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

Supreme Court tax decision good news for Norman

Supreme Court tax decision good news for Norman

The U.S. Supreme Court ruled 5-4 Thursday states can order online retailers to pay sales taxes. The ruling overturned two decades-old Supreme Court decisions that have made it tougher for states to collect sales taxes for certain purchases online, a situation they said costs them revenues each year. The biggest online retailer, Amazon.com, took a small hit, even though it already collects taxes on its sales in all states. Amazon collects sales tax from customers in the 45 states that have a sales tax.

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

Georgia state officials have been pushing for more internet retailers to pay taxes in recent years.

The 16 states with laws similar to South Dakota's, including IN and ME, are less likely to be challenged.

There's still an opening for Congress to consider tax legislation to simplify the collection process, but this decision is good for business at traditional stores without being unfair to online merchants.

Soon after the South Dakota law passed, South Dakota took it to court with retailers Newegg, Wayfair and Overstock, alleging that the companies failed to comply with their state sales tax laws.

Local attorneys also suggest that small online business retailers consult with a CPA or tax lawyer because laws change and software might not keep up. 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. The law required out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and turn it over to the state.

For a large state like Texas, the combined state and local revenue growth could be as high as $1.2 billion per year and will likely grow over time, Walsh said. Online sellers that don't charge sales tax on goods shipped to every state include jewelry website Blue Nile, pet products site Chewy.com and clothing retailer L.L. Bean. That makes me really think twice about whether or not we push online sales as a component of our company.

Hattlestad says although taxpayers will be paying sales tax they didn't previously, that may mean the difference in avoiding increases in income tax or property tax, as government will now have those funds for operating. South Dakota's gambit worked: in its. North Dakota, deciding that companies should charge sales tax even in states where they have no physical location.

The case is South Dakota v. Wayfair, 17-494.

Meanwhile, the biggest players like Amazon have had little choice but to establish true physical presences (warehouses and such) and start collecting tax in all or virtually all states. OH has even asserted that online retailers have a "presence" in the state that obligates them to collect taxes if they put cookies on their customers' computers.

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

Like this: