Supreme Court says Yes to Online Sales State Taxes - June 21, 2018

Supreme Court says YES to Online Sales State Taxes

June 21, 2018 and the internet is a buzz, as stocks fall on many of the United States top online marketplaces, but what does this mean for you as a bottom feeder homebased online seller?   Don't Panic!

What we have here is sales tax laws catching up after thirty years of eBay, Amazon and other online marketplaces being able to avoid entanglement with sales taxes.  Instead, these marketplaces when asked over and over again about sales taxes by those small sellers and people using them to clear out their Spring Cleaning, has been silence.  

A quick visit to eBay's forums and a search will show sellers have been asking about sales taxes since it's beginning, and a little data research will show that eBay spends multiple millions of dollars on Lobbyist in Congress to protect their interests.  As a result, online sellers have had to stumble around blindly looking for information for many years, just to find out if what they are doing is legal.

The new Supreme Court decision, has given the power to the States to enforce accountability of these marketplaces, it's unclear how this will trickle down to those of us who sell online.  

State's like California already have unfair and unbalances policies for online sellers, which require anyone selling online to obtain a sellers permit, which also requires buying a business license, and collecting sales taxes to be paid on the shoppers behalf to the State, once three sales in a year have been surpassed. 

There pencils at one penny each and once that fourth pencil is sold, an online seller in California is suddenly obligated by California law to become a Sole Proprietor, with a city business license being required before a Sales Permit.  That will cost you anywhere from $140 to $280 just to start, and that doesn't include the minimum of $175 a seller is going to pay to do a Schedule C and Profit Loss Statement for the IRS at the end of the year.  Yet, California allows someone selling on their front lawn to hold three $5,000 yard sales in a year, before requiring those sellers to obtain a sellers permit.  That's $15,000 in a year for garage sellers, while most online sellers will make less than $1,000 to $2,000 in that same year.

The new Supreme Court decision will probably result in additional over legislation in those States like California and New York, which already have bad laws for online sellers and sales taxes.  It's a ton of work that discourages individuals from selling online and empowers larger and medium sellers and retailers who import their goods from China.

As suggested in the most recent SellerThink video on YouTube, once of a series of videos about sales taxes, selling online and specific marketplaces like eBay and more recently Mercari.  The best advice is Don't Panic!

It will take time for each state to create new laws regarding online selling, and hopefully common sense State's with common sense legislatures will realize that the accountability for sales taxes should be places on the actual marketplaces and not on the single parent mother trying to feed her children by selling off their baby clothes.  Requiring all online selling individuals to become licensed businesses is in unfair and overbearing burden, especially when no accountability is assumed by the actual marketplace that makes billions of revenue for doing nothing other than running a marketplace website. 

eBay in particular already makes the decisions and forces people selling on its marketplaces to give up all of their rights to do so.  eBay assumes control of all decisions about when a seller must issue a refund or accept a return. 

Marketplaces like Mercari in California does not even provide the ability to charge sales taxes currently, even is a seller is required by State Laws to do so.  That means all sales on the marketplace are being forced to be collected by each state under their "Use Laws", which no one does.

Until clarification is made. Until marketplaces are held accountable for their role in sales online. Until marketplaces require all online sellers using their marketplaces to provide proof of being licensed by their state. Until all marketplaces provide the ability to collect sales taxes as an option.  As mentioned in the Mercari Sales Tax Video, I'd say, do nothing.

At the time of this article and new decision by the Supreme Court, if you ask eBay, Mercari, or similar if you as a seller need to pay sales taxes, they simply give you some mumbo jumbo excuses about why they can not assist you.  They tell you to consult a tax consult or small business attorney.  Why is it so hard for these marketplaces to own up! It's their business!  All we do is provide them with stock and get paid a percentage of the profit.  We are essentially contractors of eBay, Mercari, Amazon, Poshmark, Depop, Offer-up!

Here is a list of the office in your state to contact to find out about collecting online sales taxes. At the time of this blog post, all of the links should work.  (These links were working at the time of this article)

Key Words:

Supreme Court Decision, Taxes, State Taxes, Online Seller Taxes, Board of Equalization, IRS, Federal Taxes, List of board of equalization, eBay, Mercari, online selling, California, New York