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Tue Apr 10 2018 01:23:37

South Dakota Refers to Small Sellers as Pint Sized

By: Ina Steiner

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South Dakota came out swinging against Wayfair, Overstock.com, and Newegg in its reply brief to the Supreme Court on Monday, but it may have disrespected small sellers when it referred to them as "pint-sized." 

The state filed the brief in the South Dakota vs. Wayfair case, which the Court will hear on April 17th to decide whether to overturn Quill vs. North Dakota. Here's an excerpt from South Dakota's reply brief filed on Monday:

"Meanwhile, respondents (Wayfair, Overstock.com, and Newegg) cannot dispute that they could easily comply everywhere, or that everyone could comply easily enough in South Dakota. Instead, they defend Quill only by alleging that other, pint-sized retailers might face outsized costs under some hypothetically burdensome economic-presence regime in another State. 

"This supposes other States will (for some reason) enact such burdensome economic-presence laws and pursue small handfuls of tax dollars from small sellers, and then ignores that courts will still scrutinize those regimes using the flexible approach this Court applies to every other undue-burden claim under the dormant commerce clause."

Generally small sellers are referred to as entrepreneurs, micro sellers, small businesses, or in some cases, casual sellers.

What do you think of the online sales tax debate and South Dakota's dismissal of small seller concerns? 

Do you have any thoughts about states who have use tax (such as South Dakota) but aren't enforcing it? As Investopedia explains, "A use tax is supposed to protect in-state retailers against unfair competition from out-of-state sellers that aren't required to collect tax."



Comments (45) | Permalink

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Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: FeelingFroggy This user has validated their user name.

Tue Apr 10 05:22:38 2018

Well we collect sales tax in our state without a problem. We agree with South Dakota. Pint size fits us. Call us what you may but we have found a way to support ourselves with out holding out our hands for the government to fill. Pink size it is. Has a nice ring to it.

Bottom line is the really big people are getting to big for their britches. They are the ones whining about how hard it will be for the pint size guys but have no clue what the pint size do for a living. Those big guys would blame anyone and anything just to get out of paying their taxes and if the truth be known they probably don't pay much in taxes anyway.

AS SO CALLED THE NEW PINT SIZE SELLERS WE JUST DON'T CARE IF ITS TO MUCH OF A HASSLE WE WILL Just go back to holding out our hands for the government to fill. NO PROBLEM.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: Rexford

Tue Apr 10 06:23:03 2018

The wording doesn't bother me at all, but at some point both the states and the large platforms have to realize that this would indeed be burdensome for "pint size" businesses. (It appears that the large platforms have a grasp on this, but the states are in denial.)  How exactly do mom and pop and small businesses remit taxes to many hundreds of states and counties throughout the USA?  And how would they also keep up with the ever changing tax laws? Burdensome doesn't begin to describe what this would entail, and the amount of man hours it would take to do so.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: RKTOYS

Tue Apr 10 08:25:21 2018

Curious size definition you have, FF.  Agree with most of the rest though.  As a real "pint-sized" business, it's all I can do to keep up with my state's sales tax but I do it because I live here and that's the cost of state government.  The big players are crybaby deadbeats.

Something I found interesting though.  PA is 6% statewide but 7% in Philadelphia and Pittsburgh.  Square Reader doesn't even do that automatically.  You have to set up three tax zones and manually activate whatever one you're in.  Can't even find that much in the online dashboard so I don't know what'd happen if I ever made a sale through their online storefront.  Square, mind you, is a billion dollar company that does practically nothing but process commercial transactions.

A few years back, though, this topic came up in a job interview.  Part of the interview was to show a personal project, so I was showing the software that I wrote to manage my "pint-sized" business.  Most people just use Excel, if they use anything at all, but most people don't have a computer science degree.  Saves alot of time, like my federal schedule C only taking ~20 seconds.  At the time, I was only doing shows in PA, but had designed the built-in tax calculators to work differently based on state.  The interviewer pitched a fit that I didn't use ZIP codes and a table lookup.  For a "pint-sized" local selling a couple thousand in toys each year.

Says almost as much about the tax situation as the state of software development these days.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: Ina

Tue Apr 10 08:34:01 2018

RKTOYS - I've read that even within zip codes, there can be differences in some states.

I see that TaxJar wrote about it in May of last year. "Why 5-Digit Zip Codes Don’t Always Return Correct Sales Tax Rates (And That’s OK)"

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: geoffreymason This user has validated their user name.

