Commerce Stocks Smacked By Supreme Court Ruling On State Taxes

Jun 23, 2018, 02:45
Commerce Stocks Smacked By Supreme Court Ruling On State Taxes

Online shopping will become more expensive soon, as the U.S. Supreme court ruled Thursday that states can enforce internet retailers to collect sales taxes, even if they don't have a physical presence in the state, reports CNN Money.

IN lawmakers anticipated the ruling in 2017 when they passed a law that imposed sales tax on companies that did at least $100,000 worth of business or more than 200 separate transactions in the state in a year.

In Illinois, whether a shopper is charged sales tax at online checkout has depended on whether the retailer had a large enough physical presence in the state to trigger collection requirements, such as maintaining a store, office or warehouse. "Wayfair has long supported a legislative solution that would establish a level playing field for brick-and-mortar and online retailers by permitting states to collect sales tax on online sales".

Companies will pass the cost of sales tax on to consumers.

South Dakota has estimated that it could take in up to $50 million a year in additional revenue with these taxes being collected.

The primary revenue source for the city's general fund is use and sales tax, which together are two-thirds of that budget pie, Kier said.

Customers were then meant to pay the sales tax themselves. Justice Anthony Kennedy wrote the 5-4 decision, joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch.

There are now significant complexities in the thousands of state and local sales tax laws, including different minimum thresholds, tax holidays, and product tax category rules. Kennedy also said that the rule makes no sense, and that "this Court should not maintain a rule that ignores these substantial virtual connections to the State". South Dakota was backed by the Trump administration in the case.

While today's decision is not the one for which we advocated, the Supreme Court did acknowledge the important difference between big internet retailers and the creative entrepreneurs on our platform.

"Other states shouldn't be able to force Granite State business owners to navigate a complicated web of tax collection rules in order to collect and remit taxes that we don't even have in our state", U.S. Rep. Carol Shea-Porter, D-N.H., added.

"By validating South Dakota's law today", Moylan argues, "the Supreme Court has granted states the power to tax any business, anywhere in the country, simply for daring to use the internet to access a nationwide market".

But the move could impact thousands of smaller retailers in MA and across the country as they try to comply with a labyrinth of differing state and local rules.

Chief Justice John Roberts offered the dissenting opinion, along with Justices Stephen Breyer, Elena Kagan, and Sonia Sotomayor.

The online stores have contended that charging sales tax would be "burdensome" for small- to mid-sized shops. But after the court ruling, most others will be required to collect them.

States would have to adopt laws such as South Dakota's first, which was the subject of the Supreme Court ruling (PDF). The law requires 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 send it to the state. She said the system will be more equitable, with less of a tax burden across the board on businesses if they all pay their fair share.

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