Indie builders....will new SCOTUS ruling hurt or help?

[2010P]

Sorry for OT thread, but I am trying to focus on small pedal businesses. Curious to see how the small indie pedal makers are reacting to the new SCOTUS ruling on sales tax. I can't see how this is going to be good for internet business, but I'm definitely open for my mind to be changed. But Please for the love of god no politics. This is not a left-right issue.

What do you think?

 

[rratajski]

What ruling are you specifically asking about?

 

[boomertech]

Sorry for OT thread, but I am trying to focus on small pedal businesses. Curious to see how the small indie pedal makers are reacting to the new SCOTUS ruling on sales tax. I can't see how this is going to be good for internet business, but I'm definitely open for my mind to be changed. But Please for the love of god no politics. This is not a left-right issue.

What do you think?

The key here is "small businesses". There will be thresholds of sales and dollar amounts that would trigger what your status would be for collecting out of state sales taxes. For instance: "South Dakota responded to Justice Kennedy’s invitation by enacting a law that required all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 individual transactions in the state."

So, we will have to wait to see what the thresholds are for each state, but I don't think that small pedal builders are going to have a problem with this. In fact, it just may help the small guy, because he won't have to charge sales tax, but the big players most likely will.

-Frank

 

[2010P]

The key here is "small businesses". There will be thresholds of sales and dollar amounts that would trigger what your status would be for collecting out of state sales taxes. For instance: "South Dakota responded to Justice Kennedy’s invitation by enacting a law that required all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 individual transactions in the state."

So, we will have to wait to see what the thresholds are for each state, but I don't think that small pedal builders are going to have a problem with this. In fact, it just may help the small guy, because he won't have to charge sales tax, but the big players most likely will.

-Frank

Interesting. I didn't know about thresholds. That is something I need to look more into.

 

[stambroker]

The key here is "small businesses". There will be thresholds of sales and dollar amounts that would trigger what your status would be for collecting out of state sales taxes. For instance: "South Dakota responded to Justice Kennedy’s invitation by enacting a law that required all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 individual transactions in the state."

So, we will have to wait to see what the thresholds are for each state, but I don't think that small pedal builders are going to have a problem with this. In fact, it just may help the small guy, because he won't have to charge sales tax, but the big players most likely will.

-Frank

200 transactions seems awfully low, and only reaches the $100k threshold if each pedal was $500.00 to the purchaser. My guess is that the "bigger" indie companies like Fuzzrocious or ss/bs would easily surpass a similar threshold and end up charging sales tax like the big companies do.

But you're right, it would definitely be good for the smaller indies or someone just starting out to be the only player for that particular effect that doesn't charge sales tax.

 

[boomertech]

200 transactions seems awfully low, and only reaches the $100k threshold if each pedal was $500.00 to the purchaser. My guess is that the "bigger" indie companies like Fuzzrocious or ss/bs would easily surpass a similar threshold and end up charging sales tax like the big companies do.

But you're right, it would definitely be good for the smaller indies or someone just starting out to be the only player for that particular effect that doesn't charge sales tax.

That's 200 units for S. Dakota. In ten years, I've sold less than 100 units to S. Dakota. Maybe other small builders are selling more, but I sincerely doubt that they are going to be bothered much by a 200 unit/year threshold. Like I said, there will be thresholds set by other states that we will need to look at, but I really don't see this as an issue for the small guys. If you get larger, then you could sell thru places like Amazon that will automatically handle the sales tax for you for each state, again not an issue.

-Frank

 

[Will_White]

I'm glad I live in Oregon.

 

[boomertech]

I'm glad I live in Oregon.

I think I would like living there too.

-Frank

 

[stambroker]

That's 200 units for S. Dakota. In ten years, I've sold less than 100 units to S. Dakota. Maybe other small builders are selling more, but I sincerely doubt that they are going to be bothered much by a 200 unit/year threshold. Like I said, there will be thresholds set by other states that we will need to look at, but I really don't see this as an issue for the small guys. If you get larger, then you could sell thru places like Amazon that will automatically handle the sales tax for you for each state, again not an issue.

-Frank

My apologies, I misinterpreted - I thought that the 200 unit/year threshold was for the entire country. As in, a company that outputs 200 units/year is subject to the sales tax stipulation.

