Supreme Court To Rule On Sales Tax Of Online Purchases

Supreme Court Case Could Change Sales Tax Rules For Online Retailers

The Wall Street Journal's Anti-Tax Suicide Mission

Supporters want to overturn the ruling in the "Quill vs North Dakota" case that prevented catalog sellers to remit sales taxes.

Based on a prevailing Supreme Court law, retailers can be forced to collect taxes only in states where the company has physical presence. But other online sellers, from 1-800 Contacts to home goods site Wayfair, can often sidestep charging the tax. The state court invalidated a 2016 state law requiring e-commerce retailers to collect sales taxes on behalf of the state if they had more than 200 transactions annually or $100,000 in sales.

In four other states where the case is expected to have less impact, sales tax revenue accounts for less than 20% of their overall tax revenue - Vermont (12%), NY (16.8%), Virginia (18.5%) and the District of Columbia (18.5%).

Small retailers are not collecting state taxes from online shoppers unless the store has a physical presence in the state where the buyer lives.

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More than 40 states are asking the Supreme Court to reconsider that rule in a case being argued Tuesday. South Dakota and other state and local governments say they've been cheated out of billions of dollars because of this rule. But numerous small retailers sell through large websites like Amazon. "A retailer today can transact a significant amount of business in a state without ever being physically present in the state".

"It's a long time in coming", said Sen. "Amazon.com did not begin selling books out of Jeff Bezos's garage until July 1995, and Bezos himself described Amazon as a pipsqueak in comparison to Barnes & Noble". But a Supreme Court case being heard Tuesday could change that. Taxes can even vary within a zip code.

Q: What are examples of online retailers that don't collect sales tax nationwide?

"The Internet has proven to be one of the most vital and dynamic sectors of our economy".

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Isaacson argues there are thousands of complex tax laws at the state and local levels and complying with so many regulations in different states could harm at-home businesses. But since Wayfair doesn't have to collect it, it's up to you to remember and report it to the state when you file your taxes next year.

The ruling won't have a direct impact in five other states - Alaska, Delaware, Montana, New Hampshire and OR - because they have no statewide sales tax.

Overstock.com has a small but unmistakable advantage for anyone looking to buy a 3-cup Cuisinart Mini Prep Plus Food Processor for shipment to Germantown, Maryland: Purchasers don't have to pay the 6 percent sales tax they'd owe at a local store.

The case now before the Supreme Court involves South Dakota, which has no income tax and relies heavily on sales tax for revenue. But the General Accounting Office estimates that the number would be at most about $13 billion. Sales tax collection is nearly certainly in their future, whether this year or next, and they should begin immediately working with the appropriate resources to identify the states already collecting sales and use taxes and whether they have any retroactive liability.

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