collecting it and I think almost all of the big retailers already do. There are some outliers, but they are few and far between and going after small businesses selling a few thousand items in different states is not going to result in a big return.

My concern is that once they get this money there will be a push to collect a "mail order tax" since the playing field will still not be level: Mail order businesses do not pay any local property taxes or local business taxes (a percentage of revenue, not profit) or use the services of other local business that Main Street stores do. The future of local business is selling something that cannot be shipped (e.g. services, manufacturing and food). More and more people are moving out of high tax states and into ones that don't have sales tax or income tax. The government needs to scale back or find other revenue sources.

Looking to the future 3D printers will make a lot of businesses obsolete. No need to buy something when you can get plans to make it yourself. This is done on a very small scale due to cost and other limitations, but that will change. Also, the auto industry is going to succumb soon. There dated model of states requiring dealerships is going to die off as are the need for car repair. Just look at Tesla's cars that require very little maintenance due to the not having transmissions or engines.

Offline McNally Family

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Re: South Dakota v. Wayfair Inc.
« Reply #4 on: April 18, 2018, 01:45 PM »
I wonder what percentage of Festool sales are conducted online/out of state?  I suspect it is much higher as is the general trend year over year for other items (see Amazon's record holiday sales this year over say 5 years ago).

If I was a business dependent on out of state online sales, I would be very worried right now.

https://www.racked.com/2018/4/17/17242952/south-dakota-wayfair-online-sales-tax-supreme-court 
« Last Edit: April 18, 2018, 04:44 PM by McNally Family »
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Offline neilc

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Re: South Dakota v. Wayfair Inc.
« Reply #5 on: April 19, 2018, 08:27 PM »
This was in today's Wall Street Journal. 

‘Our states are losing massive sales-tax revenues that we need for education, health care, and infrastructure,” South Dakota’s Attorney General Marty Jackley told the U.S. Supreme Court Tuesday. His state’s Supreme Court opined that sales tax revenues have “declined.” The state Legislature, citing its own “finding” to this effect, enacted a law requiring out-of-state retailers to collect sales tax on purchases shipped to South Dakota.

But in addition to running counter to decades of precedent governing interstate commerce—which Mr. Jackley was in court asking the justices to overturn—the law is based on a false premise.

The state’s (South Dakota) own data show that sales and use tax revenue grew from $787.7 million in 2013 to $974.7 in 2017—considerably faster than the state’s rate of economic growth. The governor’s budget for 2018 projects the state’s sales and use tax revenue will be more than $1 billion, 4% higher than last year, with no change in rate. That’s 29% higher than five years earlier. Sales-tax revenues have been booming in other states, too.

How did a case get all the way to the U.S. Supreme Court with such basic facts still in dispute? South Dakota did not have to prove its claim because its legislature created a “fast track” litigation procedure to move the case up to the state’s high court without the usual elaborate fact-finding, discovery, witnesses and trial.

Online Gerald_D

  • Posts: 311
Re: South Dakota v. Wayfair Inc.
« Reply #6 on: June 21, 2018, 10:50 AM »
I think the national news is reporting on this too, but local news here in South Dakota is reporting that Supreme Court ruled in favor of state of South Dakota in this case.  I understand both sides of this issue- I'm thinking the winners from this ruling will be brick and mortar retailers and big online retailers (who can absorb the compliance costs) but will hurt small businesses that sell across state borders (think Etsy-type retailers).  No matter what side of the issue you are on, no doubt we will all feel the impact of this one.

Regards,
Gerald

EDIT:  OK- I guess I didn't understand this as well as I thought  (I wonder if anyone really understands tax law anyway...  [embarassed])- talked with a couple 'tax' folks and it sounds there could be some minimum thresholds for this change.  I suppose these could be different for each tax jurisdiction in the US, so may still be a compliance issue.  In the end when the dust settles, the states will be happy and it remains to be seen if anyone else will.
« Last Edit: June 21, 2018, 11:27 AM by Gerald_D »
Gerald
I have Festools- Big and Small and a few other tools

Offline DeformedTree

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Re: South Dakota v. Wayfair Inc.
« Reply #7 on: June 21, 2018, 11:04 PM »
It's not going to change things much.  It's a myth that "no tax" is why people bought stuff online. If that were the case, no one in Sales Tax free states would have done online shopping.

People bought stuff online because for the first time they could

A) buy stuff they couldn't find locally
B) be able to buy the specific combo/version/model of what they wanted, no what the local store carried.
C) not have to pay an exorbitant price because there was 1 place in town selling what they wanted.
D) convenient hours.

Sales tax never was a real part of the equation, shipping negated tax savings for most purchases and having to wait days/weeks was a huge drawback.

Brick and Mortar stores used the sales tax reason to dodge the fact a lot of them just simply ran bad businesses that people were more than happy to see die, the internet killed bad/flawed businesses.  Lots of brick and mortar stores have done great since the internet, it's not about being online store or brick and mortar, it's about what you do/how you do it and so forth.  There are markets where major names are all but gone (Blockbuster Video), yet video rental stores live on (Family Video), simply because other businesses in the same game were run/managed vastly better/smarter, not because the market died, or some other industry destroyed them.

Offline RussellS

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Re: South Dakota v. Wayfair Inc.
« Reply #8 on: June 21, 2018, 11:21 PM »
People bought stuff online because for the first time they could -
A) buy stuff they couldn't find locally
B) be able to buy the specific combo/version/model of what they wanted, no what the local store carried.
C) not have to pay an exorbitant price because there was 1 place in town selling what they wanted.
D) convenient hours.

I would add E) It so much Easier to buy stuff.  It takes hours to figure out which store is selling what you want to buy and then to go to that store and buy it and go back home.

