Supreme Court Tax Ruling Hurting Small Businesses
Article from Reason by Eric Boehm.
When he started selling race car equipment 40 years ago, Chris Heitman never imagined that he’d have to learn which states charge sales tax for fireproof underwear.
Heitman and his wife, Carla, have been running Pegasus Auto Racing Supplies since they founded the company back in 1980, out of a two-story building in New Berlin, Wisconsin. Until last year, that meant Heitman was responsible for collecting and paying sales taxes to exactly one place: the Wisconsin Department of Revenue. But thanks to an under-the-radar ruling from the U.S. Supreme Court in June, he’s now receiving letters, phone calls, and emails from revenue officials across the country, each wanting a piece of his business.
The source of Heitman’s frustrations is Wayfair v. South Dakota,which allowed states to collect sales taxes from online businesses located beyond their borders. Many states view the Wayfair ruling as a potential tax revenue windfall in which the taxes are paid by non-residents who can’t vote against them. That’s why businesses like Heitman’s are now facing the chilling prospect of owing taxes in dozens, and possibly hundreds, of different jurisdictions—while being hounded by out-of-state tax collectors.
Since the Supreme Court issued its ruling in June, Heitman has been scrambling to become compliant with tax commissions and revenue departments from coast to coast. He’s spent thousands of dollars on new software to help navigate the complexities of state sales tax law, but that’s only been so much help. “It almost seems like I have another full time job dumped on me with this sales tax thing,” he says. “It’s burning me out.”
Read the entire article at Reason.
Image Credit: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons
That was one of the dumbest rulings by the supreme court.
One ‘solution’ is for such businesses to refuse to fill any orders outside their own state.
Not a solution. I live in North Dakota and I just invented the best mouse trap in the history on the world. The problem is that every mouse in the state has moved to Texas because it is a lot warmer there. Now I can only sell a few traps a year to museums. I go out of business because I can’t sell in New York (and you should see my rat trap!)
Tell ’em to pound sand. Will it be worth the time and money to try and recover a measly sum? How much are we talking here? Time these states start watching their spending, instead of shaking down small businesses.
They’ll do it just to set an example for others to see and put the fear of prosecution into everybody for non compliance.
I agree 1000% the States are ruthless in collecting there sales taxes
Do what all the big businesses do FILE BANKRUPTCY and get out. Lay everybody off and close the doors. Tha’s what I’d do. How stupid are we the people that we allow these dirtbag, toilet treasures to male life so unbearable for us and then we re-elect them. How stupid are we the voters?
I agree with you 1000% time to start a recall and strip pensions and health care for every senator and congress person who has voted to put this country 22 trillion in the hole.
Any Dufus should know that when voting with RBG, you’re voting for big government.
This should be called the “destroy small online business” ruling. I skimmed the court opinions. Sure they talk about “small” businesses…with 500 employee’s. What about mom and pop size businesses? Who cares, let’s crush them? Obviously there needs to be a better solution. (I really hate to say this but) why doesn’t the federal government (because of interstate commerce) set up a sort of sales tax clearing house for all internet sales that would automatically calculate the necessary taxes to be collected, have the businesses send those funds there, which are then distributed to the various taxing authorities? The States ‘n counties ‘n cities get their taxes (- a handeling fee from the federal agency?), brick and morter stores are no longer disadvantaged by out of state internet sellers, even foreign sellers could be taxed (remember it’s a USE tax) and eveybody is happy except the large companies who still have to compete with the micro sellers. Taxpayers would clearly see how their government(s) are taxing them and can vote accordingly. Boom, problem solved. Heck, even brick and morter sellers could use this to have sales taxes automatically calculated and deducted from each sale so it is not necessary to keep so many accounting records; all that info is right there available anytime from that agency. Not that’s a governement agency that SHOULD exist. (And if the government doesn’t do it, sounds like a business opportunity to me.)
Sales tax is added to each sale, not taken from it.
You are advocating yet another govt bureaucracy to handle the absurd scotus ruling when the idiotic ruling needs to be reversed.
The Congress and the Commerce Committee have the authority to lay out the rules b which one state can impose taxes on the businesses within that state. The principle upon which our Revolution was based (in part) was that there should be no taxation without representation. that principle would block the imposition of taxes on a person who does not reside within an individual state and the principle of capitation would forbid the imposition of a tax on one person and not upon another, hence in effect outlawing sales taxes.
Here’s the solution, for every customer from states or municipalities who demand sales tax meaning there is extra administrative cost to the seller, every online seller should add a surcharge to their price and explain that surcharge to them just as restaurants have done on their bills when Obamacare or higher minimum wages were forced on them. Let the buyers from those states see how their politicians are costing them as consumers.