Published: Sun, June 24, 2018
Money | By Ethel Goodwin

Realtors® Commend Supreme Court Decision Promoting Fairness Between Online, Main Street Businesses

Realtors® Commend Supreme Court Decision Promoting Fairness Between Online, Main Street Businesses

The 5-4 court opinion finally recognizes the impact of the internet and acknowledges commerce has changed since the court ruled in the 1960s and early 1990s that businesses had to have a physical presence in the state before the state could require them to collect state and local sales taxes. The South Dakota law under review was the result of an intentional effort by South Dakota to pass a law with an "economic nexus" threshold for use tax collection purposes that would conflict with the "physical presence" standard imposed by the Supreme Court's 1992 decision in Quill Corp. v. Amazon.com, with its network of warehouses, also collects sales tax in every state that charges it, though third party sellers who use the site to sell goods don't have to.

A new law that goes into effect in January says companies that do at least $250,000 in online business or have at least 200 separate sales purchases must pay sales tax to the state. B&H doesn't require that buyers pay sales tax if they place orders outside of NY or New Jersey, and while you're supposed to later pay those uncollected funds when tax time comes around, the vast majority of people don't. The ruling potentially means thousands of small businesses that never collected sales tax except in their home states will be responsible for tax in some 10,000 state and local jurisdictions nationwide.

From here on out, states can now force shoppers to pay the sales tax upfront no matter where you're buying from.

"When I took office and our state was struggling financially, at that desperate time, I might have considered supporting legislation to enforce West Virginia sales tax on out-of-state transactions", Justice said.

States also still must announce dates by which retailers must be in compliance, says Scott Peterson, a vice president at Avalara, a manufacturer of tax collection software.

This law affects IL shoppers that check out of shopping sites without paying sales tax, and the sites are now required to add them. Now, on most of their online purchases there will be sales tax.

But taxpayers could raise challenges, including the argument that collecting sales tax for previous sales could subject the seller to double taxation if the customer had already paid sales tax.

"I don't have to travel anywhere and typically online prices are still lower than retail stores", Teisanu said.

The tax compliance software and services are created to work with the programs retailers use to process their sales transactions.

"Sales tax doesn't make that big of a difference".

In any event, today's decision is a victory for bricks and mortar retailers who have built stores in Hawaii and have employed local residents. Walmart is another retailer that collects online sales tax because it has physical locations in the state. Brick-and-mortar gets some relief.

"So many of us who sell on platforms like Etsy are juggling all the time, families and businesses, or potential businesses along with day jobs", says von Braun, whose Etsy shop sells original artwork.

While almost impossible to determine how much revenue Johnson City or Washington County loses to online sales, state officials estimate Tennessee loses between $200 million and $450 million annually.

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