I'm glad the court ruled this way.  It levels the playing field, or reduces the excuses of local stores.  My main reasons for online buying are the ease I just mentioned, AND the far better prices.  Everything online is half the price of local stores.  Same products.

Back to Festool sine this is a Festool forum.  This decision could affect the online Festool retailers.  Guessing they sold with no sales tax.  And are small sellers.  Now they will be required to collect sales tax, so no price advantage due to sales tax for customers who have a local Festool retailer.  And for the small time online Festool sellers, they will have costly processes for collecting sales tax for the hundreds or thousands of different places/categories across the US.  Might put some of them out of the online business due to the increased cost.  I have two local Festool retailers so buying Festool online was never appealing.

Offline DeformedTree

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Re: South Dakota v. Wayfair Inc.
« Reply #9 on: June 22, 2018, 12:38 AM »
I'm not an e-commerce sales person, so I could be wrong, but I would think pretty much any platform someone would use for handling their sales would handle all the sales tax stuff automatically.  After all, the buyer just gave you their address, and it's all electronic in a database. It should do everything that is needed just fine.  Now if you say don't take online sales, but are doing it all buy "call us" or "email us" and doing the whole process by hand, that's a different story, but at that point that "online" retailer is basically a brick and mortar just not one you are walking into.

Eventually the US will get to a VAT tax like system across the country.  End the madness of taxes being different for everything in every state.  Wonder how well it works out right now if someone in one state that has sales tax but has no sales tax on food orders food from someplace across the state line  [unsure].

Far as stuff being cheaper, that varies a lot. Plenty of stuff is more expensive online.  The old tricks of retail stores still apply,  start cheap, get a buyer base, kill off some competition then start raising the prices and people don't notice because they just assume online is cheaper. 

Offline RKA

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Re: South Dakota v. Wayfair Inc.
« Reply #10 on: June 22, 2018, 07:35 AM »
You’re partially right, the only overhead that remains to be solved is getting the money to the state AND local taxing authorities. That’s solvable by allowing the payment processors to act as a clearing house for the funds and directly forward to taxing authorities in exchange for a small percentage.

Not enough have wanted the change until now. So here it is.
-Raj

Offline DeformedTree

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Re: South Dakota v. Wayfair Inc.
« Reply #11 on: June 22, 2018, 10:27 AM »
Sounds like something that will change very quickly now.  Since it's no longer "Stores: oh this is to much burden since the tools don't do this so we can't make such a change". now it's "Software/Processor: Since you all have to do this, all our tools for commerce do this automatically"

Offline RussellS

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Re: South Dakota v. Wayfair Inc.
« Reply #12 on: June 24, 2018, 12:29 AM »
I would think pretty much any platform someone would use for handling their sales would handle all the sales tax stuff automatically.

Far as stuff being cheaper, that varies a lot. Plenty of stuff is more expensive online.

Why would current online software include sales tax process?  Currently online does not collect sales tax.  So why would it already be in the software?  Do you think the software makers put it in for free ahead of time just in case sales tax was charged?  That is not how the world works.  The new software that will be developed for the thousands of different taxing authorities, will have this feature.  For a mere ten thousand dollars for starters.  Then require a mere three thousand dollars each year for updates.  All to keep the online seller out of prison for not paying sales tax to the various taxing authorities.  States, counties, cities would not hesitate to sue and incarcerate some criminal who did not collect and pay the sales tax on online sales.  I'm guessing authorities will see this as a new way to get government money by going after the crooks who do not follow the new sales tax procedure.

I always find stuff online cheaper.  I can compare hundreds of retailers in minutes.  Locally I can compare two in a few hours.  I have to spend hours to find the price of Festool tools sold by my two local sellers.  Online I can find the prices in minutes from fifty sellers.  Now with Festool everything has the same price.  Last year I bought my Honda mower online for $100+ cheaper than local dealers.  And no sales tax.

Offline DeformedTree

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Re: South Dakota v. Wayfair Inc.
« Reply #13 on: June 24, 2018, 01:56 AM »

Why would current online software include sales tax process?  Currently online does not collect sales tax.  So why would it already be in the software? 

 States, counties, cities would not hesitate to sue and incarcerate some criminal who did not collect and pay the sales tax on online sales.  I'm guessing authorities will see this as a new way to get government money by going after the crooks who do not follow the new sales tax procedure.

 Last year I bought my Honda mower online for $100+ cheaper than local dealers.  And no sales tax.

Because places online do charge sales tax, Amazon had to start years ago due to physical presence laws. Charging sales tax for stuff online is not new, it's just going to get more unified now as it's not going to be hit or miss as to if a places charges sales tax or not.  Plus if you make software you have to plan for what is coming, and no one making that software would think anything other than "it's just a matter of time, we need to be ready for that day".

States haven't been going after those who didn't pay sales tax, that has been part of the issue.  If your state has sales tax, you need to pay the sales tax. Problem was places were not collecting it which puts you the buyer in the responsibility of paying it to the state yourself which is a PITA and thus no one does it which as was mentioned by someone else makes every day folks criminals.

Unless you live in a state without sales tax, when you buy stuff online you have always been required to pay that sales tax at the end of the year on your state tax filings.  Have you paid your sales tax?  Virtually no one does, even though it's the law.  Now with this in place, people won't have the burden to do it themselves, they can go on with live like they do with everything else you buy.

I didn't say it wasn't easier to go online and check prices on stuff, what I said was not everything online is cheaper.  People have got sucked into the idea that everything online is cheaper thus they just don't check.  Amazon is a classic case of that.  They commonly have stuff being sold at a higher price than other websites and physical local stores.  People just don't pay attention because they become so automated to buying stuff online.  I've bought a lot of stuff for my house rebuild over the years, some stuff gets bought online, and it's never because it's cheaper, it's because I can't get it locally.  If I can get it locally it will be much cheaper.   If you live in a rural/remote area, yes, online prices can get better and better.  But for the majority of the population that lives in or very close to a metropolitan area with lots of stores, online is usually lucky to be a draw on end price.  Now move into a more urban core like Manhattan, things can switch back again to online since retail space is so expensive, online becomes cheaper again for more things.   9.5% of sales of goods being online is a good indicator of the limits of online. 

Plus shipping cost money, this is where Pets.com failed.  Shipping big bags of dogfood isn't cheap.  If something is big or heavy and not expensive, the economics of selling it online don't work.  This is why the core of things sold online has always been and will continue to be stuff that is small/light and or expensive for that size/weight.   Thus books, electronics, camera gear, clothing have been the bulk of the online market from the start.

Just like people have to be reminded there is no such thing as a sale (pure marketing invention), there is no such thing as free shipping (you pay for it even if there isn't a line item for it), and unless you live in a sales tax free state there has never been "no sales tax".

Offline Paul G

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Re: South Dakota v. Wayfair Inc.
« Reply #14 on: June 24, 2018, 10:42 AM »
I hope South Dakota wins.  The current system of paying taxes on out of state purchases is a joke and makes liars out of the populace!  These are the first people to complain about the roads the schools, etc

Some folks are cheapskates!

Yes indeed. Here in California (and similar in other states), the whole notion that there is no sales tax when buying online out of state is a lie, sales tax is still due and payable by the online purchaser. But we all know it is rarely reported and paid come April 15th. This ruling simply allows states to shift the tax collecting task to anyone who sells to their residents. It isn't a new tax, just eliminating the tax evasion.

I've seen online sales almost completely wipe out certain types of brick and mortar stores, camera stores comes to mind. When buying a $1k+ product, the tax evasion saves more than the shipping and plenty of folks will rather pocket the cash and cheat the taxes. Free shipping sweetened the pot even more. People add insult to injury by showrooming at the local store and then buying online.

Anyone who thinks this sales tax cheat isn't a sales incentive is delusional. I see the no sales tax ads too often, and it is the only remaining discount angle for price fixed products like Festool. Yes there are other benefits that can come from online dealers like convenience and greater selection, and the higher sales volume and reduced overhead can lead to reduced prices for non price fixed items. Conversely it is often great to see something in person at the brick and mortar before buying. But a Nikon lens is the same lens in Sacramento or New York and many folks went for the 7%+ tax cheat and left the local store to wither.

This does at least allow for the leveling of the tax playing field, now brick and mortar vs online can compete on convenience, selection, service and price absent the tax cheat.
« Last Edit: June 24, 2018, 10:48 AM by Paul G »
+1

Offline DeformedTree

  • Posts: 159
Re: South Dakota v. Wayfair Inc.
« Reply #15 on: June 25, 2018, 12:49 AM »

I've seen online sales almost completely wipe out certain types of brick and mortar stores, camera stores comes to mind. When buying a $1k+ product, the tax evasion saves more than the shipping and plenty of folks will rather pocket the cash and cheat the taxes. Free shipping sweetened the pot even more. People add insult to injury by showrooming at the local store and then buying online.

Conversely it is often great to see something in person at the brick and mortar before buying. But a Nikon lens is the same lens in Sacramento or New York and many folks went for the 7%+ tax cheat and left the local store to wither.


So as you can get from my post above, I'm all for this.  But in the end, many brick and mortars failed on their own and or were dead in the water even if Sales tax systems were firmly in place from day 1 of internet commerce.  Camera stores were very much one of the types of stores that were doomed as they had set themselves up to be easy pickings with few people who would shed a tear.

Most places would be lucky if they even had one camera store, thus most places someone had a basic monopoly pre-internet.  The prices they charged were thru the roof and until the internet people just had no idea how overcharged they were.  I want to support local business and have no issue paying a bit more to keep a local shop going and understand they have overhead, but you can only go so far.  I would visit some camera stores, but just that act was hard.  You want to sell me stuff, but you are open 9-5 M-F, so when am I suppose to go to your store?  Take time off work to go shopping?  A few might have a small Saturday window of time, again how is this going to work. Not a lot of people are eager to get up early on a Saturday morning to hit a place up before they close at noon.  These stores had the ability to run these hours in pre-internet days, pre big chain store days.  Many just refuse to adjust, and thus no one was coming thru the door.  This aspect isn't unique to Camera stores, lots of mom and pop retail outfits have the same issue, there are tool stores near me with this issue, for me to buy something from them I have to race the clock on a Saturday morning, just to get there and find they don't have what I want in store, and once you don't carry it in store, there really is no point for me to buy from you.

Then even when you get in the camera store, they often have limited subset of stuff, especially if say you run a camera that isn't F or EOS mount.  Most lens in stores will be kit lenses, which again not many people have a need for.  So there isn't even much for me to look at.  And then if there was something more of interest it becomes really hard to want to do business if the store is trying to sell an 800 dollar lens for 1400.  End of the day something like camera gear doesn't involve a lot of hands on. Once you are in a system, know the companies stuff, you don't tend to need to hold it to know what you are buying.

Far too many camera shops were living like museums. Tiny selections of stuff, lots of old gear that's been sitting on the shelf forever, tons and tons of generic junk.  In the end, it's not hard to see why people would just buy from BH Photo.  Everything you can want, great service and I'm totally fine with buying from a computer that strictly obeys the Shabbat, thus I have to wait till Sunday to place an order, it's still way more convenient than trying to run across town during lunch.

