Internet Stocks Tumble After SCOTUS Rules On State Internet Tax Collection

The Supreme Court just overturned a 1992 ruling (which had limited online tax collections), thus freeing states and local governments to start collecting billions of dollars in sales taxes from internet retailers that don’t currently charge tax to their customers.

Specifically, SCOTUS upheld a law passed by South Dakota lawmakers in 2016 that requires out-of-state online sellers to collect the state’s sales taxes if the companies have more than $100,000 in annual sales of products to South Dakota residents or more than 200 separate transactions involving state.

Siding with states and traditional brick-and-mortar retailers on a 5-4 vote, Bloomberg reports that the court overturned a 1992 ruling that had made much of the internet a tax-free zone. That decision had shielded retailers from tax-collection duties if they didn’t have a physical presence in a state.

Delivering the opinion of the court, Justice Anthony Kennedy said the physical presence rule in that former case is unsound and incorrect.

This follows last year’s string of successes, when retailers helped to kill a levy on imported goods and saw their federal taxes slashed with a national overhaul.

The full implications are not clear for now but leveling the playing field with brick-and-mortar and sent internet retail stocks tumbling...

Wayfair, Amazon.com, Overstock, Etsy, Shopify, Blue Apron among Internet retailers falling on news.

And that is hitting Nasdaq...

 

Finally, we note that this decision comes less than 24 hours after Goldman Sachs told their clients to go overweight tech stocks...

Internet retail analysts are rushing to explain away this decision as a nothing-burger, noting that the retail brick-and-mortar survivors have one fewer excuse to blame for their woes.

“They have, in some ways, been hiding behind excuses like a tax differential,” said Edward Yruma, an analyst for KeyBanc Capital Markets. Their complaints have resonated less in recent years as shoppers’ migration online has been more rooted in convenience than price, he said. “What’s driving the success of online players is this is how the consumer wants to shop today,” Yruma said. “It’s that simple.”

However, as one astute commenter noted, what is amazing is that brick and mortar stocks are trading higher.

Net-net, the consumer just saw the first of multiple VAT-like taxes to be levied, further crushing disposable income, and decreasing standards of living. The ignorance of the average American as to what is unfolding is truly amazing.

Comments

house biscuit DingleBarryObummer Thu, 06/21/2018 - 10:57 Permalink

It's fashionable on the board to criticize Amazon & online retail in general

Also naive. Brick & mortar retail was unable to compete on inventory availability

Online retailing has been a happy world for consumer choice

Those doing cost comparisons conveniently leave out that time is a cost, as is gas, etc

That said, I am dialing back on Amazon because it's clear they're an agent of the cabal

In reply to by DingleBarryObummer

Handful of Dust eforce Thu, 06/21/2018 - 11:08 Permalink

How are small businesses going to deal with over 16,000 tax jurisdictions? Each city, county, etc. Unpossible!

Congress is going to have to step ion and straighten this out imo. This ruling is as knuckle brained poor as their Obamacare ruling that is also pro-tax.

Trump is against tax increases for small businesses so I doubt he'll like this ruling. Anyone else hear his speech to the small businsses forum of America the other day? he got a standing ovation several times when he bashed taxes.

In reply to by eforce

Baron von Bud Handful of Dust Thu, 06/21/2018 - 11:45 Permalink

Consider the knock-on effects. A retiree living in a high sales tax state and formerly buying online will save big by moving to a low sales tax state. Scottsdale, AZ has a sales tax over 11%. Not good. Most low sales states have high property taxes (Texas for example is 2x Arizona).  I do think this ruling will have a considerable effect on people's relocation plans and will reward well run states.

In reply to by Handful of Dust

snblitz Handful of Dust Thu, 06/21/2018 - 14:17 Permalink

It is going to be beyond horrible.  It is already horrible. A past business of mine is still being pursued by "the city of san francisco" for a single transaction conducted in that city 10 years ago that it does not owe.

And not only are there currently 16,000 tax jurisdictions but there will be more as local (city/town) taxes increasingly spring up to take advantage of the new source of funds.

