What's that extra in my online cart? Soon, maybe a sales tax

What's that extra in my online cart? Soon, maybe a sales tax

In Wayfair v. South Dakota, the Court concluded that the "sales tax nexus" previously articulated by the Court in Quill v.

The U.S. Supreme Court ruled Thursday that states can require retailers to collect and remit sales taxes on out-of-state purchases.

The Legislature should pass legislation next year to finally require retailers to collect sales tax regardless of whether they have a physical presence in Florida. That's a question on many minds after Thursday's Supreme Court ruling in South Dakota v Wayfair (see EcommerceBytes' article, "Supreme Court Throws Out Longstanding Sales Tax Rule-Book", published on Saturday). Walmart is another retailer that collects online sales tax because it has physical locations in the state. He also had supported Nebraska joining with 33 other states and the District of Columbia previous year in supporting South Dakota's case before the high court.

Even the likes of Wayfair said it collects and remit sales tax on approximately 80 percent of its orders in the United States while Overstock.com said the decision will have no appreciable impact on its business.

While some online sellers recently have started collecting sales taxes, others, like L.L. Bean, do not. The nonpartisan Government Accountability Office estimated last year that collecting sales tax on all remote sales could bring state and local governments in Florida anywhere from $486 million to $758 million a year.

"I do a lot in Washington state for whatever reason", Kiesel said. That may change as state laws are modified. Forty-five of the 50 states impose sales taxes on purchases. Thanks to its Prime subscription service, customers get free streaming of music and videos, free two-day shipping and a host of other perks that they will still come back for, even if they now have to pay sales tax.

Retail trade groups praised the ruling, saying it levels the playing field for local and online businesses.

In today's decision, authored by Justice Anthony Kennedy, the Court sided with South Dakota, which had passed a law in 2016 that required large out-of-state online retailers to collect sales taxes on merchandise sold in the state.




"Startups and small businesses may benefit from the physical presence rule, but here South Dakota affords small merchants a reasonable degree of protection", the ruling says.

Some tax experts said the ruling could turn out to be nearly as significant for American businesses as the recent rewrite of the US federal tax code.

The ruling is a victory for big chains with a presence in many states, since they usually collect sales tax on online purchases already.

Kennedy also wrote that the concerns of small retailers, who do minimal online sales, could be dealt with by Congress or by a further court case.

The court held that its prior "physical presence rule" was "unsound and incorrect" and so prior decisions from 1967 and 1992 were both overruled.

Wayfair said it already collects sales taxes on 80 percent of its US orders. In isolation, that is an improvement in the efficiency of the economy because people will shop based on the product and experience and not the tax consequences.

"Quill creates rather than resolves market distortions", the ruling says.

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