[meritt]

It's came up since the dawn of ecommerce. The problem is answering the following questions (and likely many more) in a way that makes everyone happy.

* Do you impose tax in the state where the seller resides?

* Do you impose tax in the state where the buyer resides?

* Do you impose tax in the state where the item is warehoused?

[mikeash]

Hasn't this long been answered with "yes" for #2 and "no" for the others? When I buy from Amazon, they pay sales tax where I live, but not where the item came from or any other place where they have a presence.

The only wrinkle is that #2 is not very well enforced when a company doesn't have a presence in the buyer's state, but it's still technically required.

[ensignavenger]

No, if the buyer and seller do not reside in the same state (an by reside, for the seller, it includes having a business "nexus") then it is interstate commerce, and states can't require sellers to collect sales tax. (They usually instead impose use tax on the buyer).

[mikeash]

I don't understand, what's "no" about that? I didn't say sellers were required to pay tax, merely that paying tax was still required. As you say, it becomes the buyer's responsibility if the seller doesn't have a presence in the state.

[JustSomeNobody]

Some (all?) states already have a use tax that people are supposed to pay. So, that takes care of the second *. Personally, I lean towards that's enough.

[irrational]

I live in a state that does not have sales tax. But if I purchase something for a family member, and have it shipped to their house, I pay the sales tax for their state. So even though I'm the buyer, sales tax actually works based on where the product is shipped to.

So number 2 should probably not be about where the buyer resides, but where the buyer ships the product.

[Spooky23]

The item was used and enjoyed at the destination.

If I am a resident of New Hampshire, and my wife buys me a sandwich online that I eat in California, why would California be cheated out of their tax?

[gowld]

Use tax is mostly unenforced because states have no visibility and can't force other states's residents to report sales.

[lotsofpulp]

With online sales, all of that is on record on credit card or bank account statements. All they have to do is jack up the penalties on sales/use tax evasion, and randomly audit people.

[toomuchtodo]

The state with the buyer should require through law the buyer to file a transaction record with their state revenue department for use tax unless the receipt contains a transaction ID showing tax was collected by the seller (can any of us argue this is hard in today’s age of API submissions? I don’t believe so).

Buyers then prefer sellers who collect taxes for them. This forces Amazon and other marketplaces to collect the tax.

The law already requires this in aggregate (use tax from the buyer of sales tax wasn’t paid). Very similar to how you can only claim dependents if your provide their social security number. Great way to bring entities into tax payment compliance.

[ikeboy]

It's not practical for states to go after individual buyers

[toomuchtodo]

Disagree. It isn’t hard at all with automated compliance.

[ghaff]

Great. So your state ought to have a record of everything that's been shipped to you.

[toomuchtodo]

Nah, you just make voluntary compliance the preferred option.

If people and Amazon paid their damn taxes, we wouldn’t even be discussing this.

[lostapathy]

There's plenty of smaller sellers that would love to be in compliance, but due to the nature of US sales tax and how FBA works (i.e., you don't know where all your product has been stored) it's practically impossible for them to be in full compliance, so they don't even try. Sometimes better to stay off another state's radar completely than get drug into a spat over partial compliance.

[icebraining]

Right, but they don't, so what exactly are you proposing? It's frankly not clear to me.