Online sales tax ruling could add $150 million to Minnesota’s coffers

E-commerce giant Amazon voluntarily agreed in 2017 to start paying New Mexico gross receipts tax, though it is unclear exactly how much the state has collected because tax filings are confidential.

As an example, lawyers for the online retailers told the high court that in IL, a Snickers bar costs more in taxes than a Twix bar, since food items containing flour are not treated as candy for tax purposes. Billions in sales every year will now be taxed, which had been left untouched for over a generation. Residents are now obligated to pay a use tax on out-of-state online purchases.

“It levels the playing field for those who invest in brick-and-mortar facilities in our communities, pay property taxes and employ our citizens”, she said.

Hufstetler was instrumental in crafting legislation that drops the top tax rate to 5.75 percent, from 6 percent, next year and schedules a decrease to 5.5 percent in 2020.

State and local governments are analyzing the specific ramifications. Other states looking to tax internet sales will also likely have to exclude small businesses in order to withstand legal scrutiny.

Rick Brown, president of the Alabama Retail Association, said the ruling was a win for local businesses.

“Amazon’s third-party business should be minimally affected in the long term from states imposing taxes on online sales, as the impact is equal across the e-commerce ecosystem.” said Jitendra Waral, an analyst at Bloomberg Intelligence.

Although it is the poster child for big e-commerce, Amazon wasn’t involved in the lawsuit and the immediate decision doesn’t affect the company dramatically. Big victory for fairness and for our country.

State officials – including in SC, with its 6 percent sales tax – have argued they were losing out on millions – if not, in some cases, billions – of dollars in revenue a year under the Supreme Court’s previous 1992 decision.

With this ruling look for more states and local governments to push for taxes on online physical and digital sales.

The current regulation “allows remote sellers to escape an obligation to remit a lawful state tax is unfair and unjust”, added Kennedy.

Internet retailers had long chosen to not charge sales tax based on a 1992 ruling from the Supreme Court.

“The internet’s prevalence and power have changed the dynamics of the national economy”, Justice Anthony Kennedy wrote in the majority opinion. Justices Ruth Bader Ginsburg, Clarence Thomas, Samuel Alito and Neil Gorsuch joined his opinion.

“It will make it an even playing field for retailers in the state of Colorado to now compete with retailers out of state”, Hartman said.

Many online sales sites, including Amazon and Best Buy, already collect Minnesota sales taxes.

Washington, Pennsylvania and Minnesota enacted laws previous year requiring Amazon and other online platforms to collect taxes on marketplace sales. That’s because they typically have a physical store in whatever state the purchase is being shipped to.

Many would be surprised to learn that a “use” tax is already technically required on all out-of-state online purchases.

Until now, many sellers that have a physical presence in only a single state or a few states have been able to avoid charging sales taxes when they ship to addresses outside those states.