Taxing online sellers is a victory for local stores

Randal Sanchez
June 24, 2018

In a blog post Thursday, Etsy CEO Josh Silverman called on Congress to craft a "simple, fair federal solution" for the many smaller vendors those operating on operating on its platform.

But to brick-and-mortar stores, the ruling righted a decades-old imbalance that favored internet retailers and led to the demise of thousands of merchants. NY and California's rules are more complex, and those states have sought to increase sales tax collection by using broader definitions of what it means to do business within their borders.

"One report says West Virginia stands to have the second-biggest gain on a percentage basis in the country by collecting on online sales", he said. Even before the Supreme Court's ruling, however, Amazon had said it was moving to collect state sales taxes on its inventory sold in all 45 states with statewide taxes.

Beginning in 2014, as part of a compromise, Tennessee started collecting sales tax from online Amazon purchases because the behemoth online retailer had a physical presence in state with warehouses and distribution centers in Chattanooga, Lebanon and Murfreesboro.

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.

A lot has changed since 1992. (Remember your first Cyber Monday?) Last year, e-commerce sales totaled $450 billion, or about 13 percent of all retail activity. To be compliant with the Streamlined Sales Tax Agreement, a State must administer one tax rate. Brick-and-mortar gets some relief.

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The 5-4 decision made by the U.S. Supreme Court on Thursday, June 21, will now allow states to collect sales taxes from online businesses whether they have a physical location in that state or not.

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.

South Dakota concluded in 2016 that the explosion in online sales changed the market dramatically.

Now, states can push ahead with legislation requiring companies to collect and remit sales taxes for goods bought online elsewhere. The South Dakota Supreme Court invalidated the law because Quill Corp. v.

He explained, "There are a small handful of states that may, in pretty short order, announce that they are enforcing existing economic nexus standards which, under the law, took effect immediately upon the Supreme Court Decision (North Dakota and Vermont)". The use tax Many states have a use tax equivalent to the sales tax that applies to online purchases but most online businesses do not comply with it. That will bring Springfield millions of dollars while closing a loophole that hurt IL retailers. The ruling should also eliminate the need for the kind of workarounds that MA regulators have recently devised to snare more online vendors, such as arguing that Internet "cookies" constituted a physical presence, a policy Kennedy cited as he dispensed with the physical-presence test.

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