Published: Sun, June 24, 2018
Hi-Tech | By Kristin Zimmerman

Supreme Court closes online sales tax loophole

Supreme Court closes online sales tax loophole

A case study Vince Kadlubek was originally happy enough when he heard of the Supreme Court ruling. "If this would increase collections by 20 percent, that's nearly $16 million". He sells most of his admission tickets online. States and municipalities stand to gain billions of dollars in annual revenue.

The General Accountability Office estimates that states could have taken in $13.4 billion more in revenues past year with an online sales tax.

Holderness says platforms like Etsy could potentially assume the costs associated with complying with the new tax framework "to attract merchants". "I think it's overall a positive".

"I understand that the customer is going to have to pay more". Perhaps, Kadlubek could simply limit online sales to residents of New Mexico. So it passed a law requiring all but the smallest retailers, including Internet companies, to collect taxes on the sales they make in the state, even if they had no physical presence there. The situation varies, depending on the state, but in Illinois, Amazon and other internet-based sellers collect the sales tax while firms without a presence are not required to do so. "We're not interested in applying more taxes", said Blair. "We've been operating in a system where we've been at a competitive disadvantage". He believes the new ruling could bring a significant amount of revenue to the Mountain State. If people bought in stores they would have to pay the state tax anyway and it may be convenient and often cheaper still to buy online.

The winners are local brick and mortar businesses, which will be able to compete pricewise with online retail giants.

"The amount of the impact of this Court decision is hard to estimate, but we would expect that over time, the impact would be very similar to Amazon.com", he said.

Do you shop online? In criticizing Amazon and its founder, Jeff Bezos, who also owns The Washington Post, Trump said Amazon did not collect sales taxes.

The decision was applauded by brick-and-mortar retailers, including Walmart, who have long said they were disadvantaged under the previous law because they have to charge sales tax, while online retailers did not in states where they had no physical presence. Small and medium size businesses are most negatively impacted These business are faced with a huge problem because compliance is complicated. "Each state gets to determine whether the products, goods, and services sold by the sellers should be subject to that state's sales tax. We do have a mechanism in place in Tennessee that we can begin collecting sales tax", Hawk said. Some states have exemptions for collecting sales tax. North Dakota is "unsound and incorrect". Allen Walton CEO of SpyGuy.com, an online seller of security equipment complained: "This makes life very hard for people like me. I personally think it's a good move", he said. "While we don't know how much this will specifically mean for our sales tax revenue, we are certain it will have a positive impact on our sales tax revenue". South Dakota's governor has said his state loses out on an estimated $50 million a year in sales tax that doesn't get collected by out-of-state sellers. The biggest online retailer, Amazon.com, took a small hit, even though it already collects taxes on its sales in all states. The state conceded in court, however, that it could only win by persuading the Supreme Court to do away with its physical presence rule.

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