Supreme Court sales tax ruling to make online shopping more expensive

22 Juin, 2018, 02:26 | Auteur: Auguste Feret
  • Supreme Court rules for states in online sales tax case

The Supreme Court ruled Thursday that states can collect state sales taxes from online retailers on consumer purchases.

Now, as internet sales grow - they reached $123.7 billion in the first quarter of 2018, up nearly 4 percent over the previous quarter, according to the U.S. Department of Commerce - the court has made a different decision, citing studies that suggest states lose out on up to $33.9 billion a year in uncollected online sales taxes.

In 2016, South Dakota passed a law requiring any retailer that conducts at least 200 transactions or has at least $100,000 in annual sales within its borders to collect sales tax, regardless of whether the business has a location in the state.

Prohibitions against collecting sales taxes from online retailers cost states as much as $13.4 billion a year ago, according to the Government Accountability Office.

For the full story, head on over to CNN Money. Texas had estimated it was losing $1 billion a year in sales taxes because of the law. South Dakota expects to collect another $48 million to $58 million in taxes a year because of this ruling. The old rule enabled online commerce to boom and helped drive an explosion of small businesses that sell their wares. "The burden is going to higher on SMBs because of the admin work required for each state - there is /will be software to simplify this, but nonetheless the impact is going to be greater on the smaller/high growth e-commerce companies", the investor said. North Dakota - was "flawed on its own terms" and was especially problematic due to the rise of internet retail. And it sued Wayfair, and Newegg, which won in lower court decisions. Also, states will be taking in more in sales taxes, which they will have to decide how to use. Ten states require out-of-state sellers to notify buyers and inform states of the unpaid sales taxes. It remains unclear whether Thursday's ruling will prompt them to revise their laws, or encourage the remaining 19 states to impose taxes on retailers even smaller than those affected by South Dakota's law. Customers were generally supposed to pay the tax to the state themselves if they don't get charged it, but the vast majority didn't.

Chris Geehern, a spokesman for Associated Industries of MA, a business trade group, said the court ruling has the potential to "introduce a high degree of complexity for companies that do sell things over the web". This gave them an advantage over brick-and-mortar stores. Chief Justice John Roberts wrote a dissenting opinion.

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The decision paves the way for states to force online merchants to collect sales tax on orders from residents, regardless of where the company itself exists.

Castro said she was "quite content" with the court's decision, calling it a "huge win for our small businesses who really struggled to compete".

Many large online retailers, including Walmart, Target and Apple, already collect state taxes. They had resulted in some companies not collecting sales tax on every online purchase.

In his majority opinion Thursday, Justice Anthony Kennedy cited the expansion of internet commerce since the court's 1992 decision, noting national mail-order sales totaled $180 billion at that point, compared to $453.5 billion in online sales in 2017, according to the U.S. Department of Commerce. Now, rivals will be charging sales tax where they hadn't before.

Kennedy wrote that the 1992 precedent that affirmed that a physical presence is required - a case called Quill v.


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