Published: Sun, June 24, 2018
Markets | By Josh Butler

NRF applauds online sales tax decision

NRF applauds online sales tax decision

Hart Posen an associate professor at the Wisconsin School of Business thinks that the decision can be a boon for Amazon.

Tuesday, the Supreme Court ruled that states can require online retailers to collect sales tax.

Now, for the first time since 1992, any of the USA states have the right to impose a tax on online shopping. In other words, the plaintiffs have one more opportunity to make any other Commerce Clause challenges to the law (aside from physical presence) and until we know what they opt to do, enforcement must wait.

"If you are a local business that also has an online presence and you have a sale in California or Georgia, you are going to have to invest in a software program or do a lot of bookkeeping because you are going to have to pay sales tax in every state that you ship too". 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. Republican state lawmaker Jeff Partridge, who sponsored the provision in the teacher pay measure, said he's looking forward to the "prospect of a tax cut for the citizens of South Dakota". The whole system became a messy patchwork.

In a statement by Rauschenberger, there will be criteria businesses have to meet before they are required to collect sales tax for the state.

As many as 24 states and their local governments could see tax revenue gains of at least 1 percent, according to Fitch's research. Some states have exemptions for collecting sales tax. Brey, who also has an online business, has closed three stores.

That means the government either has to cut back on services or it has to raise taxes on something else. Tom McGee CEO of the International Council of Shopping Centers said: "We think this levels the playing field and promotes competition". That's because more and more of our spending has been on things that aren't taxed - mostly because the economy is shifting away from taxed goods towards untaxed services, but also partly because of the online sales tax loophole.

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But to brick-and-mortar stores, the ruling righted a decades-old imbalance that favored internet retailers and led to the demise of thousands of merchants.

Because of the Commerce Clause of the US Constitution, states are still subject to a requirement not to discriminate against or unduly burden out-of-state sellers.

The ruling means states can force people who purchase goods online to pay sales tax.

For example, South Dakota makes software available to out-of-state retailers, for free, to help them comply with its sales tax. "This is a significant increase in competitiveness for local retail".

Five states - Delaware, Montana, Oregon, New Hampshire, and Alaska - do not have a state sales tax.

In Oklahoma and in Norman, the biggest online retailer, Amazon, was already voluntarily remitting sales tax which comes to the city from the Oklahoma Tax Commission as a use tax. Although Act 41 was patterned after the South Dakota law, there are differences that sellers could focus on to question the law's validity.

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