South Dakota v. Wayfair - bad for dealers?

[Commonproject]

Any tax guys know if this ruling will start having impacts this year regarding sales tax that could negatively affect dealer business models?

For reference, previously e-commerce merchants were not required to collect and remit sales tax on transactions where they did not have a "nexus", or physical location. This is why when you buy a watch from a dealer, there isn't a sales tax on top of the wire price, but there will be if they're shipping it within the same state where their company/operation is registered; to avoid it in those situation, they would offer to ship the box out of state to avoid sales tax.

However, South Dakota v. Wayfair won in the favor of South Dakota where sales tax is now collected even if a nexus doesn't exist. California, Texas, and New York are set to adopt economic nexus laws in 2019 and others have already started to draft their own.

As a result of this and the way I read it, dealers will soon have to charge sales tax on top of the wire price, which they either have to eat or push it onto the customers. If I am right, this would be a 8-10% increase in dealer prices across the board.

[tyler1980]

you always owed the tax. now you can pay it conveniently

the difference is the dealer collects it for you.

[Commonproject]

Originally Posted by tyler1980

you always owed the tax. now you can pay it conveniently

the difference is the dealer collects it for you.

When people buy from a dealer today, I doubt any are actually paying taxes on top of the wire price, even if they're supposed to. Now they can't avoid it is what I'm saying. Many dealers say "wire price is better than going to an AD because you don't have to pay sales tax even if you pay retail". Are they just not being honest?

[tyler1980]

Originally Posted by Commonproject

When people buy from a dealer today, I doubt any are actually paying taxes on top of the wire price, even if they're supposed to. Now they can't avoid it is what I'm saying. Many dealers say "wire price is better than going to an AD because you don't have to pay sales tax even if you pay retail". Are they just not being honest?

correct they are not paying the tax. Using tax evasion as a way to get a competitive advantage is not the same thing as offering better prices. With no physical store an online retailer already has an advantage of not having stores and large overhead costs.

Legitimate B&M cant compete with that and its not exactly a level playing field when a B&M collects the sales tax you owe and a online retailer doesnt.

a wire price from a dealer is usually similar as a cash price AFAIK.... if they are adding on PayPal fees or cc fees thats up to them and you if you want to pay that way.

[Commonproject]

Originally Posted by tyler1980

correct they are not paying the tax. Using tax evasion as a way to get a competitive advantage is not the same thing as offering better prices. With no physical store an online retailer already has an advantage of not having stores and large overhead costs.

Legitimate B&M cant compete with that and its not exactly a level playing field when a B&M collects the sales tax you owe and a online retailer doesnt.

a wire price from a dealer is usually similar as a cash price AFAIK.... if they are adding on PayPal fees or cc fees thats up to them and you if you want to pay that way.

Right, so this goes back to my point that with this ruling and as states adopt, dealers who weren't abiding by the rules (which sounds like it's many) will be negatively affected since they'll be forced to collect the sales tax and customers will be paying a higher price at close.

[77T]

Originally Posted by Commonproject

Right, so this goes back to my point that with this ruling and as states adopt, dealers who weren't abiding by the rules (which sounds like it's many) will be negatively affected since they'll be forced to collect the sales tax and customers will be paying a higher price at close.

SD v Wayfair has changed the theory of nexus - from physical to virtual. That was the crux of the SCOTUS decision.

You have on small bit backwards (but it doesn’t change your point that SD b Wayfair could raise prices). What’s backwards is this: no seller is “forced to collect sales tax”.

You will find no law on any books that force sellers to collect tax. What the law dictates is a seller must REMIT sales tax to the state/county/city.

Large dealers/sellers who wish to keep their profit margins intact will decide to pass the cost onward perhaps. I think the smaller sellers will not.


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[tyler1980]

Originally Posted by Commonproject

dealers who weren't abiding by the rules (which sounds like it's many) will be negatively affected.

i think its the opposite. It will benefit those who are playing by the rules as they have been negatively affected for a long time.

B&M cant compete with online sellers who dont pay/collect tax. Does anyone really want their town to have zero stores of any kind? if you extrapolate that out thats what you get.

A level playing field is good IMO. Its not necessarily about taxes either, just about not allowing un fair advantages because of the method of the sale. Its being used in the same state regardless of where it was bought. Online already has an advantage built in based on overhead costs.... so if they still cant offer lower prices thats on them

[CamSLC]

Tax laws need to evolve with the times.

Ironic and hypocritical that it's South Dakota. A state that is well known for advantageous trust and estate laws to skirt taxes with no residency requirements.

[mjr24]

No doubt it is.....I’d rather buy from a well-vetted private seller and save on the tax now.

[SoTaxLaw]

Originally Posted by mjr24

No doubt it is.....I’d rather buy from a well-vetted private seller and save on the tax now.

Omg I’d ask what you think you’re saving but you’re better off to edit or delete your post.

[MILGAUSS88]

Originally Posted by mjr24

No doubt it is.....I’d rather buy from a well-vetted private seller and save on the tax now.

A private seller by its definition is going to have very few sales.
How could they possibly be well-vetted?

Perhaps you meant a grey dealer?
Well, they are going to have to start charging sales tax or risk losing their business. They may get by with tax evasion for a while but eventually they will be caught.

[77T]

An update - at lest for eBay dealers. At the end of August they amended their User Agreement on this topic.

“In any jurisdiction where eBay has an obligation to collect sales taxes on sales you make using eBay Services, we may collect such sales taxes from you via the payment method on file under the terms of the Billing Agreement or via any other means available to us.”




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[MILGAUSS88]

Originally Posted by 77T

An update - at lest for eBay dealers. At the end of August they amended their User Agreement on this topic.

They have been collecting sales tax since January 1st in the USA.
If you use eBay global shipping, they had been collecting duties before that date.

[77T]

Originally Posted by MILGAUSS88

They have been collecting sales tax since January 1st in the USA.

If you use eBay global shipping, they had been collecting duties before that date.

Yes but they updated the terms so they can actively charge it against sellers who failed to remit. It’s mostly strengthening an enforcement step.

Now a seller is netted just like the fees. For example, selling a car where the only online payment was $1000 and the balance was due at delivery. eBay previously had little recourse to attach future sales revenue. Now they do.


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[othertbone]

It is already happening nationwide since January I think. If you are a large enough seller, you must collect tax. Smaller business don't have to as I understand it.