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California is clobbering small businesses with a retroactive tax grab
Posted on 2/8/21 at 4:43 pm
Posted on 2/8/21 at 4:43 pm
quote:
Isabel Rubinas of Glen Ellyn, Ill., operates Lollipop Seeds, a virtual boutique that sells clothing for young children online. And like many small specialty businesses, its sales have slumped badly during the COVID-19 pandemic.
It’s also being clobbered by the California Department of Tax and Fee Administration, the state agency that oversees the collection of sales and use taxes. This month the CDTFA froze Rubinas’ business bank account in Illinois in an effort to collect thousands of dollars in taxes on sales that Lollipop Seeds made to California shoppers through Amazon.com in 2017, 2018 and 2019. The freeze threatens to push Lollipop Seeds out of business.
And her dilemma is not unique. For about two years, advocates of small business say, the agency has been dunning out-of-state retailers that sold through Amazon’s marketplace prior to 2019, when Amazon started collecting sales taxes on those transactions — and seeking to collect taxes on sales from as far back as 2012. A trade association for those sellers has sued, accusing the agency of an unconstitutional overreach and unlawful discrimination.
The CDTFA’s mission is important, overseeing taxes that support schools, public safety and other essential services. And out-of-state online sellers that don’t collect sales taxes have an unfair advantage over in-state stores that do. That’s why state lawmakers around the country sought for years to force Amazon and other online retailers to collect sales taxes, ultimately leading the Supreme Court in 2018 to overturn decades-old precedents and let states require companies outside their borders to collect and remit taxes on sales to people inside their borders.
California did so through a law enacted in 2019. But the CDTFA argues that retailers that relied on Amazon to store and ship their goods are liable for taxes even before then, dating back to the first day any of their products were stored by Amazon in a California warehouse — even though Amazon is managing the entire process through its “Fulfillment by Amazon” program.
In its lawsuit, the Online Merchants Guild argues that the duty to collect those taxes should have fallen on Amazon, which acts as a virtual consignment store and should have been treated that way. But state tax officials gave the company a pass from 2012 to 2019, creating a hole that the CDTFA is trying to fill by retroactively taxing companies like Lollipop Seeds.
LINK
Just Cali doing Cali things...
7
Posted on 2/8/21 at 4:50 pm to rickgrimes
I just read where the German government was trying to seize the Bitcoin account of someone they put in jail but couldn't because it was encrypted.
Maybe that is a way to keep government from grabbing property.
Maybe that is a way to keep government from grabbing property.
Posted on 2/8/21 at 4:53 pm to rickgrimes
Sounds like they are taxing interstate commerce.
Posted on 2/8/21 at 4:55 pm to Auburn1968
Retroactively. But sure. Taxing interstate commerce.
Posted on 2/8/21 at 4:56 pm to rickgrimes
Learn to swim!
Learn to swim!
Learn to swim!
Learn to swim!
Learn to swim!
Posted on 2/8/21 at 5:00 pm to rickgrimes
Louisiana’s handling of such sales is to extort a database from the sellers and then go after the individual buyers.
I guess Cali said “Hold my White Claw.”
I guess Cali said “Hold my White Claw.”
Posted on 2/8/21 at 5:05 pm to rickgrimes
I knew states would eventually require sales tax to be paid, but going after it retroactively is ridiculous.
Posted on 2/8/21 at 5:09 pm to rickgrimes
I don't know how Isabel Rubinas votes but if it's democrat then she needs to pay up and not complain because that is exactly what she voted for. If not then she has my sympathy
Posted on 2/8/21 at 5:20 pm to rickgrimes
The taxes should fall to Amazon as they are the consignment store, but CA is scared to exact anything from Amazon retroactively - and is trying to attack small businesses instead that don't know their rights.
From Cornell Law:
"It has been customary from the begin-ning for Congress to give some retroactive effect to its tax laws, usually making them effective from the beginning of the tax year or from the date of introduction of the bill that became the law."
When was this bill introduced?
Also, the SCOTUS Wayfair ruling is terrifying when you read the Court's opinion.
From Cornell Law:
"It has been customary from the begin-ning for Congress to give some retroactive effect to its tax laws, usually making them effective from the beginning of the tax year or from the date of introduction of the bill that became the law."
When was this bill introduced?
Also, the SCOTUS Wayfair ruling is terrifying when you read the Court's opinion.
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