Yes, "show rooming" can be an issue.  But a lot of that just comes down to adjusting business models. This is where you see companies going to direct sales.  Apple, Microsoft, New Balance, etc. Just open up stores, sell for the same price as online and if someone comes in to just look at stuff, if they buy your product, they bought it someplace.  This was something nice with Sony Style stores (no longer exist far as I know), it fixed the show rooming issue since the company provided the show rooms for people to go hands on with something, then order it anyplace else.   Places like Best Buy could adjust and make deals with manufactures to be showrooms, instead of complaining that people look but don't buy, make deals with manufactures to charge the manufactures to display their goods and provide info to folks.   In the end it won't change the matter that if you are a retailer who sells stuff that you do not make, you very well may not have a business model in time.  Grocery stores, and lumber yards are fine.  No one is going to open up stores just to sell eggs (I say this but you never know), or just 2x4s.  But if you sell things like computers, electronics, cameras, sneakers, etc. You need to be looking forward to a time when those brands just have their own stores/show rooms and sell stuff direct. 

Consumers prefer to cut out the middle people.  Apple stores boomed because people could walk in and play with stuff, maybe buy it there, or maybe go home and order a custom configuration.  Sometimes the reason business go out of business is because their business model is dead.  Stores like sears are facing this reality head on.  They sell stuff people buy. But no one likes it when they are just walking thru a store and staff pounces on them. You glance at a refrigerator and someone comes up and starts talking to you. People don't want staff to ever approach them, they want to look and if they have a question there be someone to talk too, but to never be approached without asking to be approached.  End of the day, a lot of the stuff in a sears I could buy without ever having a need to see it in person.  A set of socket wrenches isn't like a pair of pants, I don't need to try the sockets on.  Some of this is generational, but in the end, if I go into a store and staff starts approaching me, asking me questions, offering help, etc, I leave, plain and simple.

Business models change.  People don't buy from the sears catalog anymore. People don't buy from door to door salesman.  If you make your living selling someone else's stuff, you have to be mindful that you probably will find yourself out of business. No different than service industry, if you sell a service, and people decide they don't need the service it's over.  People decide they can cook food at home by converting raw goods into finish product, you can't complain very much about why your salad or cupcake business went under.

Far too many businesses used the sales tax as a scapegoat for their problems which were still there even without the sales tax situation.

Offline cpw

  • Posts: 79
Re: South Dakota v. Wayfair Inc.
« Reply #16 on: June 25, 2018, 09:22 AM »
States haven't been going after those who didn't pay sales tax, that has been part of the issue.  If your state has sales tax, you need to pay the sales tax. Problem was places were not collecting it which puts you the buyer in the responsibility of paying it to the state yourself which is a PITA and thus no one does it which as was mentioned by someone else makes every day folks criminals.
In NY there is a safe harbor calculation for out of state sales tax (valid for all your purchases except those purchases over $1,000); which makes it fairly easy to comply.  I doubt the state will reduce the percentage even if more online business charge local sales tax though.

Offline DeformedTree

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Re: South Dakota v. Wayfair Inc.
« Reply #17 on: June 25, 2018, 08:22 PM »
States haven't been going after those who didn't pay sales tax, that has been part of the issue.  If your state has sales tax, you need to pay the sales tax. Problem was places were not collecting it which puts you the buyer in the responsibility of paying it to the state yourself which is a PITA and thus no one does it which as was mentioned by someone else makes every day folks criminals.
In NY there is a safe harbor calculation for out of state sales tax (valid for all your purchases except those purchases over $1,000); which makes it fairly easy to comply.  I doubt the state will reduce the percentage even if more online business charge local sales tax though.

We will see.  Honestly the sales mins/company size mins that are being talked about where below a certain size you don't have to do the sales tax should at most be a short term thing.  A couple year period that allows smaller businesses some time to comply, since the cost of software updates, or finding new credit card processor may be a big hit for them.  But you can't keep it indefinitely, you are just asking for fraud.  Someone will just keep setting up new companies, they will have a website which is just a portal to a different company, soon as it nears 100k in sales, they swap over to the next company they set up and so on.  End of the year they have 23 companies that made $98,000 each that year.  So leaving exceptions is just setting things up for future loophole jobs by some businesses.

Far as people reporting, most people are probably under the 1000 bucks a year limits.  But there are some people who buy everything online.  My guess would be if you plotted it, there are the bulk of folks under 1000,  they buy a few things here and there thru the course of the year, and then there are a few people who buy virtually everything online and have 10-20k worth of stuff a year.  Not a lot of folks in the in-between ground.

Offline harry_

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Re: South Dakota v. Wayfair Inc.
« Reply #18 on: June 25, 2018, 08:49 PM »
For me, living in a sales tax free state, I cannot help but wonder how long this will take to "flip". As in you bought it from 'this' state, therefor you pay 'this' state's sales tax, the same as if you walked in off the street.


Personally, I think that for the most part taxation is theft. However that is a conversation for a different time on a different forum.
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Offline McNally Family

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Re: South Dakota v. Wayfair Inc.
« Reply #19 on: June 25, 2018, 09:51 PM »
For me, living in a sales tax free state, I cannot help but wonder how long this will take to "flip". As in you bought it from 'this' state, therefor you pay 'this' state's sales tax, the same as if you walked in off the street.


Personally, I think that for the most part taxation is theft. However that is a conversation for a different time on a different forum.

The idea of paying sales tax in the state of purchase, not the state of your residency, certainly has merit.  It would not only solve the complicated issue of how to calculate sales tax for each sale, since local business already has the tax collection systems in place, but would be an incentive to shop from a state with a lower sales tax rate.

