[Music]  Welcome to FDC's ecom education vlog. My name is Mike Fleming and I am the founder of Michael J Fleming &  Associates. We also are known as sales  tax and more and what I'd like to share  with you today are some sales tax basics  and why the most recent Supreme Court  case this South Dakota verse Wayfair that was decided on Thursday June 21st. Why it has such an impact not only on  the sales tax world but for e-commerce sellers as well I'm going to use a term called Nexus you may have heard of this before and when we use this term we simply mean some sort of link or connection with the state and it's the linker connection that has to be present  before state can require you to  collected sales tax or pay its income taxes and for the last 50 years when we're talking about sales tax there's  got to be some sort of physical  component to this linker connection so we've disagreed as to what exactly a physical component is but you know  people have been protected sellers have  been protected that a state just can't  go out and say okay you know you need to  collect our sales tax because of this. There's had to be that physical  component of this linker connection now  this case overturned national Bella's Hess which is a 1967 case that  introduced the concept of physical  presence and then quill in 1992  reaffirmed the need for physical  presence you know this court didn't  overturn just overturn those two cases I  mean they eviscerated the whole concept  of physical presence they said that the  court should have never introduced it. It's an artificial construct it's it's a  it actually creates problems rather than solves problems so the court erred when introducing it now what this opens up  the way for is what we call an economic  Nexus in other word you can have a link with a state now just by making sales into it you know and that is an absolute  nightmare  you could now have a responsibility to potentially collect tax in all 45 states that charge a sales tax plus Washington DC the state of South Dakota which was  you know going after wayfarer and utilizing this economic Nexus they had a  threshold of a hundred thousand dollars  or two hundred trees actions now a  hundred thousand dollars of sales in South Dakota that's a lot of money but  200 transactions that that could be a  very small amount of money let's say  you're selling $5 items that's only a thousand dollars so you know this can. You can see how this could get very  disturbing  now some people out there are saying you  know the Supreme Court is going to step  in unfortunately we don't have time to  go into all the reasons why I don't  believe this is going to happen it may  happen but I just think the deck is  stacked against ecommerce sellers and we  will not get any movement from Congress  or at least any movement that's going to appreciably help ecommerce sellers. We  can you know for the Amazon sellers that  can wait for Amazon but that's not going  to happen overnight I think that that's  a three to five year process for again a  number of different reasons we can go  into when we have more time. At this  point there really aren't any good  solutions so I think we have to start resigning ourselves that sales tax is  going to be a bigger part of our lives  and that we need to start planning and  putting it into our budgets and into our  business models one of the first things  that you want to do right now is  evaluate your sales by state. Second thing you want to do is start  counting the number of transactions that  you have and then the third thing is  look at those states out there that  already have thresholds in place. By the way there's only about 23 states that we need to look at right now pretty much all the states are going to start  implementing this but it's going to take  them you know some of them maybe 30 days  but some of them may be a good 12 - 14  months. So this is going to be constantly  evolving over time it's nothing to panic  about there are ways forward we got to  use common sense when we're looking at  this in the case I mentioned earlier if  you're 200 transactions only equals a  thousand dollars you know who cares what  the state says if it doesn't make good  business sense than why do it. We have to  use common sense when we're doing this. However I think the states are going to  be very aggressive enforcing not only  this but all the other types of neck is  Nexus that are still out there and if  your sales are material in any state  your exposure is material then I suggest  you take some action and start  protecting yourself. Thanks very much I  appreciate your time and look forward to  sharing again soon.  [Music]

Michael Fleming
Sales Tax and More

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