Now All Online Companies Must Charge Sales Tax

Marco Green
June 24, 2018

The high court has said for more than 50 years in various rulings that states can not collect taxes from sellers without a "physical presence" in those states. "Last year, ecommerce retail sales alone were estimated at $453.5 billion", he wrote.

But in the often perverse calculus of modern day politics, the move to go after that billion dollar pot of money may not be as easy as it seems. "We hope that implementation of the sales tax will be done uniformly across state lines to ensure a fair and efficient system of tax collection".

Some small businesses worry that their online sales will become overly complex if they have to collect sales taxes for many states.

The Supreme Court agreed to overturn those decisions in a 5-4 ruling. Forty-five of the 50 states impose sales taxes on purchases. But the vice chairman of the Senate Finance Committee said a lot of forces stand between the promise and realization of a new revenue stream.

"In South Dakota, 80 percent of our state budget come from consumption based taxes", South Dakota Senator Deb Peters said. It's good for the people.

The ruling likely will result in many consumers paying more for online purchases. Brey, who also has an online business, has closed three stores. In what has been called the "tax case of the millennium" by the National Conference of State Legislatures, South Dakota sued Wayfair, an online furniture retailer, because the shop omitted state sales tax from its orders.

Rep. Annie Kuster said, "this misguided ruling will subject (small businesses) to thousands of taxing jurisdictions and burdensome red tape across the country".

Supreme Court Justice Anthony Kennedy had seemed sympathetic to the states' plight, and he essentially invited the South Dakota case in 2015 in Direct Marketing Association v. Brohl.

The biggest impact on Amazon will actually be on the third-party Amazon Marketplace, which makes up around half of Amazon's sales.

"Main Street retailers that employ your neighbors, pay property tax and support the little league team and high school band have always been required to collect sales tax that online stores did not, putting them at an automatic disadvantage", association President Andy Ellen said in a statement. The decision sent share prices for Amazon, Overstock, Wayfair, Ebay and Etsy tumbling.

"The problem with the physical-presence rule is that it was first conceived of in 1967, two years before the moon landing and decades before the first retail transaction occurred over the internet", the filing noted. That number is believed to have risen since then with the growth of online commerce in recent years. It required out of state retailers with more than $100,000 in SD sales to collect sales tax.

The Minnesota Revenue Department said its staff is "analyzing the court's decision" and will provide guidance to retailers within 30 days. North Dakota decision was outdated and that sales tax collection is no longer the burden it might once have been due to changes in technology.

Louisiana, Tennessee, South Dakota, Oklahoma and Alabama all stand to reap the highest gains as a percentage of their current revenue, the research found.

The Supreme Court rejected a challenge to that law, overturning a 1992 Supreme Court decision that established the physical presence requirement.

New Yorkers will soon have nowhere to hide from the steep sales tax. "It's a way of us bringing in income and having the nice things that we all enjoy being able to have for public use", Sander said. In essence, he sees the divide more practically: consumers and online retailers vs. local business. For now, the way forward for Texas is unclear.

Other reports by Click Lancashire

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