If you really think about why states feel they should be entitled to collect a sales tax to begin with, it involves the idea that since they are providing services such as police and fire protection along with utilities for a brick and mortar business, the tax helps finance those issues.  When they start collecting sales tax from out of state sales, they are now saying we have the right to tax your income a second time, regardless of where you spend your money.   
GREEN: In order of purchase = | CT26  |  RS 2 E | Hose w/ Sleeve 3.5m | 115mm X 226mm Hand Sanding Block | 80mm X 133mm Hand Sanding Block | HSK D21.5 5m hose | CT Boom Arm Bundle Set | 1080 Plate for custom MFT | OF 1400 EQ Router (metric) w/accessories | SYS-Rock BR10 | Cordless Sander RTSC 400 Set |  Cordless Delta Sander DTSC 400 Basic | Linear Sander LS 130 | PDC 18/4 set | CXS  2.6Ah Set | Installer Cleaning Set (2018 version) |  New style Festool hose D 27/32 x 3,5m AS/CT | Replacement Hose Garage | Remote control CT-F I/M-Set | MFH1000 work stool | Next purchase: TBD

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Offline Paul G

  • Posts: 1920
Re: South Dakota v. Wayfair Inc.
« Reply #20 on: June 26, 2018, 01:36 AM »

So as you can get from my post above, I'm all for this.  But in the end, many brick and mortars failed on their own and or were dead in the water even if Sales tax systems were firmly in place from day 1 of internet commerce.  Camera stores were very much one of the types of stores that were doomed as they had set themselves up to be easy pickings with few people who would shed a tear.

Most places would be lucky if they even had one camera store, thus most places someone had a basic monopoly pre-internet.  The prices they charged were thru the roof and until the internet people just had no idea how overcharged they were.  I want to support local business and have no issue paying a bit more to keep a local shop going and understand they have overhead, but you can only go so far.  I would visit some camera stores, but just that act was hard.  You want to sell me stuff, but you are open 9-5 M-F, so when am I suppose to go to your store?  Take time off work to go shopping?  A few might have a small Saturday window of time, again how is this going to work. Not a lot of people are eager to get up early on a Saturday morning to hit a place up before they close at noon.  These stores had the ability to run these hours in pre-internet days, pre big chain store days.  Many just refuse to adjust, and thus no one was coming thru the door.  This aspect isn't unique to Camera stores, lots of mom and pop retail outfits have the same issue, there are tool stores near me with this issue, for me to buy something from them I have to race the clock on a Saturday morning, just to get there and find they don't have what I want in store, and once you don't carry it in store, there really is no point for me to buy from you.

Then even when you get in the camera store, they often have limited subset of stuff, especially if say you run a camera that isn't F or EOS mount.  Most lens in stores will be kit lenses, which again not many people have a need for.  So there isn't even much for me to look at.  And then if there was something more of interest it becomes really hard to want to do business if the store is trying to sell an 800 dollar lens for 1400.  End of the day something like camera gear doesn't involve a lot of hands on. Once you are in a system, know the companies stuff, you don't tend to need to hold it to know what you are buying.

Far too many camera shops were living like museums. Tiny selections of stuff, lots of old gear that's been sitting on the shelf forever, tons and tons of generic junk.  In the end, it's not hard to see why people would just buy from BH Photo.  Everything you can want, great service and I'm totally fine with buying from a computer that strictly obeys the Shabbat, thus I have to wait till Sunday to place an order, it's still way more convenient than trying to run across town during lunch.

Yes, "show rooming" can be an issue.  But a lot of that just comes down to adjusting business models. This is where you see companies going to direct sales.  Apple, Microsoft, New Balance, etc. Just open up stores, sell for the same price as online and if someone comes in to just look at stuff, if they buy your product, they bought it someplace.  This was something nice with Sony Style stores (no longer exist far as I know), it fixed the show rooming issue since the company provided the show rooms for people to go hands on with something, then order it anyplace else.   Places like Best Buy could adjust and make deals with manufactures to be showrooms, instead of complaining that people look but don't buy, make deals with manufactures to charge the manufactures to display their goods and provide info to folks.   In the end it won't change the matter that if you are a retailer who sells stuff that you do not make, you very well may not have a business model in time.  Grocery stores, and lumber yards are fine.  No one is going to open up stores just to sell eggs (I say this but you never know), or just 2x4s.  But if you sell things like computers, electronics, cameras, sneakers, etc. You need to be looking forward to a time when those brands just have their own stores/show rooms and sell stuff direct. 

Consumers prefer to cut out the middle people.  Apple stores boomed because people could walk in and play with stuff, maybe buy it there, or maybe go home and order a custom configuration.  Sometimes the reason business go out of business is because their business model is dead.  Stores like sears are facing this reality head on.  They sell stuff people buy. But no one likes it when they are just walking thru a store and staff pounces on them. You glance at a refrigerator and someone comes up and starts talking to you. People don't want staff to ever approach them, they want to look and if they have a question there be someone to talk too, but to never be approached without asking to be approached.  End of the day, a lot of the stuff in a sears I could buy without ever having a need to see it in person.  A set of socket wrenches isn't like a pair of pants, I don't need to try the sockets on.  Some of this is generational, but in the end, if I go into a store and staff starts approaching me, asking me questions, offering help, etc, I leave, plain and simple.

Business models change.  People don't buy from the sears catalog anymore. People don't buy from door to door salesman.  If you make your living selling someone else's stuff, you have to be mindful that you probably will find yourself out of business. No different than service industry, if you sell a service, and people decide they don't need the service it's over.  People decide they can cook food at home by converting raw goods into finish product, you can't complain very much about why your salad or cupcake business went under.

Far too many businesses used the sales tax as a scapegoat for their problems which were still there even without the sales tax situation.