With 16,000+ tax jurisdiction how often do you think one is going to make a mistake that puts you in their punitive crosshairs?

 

In reply to by Handful of Dust

LightBeamCowboy snblitz Thu, 06/21/2018 - 15:12 Permalink

Exactly. It was a nightmare just to keep track of the different % sales tax for 54 counties in California when I was based there. I finally stopped selling anything into that state after they started sending me threatening letters in Oregon telling me if I had "sales agents" in the state then I had to collect tax for them. Anyone at the CA Franchise Tax Board with an IQ over 80 could have looked at my website and seen that I had no such agents. As Q would say, "These people are STUPID."

In reply to by snblitz

Rentier88 snblitz Thu, 06/21/2018 - 17:42 Permalink

Nope will be whole new cottage industry created just for POS (point of sale) software that will automatically add the tax based on the location of the buyer and excel spreadsheet it for you and auto deduct it from your business bank account and e-pay all those local taxmen.  Of, course it will be subscription based only so now you'll have to pay yet another monthly subscription fee for this software and continually updated tax database...isn't it wonderful!

In reply to by snblitz

NiggaPleeze Billy the Poet Thu, 06/21/2018 - 15:41 Permalink

The Orangutan is about, oh, 50 IQ points short of the requirement to serve there.  It actually requires being able to understand complex topics, along with their subtleties, and write coherent, complex sentences dealing with abstract matters.

My God, watching Trump try to string together a sentence is painful.  The guy's IQ must be below 90, probably below 85.  Just goes to show, with enough money and help from the Deep State (Global Oligarchs), any idiot can become a billionaire and President.  The system is rigged.

In reply to by Billy the Poet

white horse eforce Thu, 06/21/2018 - 12:03 Permalink

If Killary says "less taxes", you will cheer it regardless that she is lying.

They said all car manufacturers will die once Ford started model T. Did it happen? Of course, this might be to long of a time span for your intellect.

In reply to by eforce

GeezerGeek white horse Thu, 06/21/2018 - 15:09 Permalink

Can you buy a Franklin today? Or an Auburn? or Duesenberg? Many American car manufacturers have gone out of business since the debut of the Model T. Hudson? Studebaker? Rambler? AMC? And on and on. Who is left?

GM died, and came back to life as a zombie named Government Motors. They killed off Pontiac, Saturn and Oldsmobile to survive this long.

Chrysler essentially died, but were sold off to first a German manufacturer and then to an Italian one. Their cars are all based on old German platforms as I understand it. If it weren't for Jeep - which they acquired a few decades back - and Ram Trucks they'd be gone.

Ford is the only American car manufacturer that hasn't died, although soon their only car will be the Mustang.

That prediction that the Model T would kill all the other car manufacturers just has taken a bit longer than expected.

 

In reply to by white horse

Donald J. Trump helltothenah Thu, 06/21/2018 - 11:09 Permalink

The other fair and preferred option would be to eliminate sales taxes at brick and morter.  Since that ain't gonna happen, well.

No one likes paying taxes except people that don't pay taxes like Warren Buffet.  But it is a raw deal for brick and morter when a warehouse can have about a 10% price advantage because they are out of state.  It is decimating local retail trade on so many levels.  I would rather pay sales tax on everything if my local community thrives, as opposed to putting any more dollars in Dr. Evil Bezos pocket.

In reply to by helltothenah

Buckaroo Banzai helltothenah Thu, 06/21/2018 - 14:49 Permalink

"are people here actually cheering for more taxes?!?!?  fucking retards"

There are taxes, and then there are taxes. Sales taxes are excise taxes. The thing about excise taxes is, you can legally avoid them by simply not buying the taxed good or service in the first place. Income taxes, on the other hand, cannot be avoided by the 99% of people who have to actually work for a living, so it shouldn't be difficult to see that, if you accept the premise that governments must be funded by some form of taxation, that excise taxes are a morally superior form of taxation.

The worst part of this is, obviously, the burden that will be placed on small internet retailers for charging, and remitting, these taxes. But this isn't rocket science, and third-party services can probably step up to take this burden off of small businesses, just like payroll tax services step up to simplify the burden of payroll tax compliance.

