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Thu Sept 1 2016 22:57:45

Could 'My Pillow' Nightmare Happen to Other Online Sellers?

By: Ina Steiner

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My Pillow promises customers a good night's sleep, but a recent development involving the pillow retailer sounds like a nightmare for an online seller. The state of New York went after the out-of-state merchant for failing to collect New York Sales Taxes on purchases made to NY residents.

How can that be? My Pillow is based in Minnesota, and the Quill Corp. v. North Dakota ruling prevents states from requiring companies without a physical presence (nexus) to collect their sales tax from in-state customers.

The answer can be found on the MyPillow.com website. New York Attorney General Eric Schneiderman said My Pillow was required to collect and remit sales taxes "because the company sold products at trade shows in New York through independent contractors and other representatives, among other reasons." Doh!

The AG contends that "from 2011-2015, My Pillow failed to collect and remit approximately $537,000 in sales taxes on taxable sales made over the phone and through the Internet to New Yorkers." The state announced it had reached a $1.1 million dollar settlement with the retailer.

You can read the details on the NY Attorney General website. It's a cautionary tale - be aware of activities that could expose you to regulations in jurisdictions in which you sell. That way, you'll ensure a good night's sleep.




Comments (22) | Permalink

Readers Comments

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: mcposty This user has validated their user name.

Thu Sep 1 23:44:17 2016

Its very simple, they are over complicating this.

If you live in texas, and go to utah to.a store, the store doesnt gave to card you, see you live in texas, collect taxes for texas and send texas a check...they simply collect taxes for utah.

The same should be for online sellers, you always should collect taxes where your onlibe business resides and pay that jurisdiction.

Forcing online retailers to collect tax for every state is inbalanced and unfair and insane.

Please spread this logical idea everywhere to everyone who should know and lets get logic involved in this debacle.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: sellerchick This user has validated their user name.

Fri Sep 2 00:28:35 2016

What a slippery slope! So a temporary proxy nexus is good enough. Awful. I have a My Pillow and I luv it...

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: comments This user has validated their user name.

Fri Sep 2 01:21:18 2016

That is an interesting concept. If they sell in NY state then they do indeed have a presence there. BUT if you open and close a store in a state does that mean you have a lifelong presence there? Or just the time you operated there?

If mypillow was operating in NY for 1 week before it closed shop and left the state then doesn't that mean that from the minute they left they no longer had that presence?

By this same methodology......If a long haul truck driver passes though NY state presumably earning pay along the way....Does that make him liable for NY state income tax?  

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: FeelingFroggy This user has validated their user name.

Fri Sep 2 06:54:23 2016

Just like the government and politicians. Instead of making things easy to understand they have to complicate things by overthinking them.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: papergoy This user has validated their user name.

Fri Sep 2 09:31:04 2016

In New York State, use tax is owed by anyone who purchases from out of state and brings into the state for use.  There is even a place on our income tax where we can pay it (isn't that nice).  So any law forcing someone from out of state to collect taxes is simply laziness on the part of the state in question (as many states have similar laws in place).  I suggest that if a state is serious, it begins auditing individuals to see what they purchase and then charge them use tax if they have not paid the proper amount (heck, that salt and pepper shaker you bought at Mt Rushmore and only paid 6% sales tax on at point of purchase...you owe the difference to NY State).  On the other hand, if people really want to revolt, file a use tax form for EVERY out of state purchase made and stop the system right in its tracks.  Instead we have the mishmosh we have now....

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: Volvo351 This user has validated their user name.

Sat Sep 3 08:02:03 2016

&comments

Many states now impose income tax liability on pro athletes who perform in their states. IOW, if an NFL player on a TX franchise [TX has no state income tax] has a $16MM contract and plays a game in Foxboro, MA [against NE] then he's taxed on $1,000.000 x 6% = $60,000. He doesn't pay that tax when he plays in Jacksonville, Miami, or Tampa Bay - no income tax in FL.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

This user has validated their user name. by: iheartjacksparrow

Sat Sep 3 10:20:48 2016

Shouldn't the "independent contractors and other representatives" have been responsible to collect sales tax at the trade shows and pay said tax to the proper taxing authorities?

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: Flying Childers This user has validated their user name.

Sat Sep 3 14:46:44 2016

Here's what the problem is:  New York is probably the most corrupt state in the USA.  Most of our top politicians end up in prison and if they don't, it's only because they're friends with the judge.

New York has the worst regulations and the highest taxes in the USA as well.  You have to feed all those politicians.

There is never enough money for these bastards and they are always looking for something else to tax.

It is a disgrace.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: tango This user has validated their user name.

