Online sellers consider how to comply with sales-tax ruling

Sean Reid
June 24, 2018

States will be able to force shoppers to pay sales tax when they make online purchases under a Supreme Court decision Thursday, June 21, that will leave shoppers with lighter wallets but is a big win for states.

"The old physical presence rule created these pockets where businesses were structuring and locating in states where they didn't have a lot of sales so they could sell online and sell across the border, not having to collect sales tax", North Dakota Tax Commissioner Ryan Rauschenberger said.

"CEO Matthew Shay said in a statement Thursday that the ruling clears the way for "a fair and level playing field where all retailers compete under the same sales tax rules" no matter whether they operate online, in stores or both".

The effect is expected to be positive and widespread because 45 states impose sales taxes and until now were barred from requiring those companies to collect remote sales taxes.


Honestly, this shouldn't be surprising to anyone, but it's a bummer nonetheless.

In recent years, City Manager Pete Peterson said online sales has grown "two or three" times the rate of brick-and-mortar sales. It sent the law back to South Dakota's highest court to be revisited. The ruling should also eliminate the need for the kind of workarounds that MA regulators have recently devised to snare more online vendors, such as arguing that Internet "cookies" constituted a physical presence, a policy Kennedy cited as he dispensed with the physical-presence test. With the bigger players now forced to add sales tax, the total cost of online products becomes less of an issue for smaller businesses with physical presences in the state. That could bring $500 million or more in additional sales tax revenue to Florida, and the Legislature should require that the tax be collected. "The process of enacting state laws could take years". "I suspect that we will be hearing from SD shortly on this point".

Nevertheless, the Court stopped short of giving its full blessing to the South Dakota law, stating that the taxpayers had made other challenges to the law and those need to be addressed by the state courts first.

Carl Davis, research director for the Institute on Taxation and Economic Policy, a non-partisan think tank, told Business Insider the Trump Store's sales tax collection policy is "a textbook example of the problem that this ruling is meant to address".


The Supreme Court of the United States today decided Wayfair, Inc. v. Reaction to the ruling is mixed Companies with a physical retail presence in states have cheered the decision since before they were at a competitive disadvantage with online sellers.

West Virginia Chamber of Commerce President Steve Roberts said Friday on MetroNews "Talkline" if state leaders chose to begin the collection, it could mean real money for West Virginia.

Second, Hawaii is not a member of the Streamlined Sales Tax Agreement and can not be a member unless its laws are amended significantly.

Lauren Boggs Meslar has been selling patterned paper straws, hemp gift cords and other lifestyle goods on Etsy since 2012, relying on sales from the Etsy shop and her own e-commerce website to "help pay the bills" for her family.


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