Thursday's Wayfair Supreme Court decision could mean state legislatures can now force online retailers to start preparing for new rules in the sales tax world. The nonpartisan Government Accountability Office estimated last year that collecting sales tax on all remote sales could bring state and local governments in Florida anywhere from $486 million to $758 million a year.
South Dakota law requires retailers with more than $100,000 in sales or 200 transactions annually in the state to pay a 4.5 percent tax on purchases. 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. Our reading of the ruling is that the case now returns to the South Dakota Supreme Court to evaluate the case on its merits, unfettered by the now antiquated physical nexus standard defined by Bellas Hess (1967) and upheld in Quill (1992). When New York was added to the list of states, a Trump Store spokesperson told Business Insider the online retailer has "always, and will continue to collect, report, and remit sales taxes in jurisdictions where we have an obligation to do so".
Rep. Tom Reed, R-N.Y., said he supported the ruling's creation of a level playing field between online sellers and physical retailers. Rocky Cummings of BDO the accounting, tax, and advisory firm said: "There was very little voluntary compliance with the use tax".
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. One leading voice in that argument, eBay, says many small online businesses will be forced to close. If a company doesn't expect to reach the threshold in a state, it may decide not to collect tax.
Most states now have some kind of sales tax, though the amount-and what items or services are taxed-varies widely from state to state.
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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.
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. The ruling clears the way for states, including MA, to collect an estimated $13 billion or more in extra taxes every year. When you create a way for people to avoid the tax, you distort their behavior (pushing them to buy online when they might otherwise buy in a store) and you reduce tax collections.
South Dakota wanted out-of-state retailers to begin collecting the tax and sued several of them: Overstock.com, electronics retailer Newegg and home goods company Wayfair.
Walls think people understand the importance of keeping brick and mortar businesses for our communities. "It's vital we continue getting that and that we continue getting growth, not just stagnant collections each year", Jennings said at the time.