Sun Sep 4 03:07:22 2016

pfft - at my pillow - i am not the size of my pillow - but if you sell thru e-commerce - its your duty to know the laws in the states you sell into and if you have local reps or do tradeshows in states other than your 'home-state', damn right, pay up!!! These laws are simple to comprehend by anyone.  If you want to gamble, buy a lottery ticket, don't violate laws.  Chers.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: mcposty This user has validated their user name.

Mon Sep 5 20:55:47 2016

Vote libertarian, no taxes. Taxes are abused anyways.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: phantom This user has validated their user name.

Tue Sep 6 00:12:39 2016

I wonder if the NY Attorney General sent a bill to those  China Based Sellers.

Congratulations NY for sending more business and more jobs to China

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: Paul W This user has validated their user name.

Tue Sep 6 02:03:57 2016

Every State that has sales tax would get more revenue (to add on to Mcposty's idea) if they all agreed on a standard country-wide rate and every seller in those States collected tax at that rate and remitted to their own State.

If one's own State has a different rate, then collect that rate from in-State residents, and the standard country-wide rate from everyone else.

Sellers in States that have no sales tax would not collect tax from in-State residents, but would collect the standard rate for out-of-State residents, and submit it to their own States.

Thus, EVERY State would get more revenue, it would be simple to process, and it would be a level playing field for all sellers, online or brick and mortar.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: Watching the Wheels This user has validated their user name.

Tue Sep 6 04:50:49 2016

Well IF America EVER CONNECTS THE DOTS and refigures out Economics 101, then properly educates students, so they can build better cars, TVs and all the other items now made by other countries, they wouldn't be so desperate for any and all pennies to be gleaned from all of us.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: rover This user has validated their user name.

Tue Sep 6 05:45:15 2016

One of the reasons why people in Britain voted to leave the European Union was because we were overburdoned with petty and sometimes ludicrous regulations. These were promulgated by an unelected deeply corrupt bunch of fat cats in Brussells.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: Sue This user has validated their user name.

Tue Sep 6 06:56:12 2016

@Paul W.
Right on!  I have been saying that all along too. Keep it simple, everyone gets money.  

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: Barbbie This user has validated their user name.

Tue Sep 6 09:21:19 2016

I would prefer if the tax was paid based on the location of the business instead of having to potentially be responsible for not only the 64 plus taxing jurisdiction I am now but another at least 49 more. I do not have employees, I did look into taxjar etc..(years ago), they charge by the form meaning the literally 30.00 I paid last month in taxes to 21 counties would have cost me hundreds and I still would have had to compile the info for them.
Not to mention that all those places that charge me 1.00 instead of the pennies that I actually owe them adds up pretty quick to a whole lot of over-taxation without representation.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: FREDDY This user has validated their user name.

Tue Sep 6 09:59:46 2016

New York.  Always liked to over tax and over regulate. Someone has to pay the politicians and all the illegals-sorry, undocumented health care, school etc...
My theory is it will end up being a federal tax. Just pay the federal government not the state and let the feds worry about it.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: cillianred This user has validated their user name.

Tue Sep 6 10:31:26 2016

@Paul W

You're absolutely correct. Though that idea is obviously too logical, too fair and too straightforward for the bickering spoiled brats in Washington.

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

by: Moonwishes This user has validated their user name.
Web Site

Tue Sep 6 12:07:02 2016

I got a notice from my state that we can't collect sales tax anymore because they didn't receive a quarterly payment in 2014! Not that they sent us an email to tell us this. The paroblem was after filing the form, they don't take the tax out of your account for another month+ and so by the time they went to grab their money, that particular bank account had been closed! So an email would have been nice, since we didn't purposely default. We also supposedly owe more than what we paid for the other quarters. Since we do our taxes on line at their website, we pay what they tell us to. And they said that we didn't renew our license when we should have. Yet another fault of the state since they never mentioned that we had to, no reminder to do so. They leave it all up to us to do and remember and then want to tell us we can't collect taxes for them anyhow. Do they want us to go out of business for less than $100? These states and their tax collection departments are a joke. And now I have to deal with the appeal. Not going to be fun. I just don't get why instead of let's fix things they want to say you can no longer collect taxes, which doesn't sound like a good idea, so they can come back to us in a few years and say why aren't you collecting taxes and we get to say, because you told us not to!

Could 'My Pillow' Nightmare Happen to Other Online Sellers?   Could 'My Pillow' Nightmare Happen to Other Online Sellers?

This user has validated their user name. by: RKTOYS

Tue Sep 6 12:34:53 2016

"Vote libertarian, no taxes. Taxes are abused anyways."

That works until you expect something from the government.  And many self-proclaimed libertarians do.

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