States can, however, begin passing laws that require online retailers to collect sales tax from customers even if they have no physical presence in a state. North Dakota, which said mail orders from out-of-state companies didn’t have to add sales tax. The Court also found that “the expansion of e-commerce has also increased the revenue shortfall faced by States seeking to collect their sales and use taxes”.
Retailers with physical storefronts celebrated the decision, as did the National Retail Federation, a trade group comprised of some of the biggest brick-and-mortar retailers in the US.
“Will states step forward and pass laws similar to South Dakota?” asked Annette Nellen, director of the Masters in Science in Taxation program at San Jose State University, on Thursday.
All that is soon to change as today’s landmark reversal gives states the authority to start demanding their fair share of internet sales tax.
But, he said, “I think that it’s safe to say there’s a substantive amount of money here”.
The Trump administration had urged the justices to side with South Dakota.
“Startups and small businesses may benefit from the physical presence rule, but here South Dakota affords small merchants a reasonable degree of protection”, the ruling says. Five states don’t charge sales tax.
The decision provides clarity that could lead to Congress passing legislation to create uniform national rules for collecting state taxes, to avoid a hodgepodge of individual state rules that would make the tax collection especially onerous for small e-commerce businesses. But that money is likely to come out of the pockets of consumers.
But Karr said he wasn’t concerned about challenges complying with new regulations that might not be consistent state to state.
A federal audit said states lost $13.7 billion in uncollected sales tax revenue past year. “At the local level, you’d probably see property tax freezes or reductions”. Amazon was down almost two percent, although Amazon may be one of the least-affected retailers. Furthermore, because most of the larger catalog and online retailers are based in Florida and Pennsylvania-two states with no tax on cigars-the move to collect additional taxes would be dramatic.
“It certainly clears up any confusion, clears up some of the rhetoric”, said Rep. Jay Kaufman, D-Lexington, chairman of the Committee on Revenue.
Today’s ruling caused publicly traded e-commerce companies share prices to tumble, with Shopify, Etsy, Amazon, eBay, Alibaba all recording losses in midday trading on their respective US exchanges. But just because I can buy a unicorn from a company based on Tesla that’s orbiting in space, doesn’t mean I should be able to escape paying my share of the NY sales tax. Under it, member states have uniformly streamlined their sales tax codes.
Amazon, with its network of warehouses, voluntarily collects sales tax in every state that charges it, though third-party sellers who use the site to sell goods don’t have to. “The storefront on Main Street is paying property taxes in their local community; they’re paying the person that’s helping you try on the shoes, and they’ve got to pay for the inventory”, she said, but they lose a lot of sales because people know they can buy the same shoes online without paying taxes”. “Its advertising seeks to create an image of lovely, peaceful homes, but it also says that “‘[o] ne of the best things about buying through Wayfair is that we do not have to charge sales tax.'”…