 

[boomertech]

My apologies, I misinterpreted - I thought that the 200 unit/year threshold was for the entire country. As in, a company that outputs 200 units/year is subject to the sales tax stipulation.

No prob!

-Frank

 

[40Hz]

The issue isn’t so much whether you exceed thresholds or not. It’s the record keeping you’ll need to maintain in order to show you’re in compliance that is burdensome. And the necessary filing you’ll need to do for 50 different states with 50 different sales tax codes is a real problem. My state is easy. There’s basically a tax rate for goods and a tax rate for services. But other states have state, plus complicated county and city sales taxes as well. And some apply the tax to the full invoice amount - which means shipping is also taxable in some jurisdictions last I looked.

All this is really going to accomplish is provide a windfall for all the new service companies that will soon spring up to handle small business invoicing and tax reporting - for a fee. Much like payroll taxes, sales tax is about to become more complicated and risky than it’s worth for a small business to handle in-house without a qualified accounting department.

Way to go SCOTUS!

 

[jbybj]

Way to go SCOTUS

Why blame the Supreme Court. They just judge the constitutionality of a law. I blame the genius legislators who wrote this brilliant money grab.

 

[40Hz]

Why blame the Supreme Court. They just judge the constitutionality of a law. I blame the genius legislators who wrote this brilliant money grab.

They don’t just judge constitutionality. They control the current understanding and interpretation of constitutional and federal rules. So they basically define our reality. And they are nowhere near as impartial in their judgements as some would wish. There are definite legal and philosophical biases these judges bring to the bench.

It’s impolite to call these philosophical biases political convictions. But for all practical purposes it equates to the same thing. You have your progressives and conservatives sitting on the SC just like everywhere else in government. Which is why there is so much interest in stacking the SC with like-minded justices who see things in the same way as the current administration and dominant political party sees things. And this is nothing new. This has been how it’s worked for most of US history.

One of the greatest powers the executive branch holds is the power to nominate justices to the Supreme and lower federal courts. Some administrations have had a more powerful and lasting impact on this country through how well they succeeded in getting their judicial appointments confirmed than by anything else they did while in office.

So as the highest court in the land, I do hold the SC completely responsible for everything they rule on along with the consequences that ensue from them. SC cases are not parlor philosophical exercises and word games. Their rulings affect real lives. And it’s important to remember the SC is supposed to act as part of the checks & balances function the Constitution created. And act as a reality check to some extent in curbing abuses of governmental power.

Of the three branches in the US government, their hands are (by design) the least tied of all. Nobody bullies the Supreme Court. And since we have granted them godlike powers and given them the absolute final word, I see no reason to cut them much in the way of slack.

This isn’t me talking politics. This is me pointing out the reality of the situation.

 

[boomertech]

The issue isn’t so much whether you exceed thresholds or not. It’s the record keeping you’ll need to maintain in order to show you’re in compliance that is burdensome. And the necessary filing you’ll need to do for 50 different states with 50 different sales tax codes is a real problem. My state is easy. There’s basically a tax rate for goods and a tax rate for services. But other states have state, plus complicated county and city sales taxes as well. And some apply the tax to the full invoice amount - which means shipping is also taxable in some jurisdictions last I looked.

All this is really going to accomplish is provide a windfall for all the new service companies that will soon spring up to handle small business invoicing and tax reporting - for a fee. Much like payroll taxes, sales tax is about to become more complicated and risky than it’s worth for a small business to handle in-house without a qualified accounting department.

Way to go SCOTUS!

Record keeping isn't really a problem, because you as a business, should already have the info in your records... all you will be adding is another column to your spread sheets for internet sales tax. If you look at the SD internet sales tax example of 4.5%, they have one tax rate for the entire state with internet sales tax. Food and clothing may have a different tax rate, but we are only concerned with indy builders or small manufacturers of pedals/musical gear with this thread. So gear will be internet taxed at 4.5% everywhere for the state.

Shipping isn't taxable, so for SD you would take the product total and add 4.5%... it's that simple. The only thing extra you have to do is take 5 seconds to look up the internet sales tax rate to apply to the state you are shipping to and record it. I suspect that any of the payment sites (like PayPal) that you would use, will actually automate the internet sales tax and possibly collect that tax so the burden to sellers will be nonexistent.

