A Look at Sales Taxes: Post-Wayfair Ruling

There used to be a time when brick and mortar stores thought they were losing ground to upstarts like Amazon, who initially didn’t charge sales tax because Amazon didn’t have a physical presence in the state where the sale was made. Eventually Amazon branched out, and created nexuses in different states and today pays their sales tax in those states. The brick and mortar stores thought they were losing business because online retailers didn’t have to pay sales tax. Sales tax is simply a tax that is collected by the business owner and passed onto the state. In Florida the sales tax rate is 6%, will $6.00 on a $100 purchase make me rethink that purchase…no.

Online retailers are beating brick and mortar for one reason and one reason only, convince. For example, I can do my grocery shopping at 430 am, by 8 am, my groceries have been shopped for, bagged. All I do is go at the allotted time, pop my trunk and get my groceries delivered to my car. I don’t want to fight people to grocery shop myself, then I can never find something. Not to mention this is a lifesaver.

Another example, is if I want something delivered today, I can have it. I can shop online, get exactly what I want, without driving to the store only to find they don’t have what I need. It’s a time thing. Sales tax isn’t the issue, these smaller companies haven’t kept up with the changing times. Who thought Radio Shack, and Circuit City would go out of business? They just never adapted.

Now with South Dakota v Wayfair, the Supreme Court has set up a virtual compliance nightmare for a business owner. We already have quirky nexus rules to deal with, now this? I still fail to understand that if I have an employee that is a staff accountant in Oklahoma, how I’ve created a nexus. I don’t have clients in Oklahoma, just an employee.

I live in Florida. Our basic source of revenue is sales tax. I see the Supreme Court’s point on that, but just think of the registration requirements, the separation of sales between states. Not to mention applying to collect sales tax in all those states.

Then we go back to the colonial argument; “No taxation without representation.” There would be no representation, nor would you have a chance to vote, because you just simply made a sale in that state.

An unintended consequence of this ruling, is does paying sales tax in a different state make you have to file an income tax return in that state? Another compliance nightmare.n. Not to mention, most states have a use tax. If you order something from another state you are supposed to pay a use tax. The States could of simply put money into enforcement of that tax, but they choose court instead.

Does this create more billable work for us? Yes. However, I don’t like compliance work. I will have figure out all the state laws regarding nexuses and sales tax collection. I am an income tax planner, so I’ll probably give this job to an employee.

I am Generation X. My mentors were baby boomers. They were so conservative and had one track minds, that they couldn’t see the big picture. I can remember my request in 1995 to get a website and email. I got the equivalent of a pat on the head. However there was one thing the Boomers were right about. A simple phone call, or meeting goes a long way

We will have to get with our clients on the phone or in person and explain why we have to raise our rates.

Sales Tax