Tue Apr 10 08:45:06 2018

In seventeen years at this, I have never sold anything to a resident of South Dakota. I'm surprised to find that anybody lives there.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: aim04744 This user has validated their user name.

Tue Apr 10 09:18:55 2018

The zip code I live in is within 2 city and 1 unincorporated boundary. All 3 have different tax rates.

I don't think they have a clue what is going to happen if small business sellers all go out of business due to the burden of ten thousand tax districts. They won't have any revenue, even from the big boys. Small sellers not selling = buyers not buying locally.  

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: RKTOYS

Tue Apr 10 09:27:38 2018

Ina - Supposedly, lists can be purchased (like auto make/model/part lists) but it's overkill for a local dealer in a narrow subset of a single product category.  Plus, it wasn't like it's impossible to link on ZIP codes instead.  I just didn't do it because there was effectively no difference.

Also, it occurs to me that "most people" is a wider generalization than I intended.  It's more like most people I've talked to at shows don't use anything sophisticated.  Just having a tax license at all seems to put me in rarefied company!

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: b86fiero This user has validated their user name.

Tue Apr 10 10:19:39 2018

It appears to me that individual states passing and defending these type of sales tax laws collectively have the ultimate goal of getting a national sales tax law enacted.  

At some point the Feds and Supreme Court will find the cajones to enact and confirm a national sales tax to ease or eliminate the rag tag desperate attempts by individual states to collect their share which place an undue burden on small business owners.  

An equal percentage sales tax across the country (say 5% for example) at the purchase payment collection point will be easier to deal with, provided the law eliminates the ability of the Feds to raise the rate without a national vote of the people confirming such raise.    

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: iheartjacksparrow

Tue Apr 10 10:35:22 2018

If states want pint-sized sellers to remit sales tax to every one of them, then they better agree on a set tax rate for all 50 states, and only increase the rate once a year. Last year, Los Angeles County had one tax rate from January 1st to June 30th, a higher rate for July 1st to September 30th, and an even higher rate from October 1st to December 31st. Several other counties in California also increased the rates throughout the year. I don't have a math degree, and trying to navigate the tax form to properly remit the correct amount is always a challenge. It seems states want to treat us like second-class citizens, but nonetheless want to squeeze every penny possible out of us.  

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: futervest This user has validated their user name.

Tue Apr 10 10:44:50 2018

As a "pint Size " seller I have to ask If big Box is so worried why do they send out secret shoppers to STEEL our products and craft ideas so they can flood the market and put us out of business.    Just like the big MART store.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: eXtinctBay

Tue Apr 10 12:00:37 2018

As South Dakota has the 46th largest population in the US, wouldn't that mean that they are a ''Pint Sized'' state?

I WILL STATE THIS ONCE AGAIN:
The marketplaces will be ultimately responsible for remitting sales taxes to the appropriate authorities, not the small businesses which use their platforms.

If they can take the time to micro-manage every aspect of how a seller conducts their business, they can certainly collect and make the correct tax payments to the states as well.

It would also be much simpler for the states for their accounting staffs to process electronic payments from each site, rather than receive a flood of checks and money orders from Mom-'N-Pop businesses every month.

Also, there will be no need to waste resources auditing the many small payments for correctness. For what? A few cents??

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: Marie

Tue Apr 10 12:59:29 2018

@ina

Yes, you are absolutely correct.  In fact in the zip code in which I live there are actually two different counties as well.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: mcposty This user has validated their user name.

Tue Apr 10 12:59:45 2018

Again, the states should require seller sin their state to colelct for their states..end of story.

If I already collect tax for my state, does that mean i collect tax for my state AND south dakota?

If a person in texas goes to utah, can they show thei id and say to 7-11 " you have to collect tax for texas because thats where i live

no, if a person from texas goes to utah, they pay the sales tax for utah.

this is stupid and even more stupid that lawayers and businesses who are trying to stop these states cant come up with a simple arguement like this to stop it in its tracks.

South Dakota needs to collect tax from south dakota online sellers, force them to collect sales tax from everyone regardless of their state.

as it is now, many onlien seller sonly charge tax if the person buying is in their state..this is a simple thing to fix for states.

but this ISNT about taxes, this is about retail brick and mortar stores trying to stop online sales.

This is sickening, south dakota is SICKENING, so is any state trying to do this, their jurisdiction is THEIR state not ANY one from ANY other state.

