Friday, 16 November, 2018

Supreme Court ruling lets states collect sales tax from online purchases

Supreme Court rules that internet sales can be taxed by states Online Shopping Is About To Get More Expensive, Thanks To A Supreme Court Ruling
Nina Mathis | 22 June, 2018, 18:31

Washington, which doesn't tax personal income or capital gains, depends heavily on sales-tax revenues to help fund government services.

The tax is 6.25 percent.

"They will lose some share in the near term, and local stores may see some of that volume but customers will adjust over time", Kodali said.

Today's ruling upheld a statute from South Dakota, which requires any company with more than $100,000 in annual sales to collect sales tax on sales made to customers in the state. It will leave shoppers with lighter wallets but is a big financial win for states.

Back in 1967 though, it's been argued, the proportion of out-of-state transactions to local retail was slim.

"Consumers are used to paying sales tax, so no big deal", Tim Bajarin, principal analyst with Campbell-based Creative Strategies, a market researcher, said Thursday. "Great victory for consumers and retailers". So it passed a law requiring all but the smallest retailers, including Internet companies, to collect taxes on the sales they make in the state, even if they had no physical presence there.

Without that, there's theoretically nothing stopping a state from copying South Dakota's laws and insisting that all online retailers above a certain size collect sales tax.




Only five states do not have a state-wide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

The retailers refused to collect sales tax - citing a 1992 law that prohibited states from collecting sales tax from retailers that did not have a "physical presence" in their state, such as a store, warehouse or sales representatives.

Not having to pay state sales tax also gave many internet retailers an edge on their brick-and-mortar counterparts, as sales tax contributes to the overall purchase price of a good.

Liberal Ruth Bader Ginsburg joined four conservative justices in the majority in the ruling authored by Justice Anthony Kennedy, while conservative Chief Justice John Roberts joined the court's three other liberals in dissent.

"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", he wrote, calling the physical presence rule "an incorrect interpretation of the Commerce Clause". "We have long fought the battle to defend Main Street businesses and now with today's ruling, all businesses will compete on a level playing field", South Dakota Republican Governor Dennis Daugaard said.

OH has been known to try to collect excise taxes on cigars in the past, but most states, similar to the sales tax issue, have avoided going after consumers for missing taxes on online purchases. But most of Amazon's purchases are from millions of independent merchants who post inventory on the web store, and many of those sales now aren't taxed. President Donald Trump, who has bashed online retail powerhouse Amazon.com Inc and whose administration backed South Dakota, said on Twitter.

Smaller sellers who use eBay and Etsy also haven't been collecting sales tax nationwide. North Dakota from 1992, which set the property or employees standard for sales taxes using the Court's (debated) dormant commerce clause power to restrict state taxation of interstate commerce.

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