You make excellent points. I used to have a local camera shop, a licensed Nikon dealer who had no problem competing with BH and Adorama on list prices, but even then many customers went for the sales tax cheat or especially the grey market factory unauthorized no warranty imports. I was sad to see them go, they helped me out many times with gear I needed last minute for a hot job. I overheard many a conversation with customers saying they can get it online for no tax and wanting to match the final OTD price.
+1

Offline JimH2

  • Posts: 608
Re: South Dakota v. Wayfair Inc.
« Reply #21 on: June 26, 2018, 11:49 AM »
Not paying sales tax is a plus on any sale, but the bottom line price with or without sales tax is not really a consideration when convenience is added into the recipe. I will gladly pay a few dollars more if I don't have to drive somewhere to pick it up. I value my time too much to go to a store for something I don't need today.

A reasonable person who receives a bump in salary will save more money or pay off bills. A government will not just add it to the pot, but immediately spend it or worse pre-spend it. I think the governor of Wisconsin has said he plans to offset spending with whatever is received so they are the exception.

The most pathetic example of government spending an unexpected surge in income is the tobacco settlement of the 90's. States won an inordinate amount of money from the tobacco companies and it was supposed to be spent on anti-smoking programs. Many believe not enough has and others note that portions of the settlement have been rolled into the state coffers to be blown on something else. The award was/is spread over 25 years, but as with all government many states could not wait. Many sold Tobacco Bonds that are funded by the tobacco companies sales pushing the risk of receiving payment to the bond holders. Some states took it a step farther and backed the bonds with secondary pledges meaning they need cigarette sales to maintain a certain level in order to make the bond payments. If sales go down the states will have make up the difference.

I don't smoke and never have, but this is case and point of the government spending recklessly whenever unexpected money is added to the coffers. In the case of smoking I don't like the government picking and choosing which products they want to decide we should or should not use. There is plenty of other low hanging fruit with alcohol and guns being the lowest.

Offline RDMuller

  • Posts: 294
Re: South Dakota v. Wayfair Inc.
« Reply #22 on: June 26, 2018, 01:05 PM »
I have expressed my views on this earlier on this thread.  The subject of camera stores has been mentioned. Can you believe there are NO camera stores in Chicago?  There is somthing in the far out suburbs. Why wil no one start one?  Combined state, county and city sales tax of 10.3% has driven it to B&H in New York

Let's keep the playing field level. Taxes do fund roads, schools, police and much more.  Yes there will be some waste, but that has absolutely nothing to do with this issue.

Offline cpw

  • Posts: 79
Re: South Dakota v. Wayfair Inc.
« Reply #23 on: June 26, 2018, 05:58 PM »
Far as people reporting, most people are probably under the 1000 bucks a year limits.  But there are some people who buy everything online.  My guess would be if you plotted it, there are the bulk of folks under 1000,  they buy a few things here and there thru the course of the year, and then there are a few people who buy virtually everything online and have 10-20k worth of stuff a year.  Not a lot of folks in the in-between ground.

"Using the sales and use tax chart below is an easy way to compute your liability for all your purchases of items or
services costing less than $1,000 each (excluding shipping and handling) that are not related to a business, rental real estate, or royalty activities."  It's easy to rack up a lot of volume, but not exceed $1,000 on any transaction; but buying a nice laptop, camera, Festools, etc. can easily exceed it in one transaction.

Otherwise the assumption is that you'll spend 0.058% for out-of-state sales tax purchases, so you'd need to make roughly $1.2MM to hit the appropriate $737 of tax owed on $10,000 of out of state purchases using the safe harbor formula.

Offline neilc

  • Posts: 2502
Re: South Dakota v. Wayfair Inc.
« Reply #24 on: June 26, 2018, 06:21 PM »
I have expressed my views on this earlier on this thread.  The subject of camera stores has been mentioned. Can you believe there are NO camera stores in Chicago?  There is somthing in the far out suburbs. Why wil no one start one?  Combined state, county and city sales tax of 10.3% has driven it to B&H in New York

Let's keep the playing field level. Taxes do fund roads, schools, police and much more.  Yes there will be some waste, but that has absolutely nothing to do with this issue.

RD - Helix Camera WAS in the west loop of Chicago for years and a great camera store.  3 stories in a converted warehouse.  Looks like moved beyond O'Hare to Itasca now.

The carry most brands and cater to professionals.  Also had a robust rental inventory of lenses, lights, tripods, etc. 

https://www.helixcamera.com

Tamarkin is also an excellent camera store.  Started in NYC below the Leica gallery on Broadway.  A few years ago,  they relocated to downtown Chicago.  They are still downtown.  They cater to the Leica crowd.

https://www.tamarkin.com


Offline DeformedTree

  • Posts: 159
Re: South Dakota v. Wayfair Inc.
« Reply #25 on: June 27, 2018, 12:09 AM »

You make excellent points. I used to have a local camera shop, a licensed Nikon dealer who had no problem competing with BH and Adorama on list prices, but even then many customers went for the sales tax cheat or especially the grey market factory unauthorized no warranty imports. I was sad to see them go, they helped me out many times with gear I needed last minute for a hot job. I overheard many a conversation with customers saying they can get it online for no tax and wanting to match the final OTD price.

There is no question someone people will just buy online for "no sales tax" or what ever reason they have even if it makes no sense.  Just think of people who will drive cross town for gas that is 2 cents cheaper. They won't do the math of how much it cost to "ship" their car to that remote gas station.  Normal people realize that 2 cents a gallon difference on 20 gallons of gas is just 40 cents, pick gas station on what is easy to get in and out of, or you trust using your credit card at.  People will simply spend more money to save less than what they spent, it all in their heads.  Not much ships for less than about 20 bucks.  So if sales tax is 6%, you need to spend 334 bucks to cover the shipping with tax savings.  You can certainly do that, but it's not the bulk of purchases.  But in the end, lots of people just think "no sales tax".