It's a ruling that makes sense when you think about it.

In reply to by helltothenah

XBroker1 house biscuit Thu, 06/21/2018 - 15:06 Permalink

Unless you start building flat screens in your basement, everything you buy is a product of the cabal. Slave wages in 3rd world countries are bc of the cabal. The chemtrails are, the vaccinations... Cutting back on amazon is like taking the filters off your cigarettes. The smoke is shorter, so I'm smoking less.

In reply to by house biscuit

NiggaPleeze Hammer823 Thu, 06/21/2018 - 15:14 Permalink

Can you give some examples please?  Bearing in mind:  Free 2-day shipping with Amazon (for 95% of my purchases there, and yes it requires PRIME for $100/year but that also provides video and streaming music service plus other stuff, and frankly I place enough Amazon orders as I live in the boonies most of the time that shipping pays for itself and is actually cheaper than gas to drive to the nearest mall); huge selection and with a huge base of reviews.  If I have to buy 10 things, I don't want to go to 20 sites to find the best price and end up logging on, adding address/credit card, etc. to 8 different sites.  Time is money too, so I'd rather spend $1 more at Amazon than spend 5 minutes searching for a better deal and the other overhead of shopping at a new site (including doing scam/service reviews).

Since I absolutely loathe Amazon (mainly, Bozos) I would like nothing more than to find a replacement for it.  PLEASE, tell me where.  Unfortunately Walmart absolutely sucks in online, amazingly so really, as they could actually beat Amazon in many ways given they can permit in-store pick-ups and really save on their shipping costs.

In reply to by Hammer823

NiggaPleeze snblitz Thu, 06/21/2018 - 15:22 Permalink

The key on reviews is not to look at the numbers but to read the reviews and particularly the bad ones.  Many of the bad ones are also competitors or bitter arses slamming a product so you need to read those carefully as well.  But there are many good reviews on Amazon that will tell you the precise good points and bad points of a product which can be extremely useful in making a purchasing decision.

As a general matter bad review problem exists everywhere, be it Walmart, Yelp or even your friend telling you their experience with a product.  Some people hate RAM trucks and I just love mine. 

In reply to by snblitz

ASimpleTrader TGF Texas Thu, 06/21/2018 - 10:50 Permalink

This actually helps Amazon as smaller retailers are the ones that can't easily afford to collect state and local taxes for out of state sales, whereas Amazon is large enough to absorb the cost of tracking everywhere that charges sales taxes. It also makes the smaller retailers pushed to use Amazon (and others) virtual storefronts where they can at least track the myriad of various sales taxing entities.

 

In reply to by TGF Texas

MaxMax ASimpleTrader Thu, 06/21/2018 - 11:03 Permalink

The ruling is going to hurt the small internet stores unless the states exclude stores selling less than $100,000 or similar.  A small store that sells a few thousand dollars in a state is going to have a hard time keeping track, collecting and remitting to all the various tax authorities.  I already get states like California, where I don't have any presence, demanding that I pay them taxes; they send threatening letters acting like they have jurisdiction over me when I am on the other side of the country.

In reply to by ASimpleTrader

Adolfsteinbergovitch p4424119 Thu, 06/21/2018 - 12:36 Permalink

You didn't find this job 6 months ago OR you haven't been paid once in 6 months. Supposing you are who you pretend to be, either you try to find new slaves to replace you in your depressing failure of a job in porn, OR yoki are the ringleader, hence far from being this innocent girl you at as an avatar. 

In any case good luck with your depressing honey trap. 

Loser. 

In reply to by p4424119

847328_3527 MaxMax Thu, 06/21/2018 - 11:26 Permalink

Sellers on the internet should not be required to collect taxes since this is the Buyer's responsibility. If a customer buys something from a Seller out of state, that customer should pay taxes to his own state, not the Seller who is not even located in that state.

Lets say the Seller is in Kansas and sells something to a person in NYC and charges no sales tax. The NYC person is then responsible (theoretically) for paying the correct tax to New York State and his city and county. The Seller has no benefit from New York like their infrastructure like police, firemen, roads, hospitals, etc so why should the Kansas seller have to pay anything to NY?

