Taxing online sellers is a victory for local stores

24 June, 2018, 23:38 | Author: Lora Ball
  • Supreme Court closes online sales tax loophole

Governor Mary Fallin also applauded the Court decision which overturned an earlier ruling that a business had to have a physical presence in a state in order for that state to collect state sales tax on online purchases.

In today's decision, authored by Justice Anthony Kennedy, the Court sided with South Dakota, which had passed a law in 2016 that required large out-of-state online retailers to collect sales taxes on merchandise sold in the state. As of 2015, states and localities collected $1.6 trillion in taxes, so closing the online sales tax loophole would be enough to boost that by about one-half of one percent.

The South Dakota law challenged in the case provided that a business having $100,000 in annual gross sales in South Dakota, or conducting 200 business transactions in South Dakota, needed to collect South Dakota's sales tax on those sales or transactions. Customers were generally supposed to pay the tax to the state themselves if they don't get charged it, but the vast majority didn't.

The 5-4 ruling is widely seen as a victory for brick-and-mortar stores, which previously said online retailers' ability to avoid sales-tax collection gave them an advantage. He is a member of the firm's Tax Advisory Group based in the Mid-Atlantic Region.

Ed Teisanu, a 39-year-old sales manager in Minnesota, doesn't think a new tax will change his buying habits, which is a mix of in-store and online. The use tax Many states have a use tax equivalent to the sales tax that applies to online purchases but most online businesses do not comply with it.

Second, Hawaii is not a member of the Streamlined Sales Tax Agreement and can not be a member unless its laws are amended significantly.

More news: Supreme Court sides with online sales tax

"I've been seeing a lot of Chicken Little 'the sky is falling, the sky is falling, '" says Sueanne Shirzay, who operates a shop on Etsy and her personal website selling handmade jewelry. If you have a million residents buying stuff online, you're not going to chase a million people.

Carl Davis, research director for the Institute on Taxation and Economic Policy, a non-partisan think tank, told Business Insider the Trump Store's sales tax collection policy is "a textbook example of the problem that this ruling is meant to address".

Most states now have some kind of sales tax, though the amount-and what items or services are taxed-varies widely from state to state.

Georgia state officials have been pushing for more internet retailers to pay taxes in recent years.

This week's decision provides a way to clean up the patchwork: States may now require sellers to collect and remit sales tax, regardless of physical presence, so long as the states take certain steps to minimize the burden of compliance on out-of-state sellers. That's unfair to the local pet supply store or jeweler, and the disparity will come to an end.

"New York and California would likely have to make some pretty big changes", said John Buhl of the Tax Foundation. But the promise of additional revenue from online sales taxes may push more states to join.

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