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Ina Steiner on EmailIna Steiner on LinkedinIna Steiner on Twitter
Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

4 thoughts on “States Keep Changing the Rules on Online Sales Tax”

  1. Don’t take PA’s claims at face value. These fools couldn’t do a budget estimate if their lives depended on it. 2002 they stopped contributing to the pension fund, thinking the market would go up forever. 2007 or so they cut corporate taxes expecting a windfall and created a deficit so bad they tried to raise sales tax for the following decade. Ran an amnesty program twice and both times brought in less than the program cost. Consolidating (offshoring) IT services, massive costs to save virtual pennies. They have no idea how any of this will work out but it never stops them from opening their noise holes.

  2. California also removed the 200-transaction threshold. If 200 transactions is reasonable for South Dakota, it should have been 9,000 transactions in California with 45 times the population of South Dakota. If other populous states retain the 200-transaction threshold, they may ensnare small sellers with revenue less than the South Dakota Wayfair revenue threshold.

    Meanwhile, eBay continues to expand market facilitator sales tax collection, but with minimal support to sellers who may require information about taxes collected on their behalf. So far, eBay has ignored requests for reporting going back more than 90 days. The Tax Collected by eBay column didn’t appear in the difficult to access Orders report until mid-April, too late for Washington State based sellers who must report revenue and amounts collected by eBay required in connection to Business and Occupation (B&O) tax calculation.

  3. One thing states need to keep in mind is that $100K is barely comfortable for a household of four when you consider all the taxes (whether personal, business and/or self-employed) and business expenses that are deducted from that. Of course, that’s just in one state, but what if the bulk of a seller’s sales come from that state?

    It would seem that each state will have to have different thresholds based on sales tax revenue limits. For example, California has a far higher population and far more in-state businesses to generate sales tax locally than a state like Pennsylvania. So, it would be appropriate for California to have a higher threshold than Pennsylvania.

    There should be an absolute minimum that a state can go, though, and I believe $100K is too low. States must consider the percentage of a seller’s total sales that were generated within their state. For example, if a seller generated 75% of their total sales within that state, then a threshold of $100K wouldn’t leave much for a single- or even double-income family after everybody else has taken their “share”.

    There are just so many factors to consider and each state requiring the tax has different needs. That’s a lot for one state to consider and they expect a sole proprietor to keep up with multiple states? Maybe they should allow us to deduct the time and expense of figuring it all up, doing all the paperwork and making all the payments.

    If they’re going to make us do their work for them, then they need to pay us something in return. After all, if they had been educating their population and enforcing their use tax laws to begin with, then we wouldn’t even be having this conversation. It’s a lot easier for them to put it on our shoulders.

    Since this topic first became hot however many years ago, I have always said that internet sales tax should be handled on the federal level since it involves interstate commerce. When you consider all the different laws, thresholds, and what-not that each state is currently coming up with, not to mention all the changes they keep making, there’s no way a sole proprietor could keep up with all of that.

    As a sole proprietor who also assists her elderly folks with their bookkeeping and other things around the house, I’m a single-income person who wears all the hats in her business. I would have to hire someone to handle it all and that digs into my business’s and my own income — on top of the sales tax, income tax, and all the other costs a business has to cover.

    When the first states started enacting their internet sales tax laws, I just knew it was going to get crazy. They all really need to get over themselves and hand the reigns over to a single entity, whether it be federal or another designated by states. At the moment, they’re all just making fools of themselves by showing how little thought they’ve really put into this — all while we little sellers sweat it out.

    Another thing to consider is just how many sellers are looking to move away from these marketplace sites that are currently handling the sales tax for sellers. We’re tired of being taken advantage of, working our tails off as we watch all these hands dipping into our pies.

    As it is, there are so many who don’t have the skills required to set up a standalone site, but even those who do are shuddering at the mere thought of having to handle sales tax for multiple states on their own. That basically means we’re fearing our own success and that’s just sad.

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