After the June 21 decision by the United States Supreme Court in the case of South Dakota v. Wayfair, several precious metals and coin industry experts have begun to weigh in on the serious implications for dealers and collectors alike. Some of their warnings are included below.
Warning to Coin Community About Supreme Court’s Interstate Sales Tax Ruling
By Industry Council for Tangible Assets (ICTA) ……
The landscape of online shopping changed with last week’s Supreme Court 5-4 decision in the South Dakota v. Wayfair case. The Court’s decision is that states can now require online retailers beyond their borders to collect sales-tax revenue from consumers.
While most news reports covering the decision refer to “internet sales” subject to states sales tax, two important points are overlooked.
The first is that all remote (interstate) sales are subject to the decision, not just internet sales. For example, sales across state lines could be taxed whether originating from an internet transaction or initiated in any other form whatsoever and however communicated.
The second is that the Court’s opinion assumes that the consumer’s (buyer’s) residence dictates the point of collection.
The Court’s assumption as to point of collection means that a seller must find a way to deal with thousands of state and local sales taxes instead of calculating a sale as if made in the seller’s state and local residence.
Therefore, unless Congress acts, numerous sales taxes will become targets of state legislatures, not just internet sales. More importantly, sales taxes can be applied to anything of any kind or character, hypothetically including accounting and/or legal advice, stocks and bonds, commodities like natural gas and products moved through pipelines—an endless list.
Many states have taxes on their books already that were struck down as violating interstate commerce. The Court places those laws back on the table.
In ICTA’s opinion, Congress must do something it seldom does. It must take a lead to avoid unforeseen consequences. Federal legislation is needed to “build a fence” around appropriate state laws affecting interstate commerce. We will be working toward that end. ICTA will have much more detail and analysis at the World’s Fair of Money.
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Commentary from Mike Fuljenz – Universal Coin & Bullion ……
Many in the media are miscasting the June 21 Supreme Court ruling on interstate sales taxation as only applying to online sales. It doesn’t just apply to online sales. State legislatures can also tax those businesses that advertise on radio, television or print publications – all of which cross state lines.
This ruling – if it is not carefully legislated – opens up the door to unintended consequences for taxation of goods and services never envisioned by the Justices. If states tax a transaction based on a customer’s state of residence, imagine businesses in a popular tourist or business convention location being required to ask customers what state they hail from so they can collect taxes on behalf of their various home states.
A better “win-win” solution, which will increase state tax revenues without hurting businesses, is to tax customers based on where the business is rather than where the customer is, so that small businesses don’t need to learn the tax laws and detailed exemptions of 50 states and over 3,000 counties. No business wants to undergo tax audits in several states, which would also amount to taxation without representation and without city and state services.
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And this, from the Gold & Silver Political Action Committee:
Supreme Court Reverses Course on Internet Sales Tax Collection
On April 17, South Dakota took its fight to overhaul our current interstate sales tax system all the way to the Supreme Court. On June 21, the Court handed down its decision, siding with South Dakota, 39 other states, and the Trump administration. In a 5-4 opinion authored by Justice Kennedy, the Supreme Court ruled that states may require retailers to collect sales tax at the point of sale, a departure from a precedent that was set over 25 years ago. While the South Dakota law being challenged did not seek to impose a sales tax on every sale to the state, it is unclear at this time how various states will react to the new status quo. Jimmy Hayes will be giving a detailed briefing at the August ANA show, so come prepared with your questions!
For general background and analysis of this case: https://tinyurl.com/ycunpd93
For an in-depth dive into the Supreme Court on this case: https://tinyurl.com/ydbxrcb9
If you have any questions or comments, please feel free to contact the Gold & Silver PAC at [email protected]. “Letters to the Editor” are appreciated and may appear in a future newsletter.
John Villavicencio, Political Coordinator for the Gold & Silver PAC
Barry Stuppler, Chairman Gold & Silver Political Action Committee
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Further commentary will no doubt be upcoming.