PONTIAC, Mich. -- An online retailer specializing in folders and binders said Friday that it will reject all orders from South Dakota after the Supreme Court ruling allowing businesses to collect sales taxes from online transactions.
Company Folders, based in Pontiac, said the sales tax requirement of more than $100,000 in annual sales or 200 annual transactions from South Dakota is problematic.
“It’s just not feasible for us to do business with South Dakota while also complying with these new rules,” said founder and CEO Vladimir Gendelman in a statement. “It would be absurd for us to charge all of our South Dakotan clients an extra bill after the fact if we end up crossing the threshold. Nor would it be worth the hassle to charge them sales tax up front and then send a refund later if the tax isn’t required.”
Reached Friday afternoon, June 22, Gendelman said he hadn’t yet considered excluding other states, such as North Dakota. He said he hasn’t yet ran the numbers on other states with this target sales amount in mind.
Last year, South Dakota orders reached about $85,000, or $15,000 shy of the new $100,000 threshold, Gendelman said. That’s where an order late in the year could immediately implement the sales tax.
“From my perspective, we don’t always know what we are going to sell in South Dakota,” Gendelman said. “One big order could take us over the limit.”
That would make the company, founded in 2003, try to settle the tax on earlier orders.
“That’s not cool to do to begin with. Who is then going to pay?” he said.
Company Folders has been recognized as being one of the fastest-growing private companies in the U.S.
“It’s disappointing to have to turn away business,” Gendelman said, “but the Supreme Court hasn’t left us much choice. This is an irresponsible decision that will have horrible implications for any small business that sells online - including Company Folders.”