This will be a minimal issue at most. Working out your sales taxes for a state like NY is WAY more complicated.

This SCOTUS decision puts big internet sellers more on an even playing field with brick and mortar stores.

-Frank

 

[boomertech]

They don’t just judge constitutionality. They control the current understanding and interpretation of constitutional and federal rules. So they basically define our reality. And they are nowhere near as impartial in their judgements as some would wish. There are definite legal and philosophical biases these judges bring to the bench.

It’s impolite to call these philosophical biases political convictions. But for all practical purposes it equates to the same thing. You have your progressives and conservatives sitting on the SC just like everywhere else in government. Which is why there is so much interest in stacking the SC with like-minded justices who see things in the same way as the current administration and dominant political party sees things. And this is nothing new. This has been how it’s worked for most of US history.

One of the greatest powers the executive branch holds is the power to nominate justices to the Supreme and lower federal courts. Some administrations have had a more powerful and lasting impact on this country through how well they succeeded in getting their judicial appointments confirmed than by anything else they did while in office.

So as the highest court in the land, I do hold the SC completely responsible for everything they rule on along with the consequences that ensue from them. SC cases are not parlor philosophical exercises and word games. Their rulings affect real lives. And it’s important to remember the SC is supposed to act as part of the checks & balances function the Constitution created. And act as a reality check to some extent in curbing abuses of governmental power.

Of the three branches in the US government, their hands are (by design) the least tied of all. Nobody bullies the Supreme Court. And since we have granted them godlike powers and given them the absolute final word, I see no reason to cut them much in the way of slack.

This isn’t me talking politics. This is me pointing out the reality of the situation.

If you look at the justices behind this decision, you have the most left and right justices in agreement. So.................................

-Frank

 

[Diamond_Dave]

The issue isn’t so much whether you exceed thresholds or not. It’s the record keeping you’ll need to maintain in order to show you’re in compliance that is burdensome. And the necessary filing you’ll need to do for 50 different states with 50 different sales tax codes is a real problem. My state is easy. There’s basically a tax rate for goods and a tax rate for services. But other states have state, plus complicated county and city sales taxes as well. And some apply the tax to the full invoice amount - which means shipping is also taxable in some jurisdictions last I looked.

All this is really going to accomplish is provide a windfall for all the new service companies that will soon spring up to handle small business invoicing and tax reporting - for a fee. Much like payroll taxes, sales tax is about to become more complicated and risky than it’s worth for a small business to handle in-house without a qualified accounting department.

Way to go SCOTUS!

Meh. QuickBooks will handle it. It’s just a query to a database stored in the cloud. You punch in the ZIP and QuickBooks returns the tax. The complexity argument is used a lot to say it’s too burdensome on business to track the myriad of state and local sales taxes, but small business won’t have to. A handful of databases will, for cheap due to volume.

 

[Londo Molari]

Anytime you allow the government to put its hands in your pocket you loose.

 

[bongostealth]

So, we will have to wait to see what the thresholds are for each state, but I don't think that small pedal builders are going to have a problem with this.

-Frank

Well, sir, I love your products. I am a proud owner of an OptiFet. It's obvious states wish to 'gain' much by way of tax revenue. As you stated, we will have to see each 'threshold' in order to determine how the states will 'attack' each merchant's sales revenue. Hopefully, the smaller sellers will in fact be 'released' from this burden so that these small sellers are not part of the overall 'ratio' of decreased online sales as compared to online revenue. Otherwise, we will have to come up with a 'side chain' stream of tax-free internet revenue, which I believe would be the 'opti' solution.

See what I did there??

 

[2010P]

I suppose in my craziest dreams I can envision a scenario where states respond to this by lowering their sales tax in order to outcompete other states. Then a "race to the bottom" can ensue where we see a major lowering of sales tax rates across the country. I don't actually think this will happen, but if the States were smart, they would think of this. I never understood the fairness of sales tax anyway. Isn't it very regressive? I mean, I am paying the same rate as a person who makes 10 billion a year. That doesn't seem very fair to me. I think they should do away with sales tax and instead, if there must be a tax to replace it, have a consumption tax where higher priced luxury items are taxed at a far higher rate than everyday staple products of life.

 

[Londo Molari]

Let's put a 40% luxury tax on stomp boxes. That would fix everything.