Wednesday, 21 November, 2018

US Supreme Court ruling on sales taxes hurts smaller businesses

Supreme Court closes online sales tax loophole US States can now require sales tax on all online purchases from Amazon, eBay, and more
Scott Davis | 24 June, 2018, 23:46

The decision reverses two Supreme Court rulings from decades ago, which said states couldn't require retailers to collect and remit sales taxes if those retailers weren't physically located in the taxing state. That ruling held that a state can not require an out-of-state seller with no physical presence in the state to collect and remit sales taxes on goods the seller ships to consumers there.

The cases the court overturned said that if a business was shipping a product to a state where it didn't have a physical presence such as a warehouse or office, it didn't have to collect the state's sales tax.

You'll have to pay up if the state you live in passes laws that require online retailers to collect sales tax, says Joseph Bishop-Henchman, the executive vice-president of the Tax Foundation. According to the Chicago Tribune, Illinois can collect more sales tax thanks to a Supreme Court ruling on the matter.

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.

In addition to being a win for states, the ruling is a win for large retailers, who argued the physical presence rule was unfair. Small and medium size businesses are most negatively impacted These business are faced with a huge problem because compliance is complicated. He is a member of the firm's Tax Advisory Group based in the Mid-Atlantic Region. If people bought in stores they would have to pay the state tax anyway and it may be convenient and often cheaper still to buy online. It's been a long-running issue for Utah, which has claimed a loss of more than $200 million in sales tax revenue from online purchases by consumers. Some states have exemptions for collecting sales tax.

"I'll do what needs to be done and get it taken care of", said Dave "Lando" Landis, owner of Rocker Rags, a New Mexico-based online seller of clothing with photos and logos of rock musicians. Republican state lawmaker Jeff Partridge, who sponsored the provision in the teacher pay measure, said he's looking forward to the "prospect of a tax cut for the citizens of South Dakota".




"As a regional destination for working, eating, entertainment, and shopping, sales tax revenue is a major part of how we operate our government and improve our community", said Chris Floore, assistant to the county manager for public affairs for Macon-Bibb County.

You may, depending on where you live and what online store you shop at.

This court decision will create a fairer playing field for retailers and make it easier for governments to continue financing themselves effectively through sales tax.

"We'd love to sit down with him and talk about this and educate him about the fairness of it", she said on "Talkline".

Washington, Florida, South Dakota, Nevada and Tennessee get more than half of their total revenues from sales taxes, meaning big gains could be in store. South Dakota has estimated it loses about $50 million annually to e-commerce. As consumers shifted away from brick and mortar business and took their purchase power online, states lost billions in annual tax revenue.

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