In a ruling that could benefit Nebraska’s tax coffers, the Supreme Court says states can force online shoppers to pay sales tax.
At the March 24 Johnson City Commission meeting, Finance Director Janet Jennings spoke about how online sales have slowly deteriorated in recent years, citing online sales as the driving factor.
And for the state of Georgia and local governments, a U.S. Supreme Court ruling Thursday means hundreds of millions of dollars in extra revenue pouring in annually.
Nevertheless, the court stopped short of giving its full blessing to the South Dakota law, stating that the taxpayers had made other challenges to the law and those need to be addressed by the state courts first. Part of the draw to buying things online, aside from the convenience, was avoiding sales tax (assuming you bought from a smaller merchant), which on more expensive products could cost more than shipping – that’s not to mention the possibility of free shipping in some cases, too. Reaction to the ruling is mixed Companies with a physical retail presence in states have cheered the decision since before they were at a competitive disadvantage with online sellers.
The court’s 5-to-4 decision could have an impact on millions of Americans nearly immediately. Writing for the dissenters, Roberts agreed that the earlier decisions were wrongly decided. “Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress”. The company said that any attempt by states to “subject remote small businesses to audits and lawsuits” will lead to “increased litigation across the country”.
“When I took office and our state was struggling financially, at that desperate time, I might have considered supporting legislation to enforce West Virginia sales tax on out-of-state transactions”, Justice said.
“New York and California would likely have to make some pretty big changes”, said John Buhl of the Tax Foundation.
The Trump administration had urged the justices to side with South Dakota. The ruling upheld a South Dakota law that exempts sellers with $100,000 or less in sales in the state. Congress could also step in and block retroactivity, Jones said. “It’s going to revive Main Street South Dakota and Main Street America”. They had resulted in some companies not collecting sales tax on every online purchase.
She pointed to a local shoe store, for example.
For as long as internet shopping has been around, the issue of sales tax has been a hot-button issue.
Lauren Boggs Meslar has been selling patterned paper straws, hemp gift cords and other lifestyle goods on Etsy since 2012, relying on sales from the Etsy shop and her own e-commerce website to “help pay the bills” for her family. In 2015, 72.5 percent of Tennessee’s total tax revenues came from sales tax.
At a local retailer, a consumer is going to pay a six percent tax rate. The estimates of the amount of sales tax lost to sellers outside of a jurisdiction is from $8 billion to $33 a year according to the Supreme Court decision. But anti-tax groups and Republicans in Congress have bottled up such proposals.
South Dakota concluded in 2016 that the explosion in online sales changed the market dramatically.
“This is a great victory”, National Retail Federation CEO Matt Shay said during an interview with FOX Business’ Stuart Varney.
The decision was applauded by brick-and-mortar retailers, including Walmart, who have long said they were disadvantaged under the previous law because they have to charge sales tax, while online retailers did not in states where they had no physical presence. Amazon.com and Overstock.com are among the companies that say they support a nationwide law that would relieve retailers from dealing with a patchwork of state tax laws.
TrumpStore.com now collects sales taxes in just four states.
The case is South Dakota v. Wayfair, 17-494.
“It is going to squash the entrepreneurship, I just can not stress that enough”, Christy Keyon, who owns Bird and Bean Coffee House and Naomi and Olive Gift shop said. “And it’s about time”.