Published: Fri, June 22, 2018
Hi-Tech | By Preston Stone

Supreme Court sales tax ruling to make online shopping more expensive

Supreme Court sales tax ruling to make online shopping more expensive

The U.S. Supreme Court ruled Thursday that states can collect sales taxes from online retailers. The 5-4 decision sided with the state of South Dakota against online retailers Wayfair, Overstock.com, and Newegg. Forty-five of the 50 states have sales taxes.

Large online retailers, like Amazon, tend to collect sales tax in most states, but not all.

That's even though Floridians already are technically supposed to pay sales tax on online purchases. He argued that the rule "limited States' ability to seek long-term prosperity and has prevented market participants from competing on an even playing field". "It does seem like it should be more fair if you paid sales tax no matter where you were purchasing".

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

"This is neither the first, nor the second, but the third time this court has been asked whether a state may obligate sellers with no physical presence within its borders to collect tax on sales to residents", Roberts wrote. On the other hand, that also means Minnesotans would be paying $150 million more in sales taxes. "Here in California, we already pay sales taxes on Amazon transactions".

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Smaller sellers who use eBay and Etsy also haven't been collecting sales tax nationwide.

In a post on its website Thursday, the company said it "urges Congress to step in and provide clear tax rules, with a strong small business exemption, to help small businesses take advantage of the Internet to grow and create local jobs". Among other technical and practical reasons cited by the majority for its decision was the argument that no-sales-tax rules hurt state revenues supporting schools and services.

The ruling is sure to elate the state's small retailers.

Chief Justice John Roberts was in the minority.

"Ecommerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule". "CCIA has serious concerns about the future implications for e-commerce if governments are empowered to tax those who reside beyond their borders". Marketplace sellers weren't previously required to automatically collect sales tax on their sales, and the ruling may hurt their sales. A bipartisan group of senators filed a brief in the case supporting South Dakota's effort to overturn the online sales tax ban, essentially acknowledging that the legislative body was too dysfunctional to fix the problem. Shares in large chains with more stores traded higher. "Big victory for fairness and for our country". The DOR decided that as long as a company is doing business in MA using computer software or hardware located in the state, or is using Massachusetts-based delivery services or payment processors, that counts as having a physical presence in the state.

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