I collect tax for MY state regardless if the person is from my state or another state, the state where the purchase is made is the state that gets to benefit from those taxes which is why things like tourism is encouraged..otherwise, If I owned a walmart I could say, I see you live out of state,. good news no taxes...sorry that doesnt fly.

i collect tax for my state and I will NEVER collect a single dime from another state..and if another state tries to shake me down Ill simply go to my state authorities to let them know THEY are losing tax revenue and that south dakota is trying to steal that revenue.







Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: mcposty This user has validated their user name.

Tue Apr 10 13:04:02 2018

Also, all those people saying there ar emultiple taxes per county, I collect tax for my county..my city. I could care less if the buyer is form one county over with lesser tax rate, they bought from me and they will pay the tax where I am located just as if they drove to another 7-11 in another county..that 7-11 only charges taxes for its city..end of story.

This should be an easy dismissal from the supreme court.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: comments This user has validated their user name.

Tue Apr 10 13:35:52 2018

The problem is that laws are being written for the government by the government and funded by the government.

Laws are supposed to protect the people and taxes are intended to fund local government. We pay a separate tax to the federal government.

Why should I pay for SD to have public works when I have never been to SD to use them?

Why would I pay sales tax to SD when on the same items in my state they are tax exempt?

Why do we elect lawmakers who have declared war on the people?

Something is very wrong here.........

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: Marie

Tue Apr 10 13:51:51 2018

@comments

You aren't, your customers are and they do live in SD.  You charge your customer for the sales tax.

Well that is unless it is written as being a retroactive law, which I am completely against.  We all operated within the laws that were in place at the time and therefore did nothing wrong.  If some state wants a retroactive sales tax law, then they need to figure out how to get the money from those living in their respective state, not penalize a seller or business that did NOTHING wrong.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: Michael in BC This user has validated their user name.

Tue Apr 10 13:55:03 2018

As many of you know, Canada has a national "Goods and Services Tax", which is currently 5%.  Each Canadian province and territory has its own provincial tax, except for Alberta where there is no provincial tax.

Several provinces have agreements with the federal government wherein the feds collect a "Harmonized sales Tax", which blends the federal 5% with the applicable provincial tax rate.

I'm a pint-sized seller in British Columbia, so I charge and remit the BC provincial tax of 7%, Goods & Services Tax of 5% Canada wide, and (where it applies) the Harmonized Sales Tax for sales to those provinces where they've set up HST.

I works wonderfully well.  From my remittance of GST/HST, I can deduct any GST/HST I've paid on purchases and services applicable to my business.  If I'm buying within BC, I just give the seller my provincial tax number, which exempts me from paying the provincial 7%..  When I remit my quarterly BC provincial tax amount, I can deduct the first $22 due, plus a percentage of the rest.

Easy-Peasey

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: Marie

Tue Apr 10 14:03:47 2018

@Michael in BC

We have things in common here in the US.  

If a seller is out purchasing stuff they plan to resell, supplies that become part of what they sell or shipping supplies.  The seller can submit their reselling permit number and avoid sales tax on those items.

But that isn't what this article and larger problem is about.  This is about, for example, a seller from Virginia shipping to someone in the state of California.  They are trying to hold the seller responsible for collecting and remitting the sales tax for the state of California.  It is all about where the seller ships TO, not from.  

With the current way the various states have so many tax rates, it is beyond a huge problem for sellers to comply.  Something like this could easily put many sellers out of business as they just could not shoulder the burden.

The tax structure of Canada does appear to be far superior to how we are structured here in the US.

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

by: Beth This user has validated their user name.

Tue Apr 10 15:29:44 2018

I'm a pint-sized seller and have never (that I remember sold to SD. ) They can kiss my cannister. I am NOT collecting sales tax from 10,000+ jurisdictions.  I will go out of business, move to SD and collect welfare if necessary.

The burden of collecting, remitting and fillingout all those forms will be too much for this old lady.  

Perminate Link for South Dakota Refers to Small Sellers as Pint Sized   South Dakota Refers to Small Sellers as Pint Sized

This user has validated their user name. by: Marie

Tue Apr 10 16:16:21 2018

@beth

Chances are they will handle it similar to other states which have now required certain sites they call "facilitators" to collect and remit the tax.  For now, that is Etsy and Amazon.  IMHO it is those sites because they process the money for the purchases on the site.  Which is why Ebay hasn't been touched YET.  But that is just my opinion.

Or maybe there will be a threshold of gross income a seller would have to meet before they would become responsible for remitting tax to SD.  Hard to say what the particulars are until they tell us.

I'm just trying to say, don't get worried enough about this to quit your little business.  Wait and see how they will be applying how this is done and then make a fully informed decision about your future in regards to sell on the internet.

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