Does not make sense.

Let the Buyer's state collect taxes from that Buyer, not the Seller. The Buyer is in the best position to know what exactly his sales taxes are for his locality, not the Seller.

In reply to by MaxMax

UnderDeGun 847328_3527 Thu, 06/21/2018 - 18:52 Permalink

Same goes for Income taxes. No business should be required to work for any government without compensation AND there is no compensation to any company for calculating, collecting, and forwarding the taxes they collect to the goverment(s) - that is at least theft and at most slavery.  OH WAIT!  You get to stay in business.  That's the compensation.  Do our work or we close your business.  WAIT WAIT again - that sounds like a protection racket.  Geez, it just gets deeper, doesn't it?  So - if the money isn't immediately taken at the point of origin well.... a whole lot of people might just not pay their taxes in a reasonable time frame, or forget, or...

In reply to by 847328_3527

PorscheNoSub 847328_3527 Thu, 06/21/2018 - 19:53 Permalink

This is the most factually correct in my experience. When I had my business and my tax permit, I was collecting sales tax on behalf of my customers to then be remitted to the State.

 

I know the State of Ohio had a line for filing income taxes to report taxes due on purchases made outside the State. It was all self-reporting.

 

Also, as some have mentioned, filing was monthly. And one of the reasons I closed my business and the permit was the State was estimating my sales and demanding payment when I had $0 in in-State sales. This fancy software people are mentioning better be filing, too. I was outside city limits which had its own tax reporting. None of the filing was electronic friendly - not all counties have the budget or tax base to modernize.

In reply to by 847328_3527

snblitz MaxMax Thu, 06/21/2018 - 14:22 Permalink

The $100,000 exemption will not help and it won't last.

You will end up having to file an "exemption" in 16,000+ jurisdiction, and like the tax authority in california (franchise tax board) , you will have to file a complete return with full ledger showing **you qualify for the exemption**.

In other words, you still have to do all the paperwork.

In reply to by MaxMax

PrayingMantis TGF Texas Thu, 06/21/2018 - 10:57 Permalink

 

    ... “ ... “What’s driving the success of online players is this is how the consumer wants to shop today,” Yruma said. “It’s that simple.”  ... 

        ... unfortunately, that is the way it is ... Amazon, eBay, et. al. ... went online as the way to retail, and, consumers who wish to avoid the dreaded “tax” would simply select “out of state or country” products to save $ ... on top of the “lower prices” offered by online sellers  ... “this is how the consumer wants to shop today” ...

 

        ... take, for instance, “Sears” ... they went from “catalog” to “brick & mortar” ... incurring “salaries and wages”, “rents”, “common area costs”, “hvac”, and other “utilities” costs to add to the price of the products ... meanwhile, “online” shops like eBay only maintains their servers and a few technicians to pay ... with Amazon, add the “warehousing costs” to that and a few “bottle-peeing-workers’-wages”, but still, the price of the products are way below the B&M retail pricing ...

 

     ... and look where Sears is now ... they had a great idea ... they should’ve transitioned from catalog to online and skipped the B&M retail market ... well, I know, hindsight is always 20/20 ...

 

 

In reply to by TGF Texas

LaugherNYC TGF Texas Thu, 06/21/2018 - 11:10 Permalink

Just feed more of OUR money to corrupt state houses to hand out to degenerate public unions for votes.

We need a federal law that states ALL public pensions can only draw on money IN THE PENSION FUNDS, and END their limitless call on taxpayers to make up shortfalls.

That would put the USA back on the path to fiscal health in ONE FUCKING MINUTE>

In reply to by TGF Texas

lunaticfringe TGF Texas Thu, 06/21/2018 - 11:12 Permalink

Taxation is theft. Please remember who the bad guys are- it is not competitive enterprise. The whole shit show gets murky when the government starts skimming the profits and deciding winners and losers. Also I note that once again- SCOTUS rules against "we the people" in favor of more government, more taxes. Hardly a shocker- they've been ruling for more government for about 100 years. 

In reply to by TGF Texas