Supreme Court sales tax ruling to make online shopping more expensive

Supreme Court sales tax ruling to make online shopping more expensive

Supreme Court sales tax ruling to make online shopping more expensive

South Dakota believed it was losing millions of dollars per year in tax revenue and passed a law requiring out-of-state vendors to charge and submit sales taxes to the state if they reached a threshold of selling $100,000 worth of goods or 200 or more separate deliveries into the state.

"Prior to today, Quill required that, to force out-of-state retailers to collect tax on sales to residents of the state, the out-of-state retailer had to have a physical presence in the state", said Jon Barooshian, a partner at law firm Bowditch.

The ruling is a victory for big chains with a presence in many states, since they usually collect sales tax on online purchases already.

The decision, in which South Dakota prevailed over the online furniture retailer Wayfair, immediately sent ripples through the internet shopping industry sending shares tumbling in Amazon, eBay, Etsy and others.

Hearst said MA shoppers who want to avoid paying a state sales tax, travel to New Hampshire. Some states that lack a broad sales tax, including New Hampshire, Montana and Washington, had submitted arguments to the court taking the opposite position.

Quill stated that U.S. states could only change sales taxes on companies with a physical presence in the state. "The current tax system favors online retailers over brick-and-mortar businesses, and undermines fair and open competition in the marketplace", wrote the National Retail Federation in a statement.

As part of the decision, Justice Anthony Kennedy, who wrote for the majority, pointed out how much the landscape has chanced since 1992.

"This is just insuring that all businesses.regardless of whether or not they have a presence in the State of Florida are collecting the tax", said Carolyn Johnson, the Director of Business Economic Development for the Florida Chamber of Commerce.

"As in so many other areas, technology has evolved faster than the law and left us with at times weird, unfair results", she said.

But the move could impact thousands of smaller retailers in MA and across the country as they try to comply with a labyrinth of differing state and local rules. The Supreme Court decision clears the way for states to unwind that competitive advantage.

States such as South Dakota, which have no income tax and rely heavily on sales taxes, stand to gain the most from the new ruling, according to a Barclays research note. It has to do with the way states collect taxes from internet sales.

The federal Government Accountability Office estimated last november that states could have collected between $8.5 billion and $13.4 billion in sales taxes in 2017 if they had expanded taxing authority.

In the digital era, the costs of complying with different tax regimes "are largely unrelated to whether a company happens to have a physical presence in a state", Kennedy wrote.

"That has meant about $300 million in lost revenue every year, including $160 million for the state, $112 million for cities and $24 million for counties", Neal said.

Chief Justice John Roberts offered the dissenting opinion, along with Justices Stephen Breyer, Elena Kagan, and Sonia Sotomayor.

Related news

[an error occurred while processing the directive]