Look at living on a state line.  People will drive from one state to the other to buy booze in the other state because they sell it in grocery stores, then drive back into the first state to a different grocery store to buy groceries because that state is tax free on groceries, and back and forth for this or that.

There are people who will send in an 11% rebate from menards on a 3 dollar item, they never stop to think about the insanity of it or how much the stamp and envelope cost.  People will drive back across town to return something because they found it at a different store for 2 dollars less. They will buy 10 boxes of cereal because it was a buy 9 get the 10th for 1/2 off sale.

I agree on the convince of a local store, that's why I try to support them, but their are limits to everything.  I don't want to have it all go away.  A large portion of them simply need to adjust and switch to evening/weekend hours.  Maybe be closed tues/weds. instead of sat/sun.  Maybe open at noon, stay open to 9pm.  You have to make it work for your customers.  A lot of businesses still set up to serve trades, but fewer trades go to those stores, they get stuff online or from big chain national distributors. So operating around an "open at 6am, close at 3pm, m-f" isn't going to help you stay alive or bring in customers.   Trades don't tend to shop at big box stores, but they sure as heck do when they come short on material, break something, work past 5 and need something or work on a weekend.  The mom and pop store can't complain much when they weren't open on weekends, and HD/Lowes were open till 10PM, plus will allow you to return anything at any time as long as it was sold by them at some point in time, and you try to return it within the next 1 million years.   Walk into a Home Depot with a plumbing fitting you bought 5 years ago at Lowes, but HD once sold the same SKU,  heres your money, have a nice day.  A lot of the business that die just can't offer that.

Offline SRSemenza

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Re: South Dakota v. Wayfair Inc.
« Reply #26 on: June 27, 2018, 12:25 AM »
The thing with all the math of online vs  going to the store is that much of the time when you factor everything in tax/no tax/ shipping/ "free" shipping , etc is that many times if not most of the time the total cost is still less online. I know shipping isn't really free but it doesn't change the fact that the all in total cost is  still  usually less online.  Not talking groceries here, or big heavy items, but pretty much  everything  else.

Seth

Offline DeformedTree

  • Posts: 159
Re: South Dakota v. Wayfair Inc.
« Reply #27 on: June 27, 2018, 11:55 PM »
As I noted, their will be a lot of regional variation too.  If there are few stores, online will be cheaper, plus you don't have to drive an hour to maybe find it.

I buy stuff online like anyone else, but it's not my first want.  Another aspect is the rather bizarre fact that buying stuff in person in a store lets you stay anonymous, where online were you are thousands of miles away the instantly know a lot about you and stuff you don't want them to know but it's not really possible to buy stuff online without giving information.

All of it is a balance, some websites do a proper job and get business because they made a quality site and focused on the right stuff or found a need.  Just like some brick and mortars do a good job.  I want good businesses to succeed, online or in physical space.  But just so many other things in life, once something is gone, it's gone.  Losing physical stores is a path I don't want. I don't think enough people think long term and picture how awful things will be if basically all shopping is forced online.  Not just the ecological impact, but how the competition in a lot of areas will go away, shopping will become a mystery, "what am I actually buying, what kind of quality is it", among so many other problems of online.  People have a tendency to think they can do without "the old" way of doing something until it's gone and the real issues of "the new" really start to show themselves.

Now just sit back, wait for a good solar flare to take down internet for half the world for a year.  That will get fun.  Like a super sized version of watching people who are glued to their phones try to survive someplace with no cell reception for a weekend, completely baffled the locals can survive.

Offline SRSemenza

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Re: South Dakota v. Wayfair Inc.
« Reply #28 on: June 28, 2018, 01:21 AM »
As I noted, their will be a lot of regional variation too.  If there are few stores, online will be cheaper, plus you don't have to drive an hour to maybe find it.

I buy stuff online like anyone else, but it's not my first want.  Another aspect is the rather bizarre fact that buying stuff in person in a store lets you stay anonymous, where online were you are thousands of miles away the instantly know a lot about you and stuff you don't want them to know but it's not really possible to buy stuff online without giving information.

All of it is a balance, some websites do a proper job and get business because they made a quality site and focused on the right stuff or found a need.  Just like some brick and mortars do a good job.  I want good businesses to succeed, online or in physical space.  But just so many other things in life, once something is gone, it's gone.  Losing physical stores is a path I don't want. I don't think enough people think long term and picture how awful things will be if basically all shopping is forced online.  Not just the ecological impact, but how the competition in a lot of areas will go away, shopping will become a mystery, "what am I actually buying, what kind of quality is it", among so many other problems of online.  People have a tendency to think they can do without "the old" way of doing something until it's gone and the real issues of "the new" really start to show themselves.

Now just sit back, wait for a good solar flare to take down internet for half the world for a year.  That will get fun.  Like a super sized version of watching people who are glued to their phones try to survive someplace with no cell reception for a weekend, completely baffled the locals can survive.


Well I live i a rural area. But I am not far (10 - 45 min) at all from plenty of big boxes and a good many independent stores as well. In both small towns and small to medium sized cities. Same items are almost always less online. I have a hard time believing that in large cities those items would be the other way around (cheaper in the stores). Maybe the things you are purchasing are the exception? I don't know.

I do like being able to shop and get my hands on things in person, and I do like having stores available. I just don't buy it that the majority of things, in the majority of stores,  are less expensive than online.

Personally I find the combination of selection (' Oh, there are three of that item that are better than the two available in the store? ' ), and all the information available (reviews, videos, pictures, usage info, etc) about the things I am buying online make it less of a mystery about the products and quality.

I guess we just have different takes on it?

Seth

Offline DeformedTree

  • Posts: 159
Re: South Dakota v. Wayfair Inc.
« Reply #29 on: June 29, 2018, 12:17 AM »

Well I live i a rural area. But I am not far (10 - 45 min) at all from plenty of big boxes and a good many independent stores as well. In both small towns and small to medium sized cities. Same items are almost always less online. I have a hard time believing that in large cities those items would be the other way around (cheaper in the stores). Maybe the things you are purchasing are the exception? I don't know.

I do like being able to shop and get my hands on things in person, and I do like having stores available. I just don't buy it that the majority of things, in the majority of stores,  are less expensive than online.

Personally I find the combination of selection (' Oh, there are three of that item that are better than the two available in the store? ' ), and all the information available (reviews, videos, pictures, usage info, etc) about the things I am buying online make it less of a mystery about the products and quality.

I guess we just have different takes on it?

Seth

I think you are mis-understanding, we are largely on the same page. Pretty sure I didn't say the majority of things are more expensive online.  It comes down to what you are looking at, like I mentioned, things that got E-commerce going (books, electronics) a largely going to be cheaper online, that's why they where instant online hits.  Other stuff won't be (buying stuff for building/remodeling house, definitely not cheaper online). 

Large suburban areas have a lot of stores and a lot of buyers.  So stuff is generally cheap and not far away.  Big boxes will be sure to have their prices the same as the big box on the other side of the parking lot.  You can see the variation just in one chain of stores.  Just because it's a Home Depot, doesn't mean the prices are the same in all HD's, the prices can vary. Just like Wal-marts.  Go to a Wal-Mart in a college town, then go to a Wal-Mart in a rural area that has killed the competition and the prices on stuff can double.

I've lived in multiple states, in multiple ends of the country in multiple development levels (extreme sticks, extreme city, suburbs).  The variations between them can be massive, and the differences online verses in person can be huge.  When you get areas where there is a lot of retail, but the cost to be retail is not thru the roof, stuff can be cheap, but it will also vary a lot by what it is.  I've lived in areas where it was cheaper to go to restaurants and grab something than it was to buy the stuff at a grocery store and make it.  Other places the idea the math would work like that would be preposterous.  Thus it's not a surprise to me their are companies trying to make shipping boxes of stuff you then cook up. Other places people would just continue to be baffled by the how/why of it. Sometimes it comes down to general cultural trends in a region that drive what retail existed and what prices were the expectation.  But like I mentioned before, you get too built up of a region and the cost of operating there gets high, shift goes back to being cheaper online for more stuff.  Go the other extreme (Alaska) prices shoot back up in person again, but also shipping stuff to your home in Alaska will be really expensive too.

What stuff you are buying is a key factor in what works. Without question that is the driver of things.

Some of what you mention isn't an online vs in person issue.  Internet has made information products available so that if your buying online or in a store, you know a lot more.  This is what has killed a lot of stores.  The idea of "knowledgable staff" has become largely pointless as the person coming in the store looking for something has probably looked into the specific product in far more depth info on the stuff than the sales person and doesn't care what the sales person has to say.  Reviews and so forth just the same.  But for a lot of stuff folks still want to give it a look in person and then it comes down to where they buy it.  And again, as I mentioned with my bullets early in this thread, it's the options/selection that was a big driver of online sales.  A lot of stuff simply can't be bought in person, so it's a default online sale.  Other things can't be bought online, or just insanely impractical. 

But it gets back to the amount of information.  Some goods have great information, you know exactly what it is being sold online. Other stuff is completely generic, no manufacture, no manufacture PN,  no dimensions or other key info, so you're still back to the going to the store with tape measure in hand.  This is where a lot of building materials/supply run into problems online, the information given just doesn't tell you what they are trying to sell you, or they are at least honest and tell you that it's generically X and could be one of any number of manufactures.   When I buy stuff, I want to know very specifically what something is. This is why I prefer to buy stuff straight from manufactures when I can. I've recently been buying some electrical stuff online from the manufacture, they are more expensive than local options, but just the fact they have detailed information, you know exactly what your getting, and have more options, I've bought from them, even stuff I could buy locally cheaper. I appreciate what they are doing.  It's much like buying from McMaster Carr.  They are crazy expensive for say nuts/bolts/screws than what I can buy at the store around the corner.  But they have everything, they have detailed info of exactly what your buying, they have all the things you need, not half the stuff, so you end up buying from them.  They are a powerhouse on the internet (having transitioned from their famous yellow catalogs). Everyone knows they are over priced and if you have a local shop for almost anything they sell it will be cheaper.  But having a great website with all the info, a huge selection and so forth folks still by from them.

Someone mentioned buying a Honda mower online.  So I looked up my Honda mower.  Amazon price is the same as Home Depot.  No one online is cheaper than the local store, some online are more expensive though. Some I have to pay shipping on top the the base price. But with all mean I can't have it in 10 minutes like the local store.

An example of something I went thru before,  Wago connectors,  I can go to menards and get a 50 pack for $13.85,  amazon wants $15.95 and I have to pay shipping unless I buy enough to get to free shipping.

I don't go checking everything I need to buy against online, but I struggle to think of very much outside of things like electronics where online was cheaper when I had an option to go either way, especially once one has filtered out sketchy retailers where it doesn't matter what the price is, I'm not going to attempt to buy from them. 

But depending on what your buying or where you live, things could very much be different.  But I'd definitely suggest people do a little bit more checking before just always assuming online is cheaper.  The gaps on things closed a lot over the years.  The sketchy places and places that were loosing money to gain marketshare online largely went away or raised prices.  Retail stores adjusted prices to compete with online.  I've gone thru this with friends and co-workers who were internet for almost everything. Once I pointed out stuff they where buying/bought was the same price or even cheaper at a local store, it got them to start re-thinking their shopping.  It's not 2002 anymore.