SCOTUS ruling has huge implications for online shopping

Dwayne Harmon
June 22, 2018

Others, including Wayfair, Overstock, and Newegg, didn't collect sales tax, and South Dakota has sued them for failing to collect its sales taxes. 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. The cases the court overturned said that if a business was shipping a customer's purchase to a state where the business didn't have a physical presence such as a warehouse or office, the business didn't have to collect the state's sales tax. But retailers with stores in the state, which do have to collect sales taxes, have long argued that the ruling put them at a competitive disadvantage with companies like Amazon.

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A 5 to 4 ruling from the Supreme Court will change that, but Kevin McCarthy with the Arizona Tax Research Association says the impact won't immediately be felt in Arizona. "Today's decision makes a dramatic change". Roberts argued that the decision isn't one that should be decided by the Supreme Court. Now governments will be able to collect billions of dollars in local sales tax.

That said, South Dakota's tax system includes several features that appear created to prevent discrimination against or undue burdens upon interstate commerce. But most of Amazon's purchases are from millions of independent merchants who post inventory on the web store, and many of those sales now aren't taxed.

The United States Supreme Court released a major decision about online sales tax on Thursday, but the country's largest e-commerce company is largely inoculated against any fallout from it.

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"Any state with sales taxes already has some sort of variance when it comes to exemptions and reporting rules", he said.

States can now force online shoppers to pay state sales tax. Accordingly, the National Retail Federation, which substantially represents traditional retailers, celebrated the decision and called on Congress to pass uniform sales tax rules for omnichannel merchants. This overturns a decision from 1992 that mandated that states could levy taxes on businesses only if they had a brick-and-mortar presence within that state's borders.

States such as South Dakota, which have no income tax and rely heavily on sales taxes, stand to gain the most from the new ruling, according to a Barclays research note.

The state Department of Finance could not say how much NY was losing under the old ruling - or when it would enact new regulations to take advantage of the new ruling.

The slight negative is in regards to Amazon's third-party sellers. That will open the door to more states passing laws similar to South Dakota's.

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