Supreme Court decision on sales tax could see local impact

Supreme Court decision on sales tax could see local impact

Supreme Court decision on sales tax could see local impact

By overturning a ruling that had made much of the internet a tax-free zone, the court delivered a victory to South Dakota and effectively blessed its model of collecting sales tax from online retailers like Wayfair Inc. and Etsy Inc. The ruling reversed a 1992 court decision that held online retailers could only be required to collect and remit sales taxes if they had stores or some other "nexus" in states.

In 2016, South Dakota passed a law requiring any retailer that conducts at least 200 transactions or has at least $100,000 in annual sales within its borders to collect sales tax, regardless of whether the business has a location in the state. In upholding the ruling the Supreme Court overturned a 1992 ruling that required a "physical presence" in a state in order to mandate collection of sales tax. That won't necessarily be the case at Amazon, the world's largest online retailer, which already collects sales tax in every state that has such a tax.

For the full story, head on over to CNN Money. If merchants don't collect it, then it's up to the consumer to declare the purchase on income tax forms, which has been inconsistent.

Last November, the federal Government Accountability Office estimated that states could have collected between $8.5 billion and $13.4 billion in sales taxes in 2017 if they had expanded taxing authority.

Here in Florida, state officials are stressing that this is not a new tax.

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Gov. Charlie Baker said the effect in the commonwealth would be minimal because state regulations already create parity for Bay State retailers.

Tax lawyers including Richard Jones, a tax partner at Sullivan & Worcester in Boston, said they interpreted the decision as meaning sales tax could be applied retroactively - perhaps on sales as far back as 10 years.

"The internet's prevalence and power have changed the dynamics of the national economy", Justice Anthony Kennedy wrote in the majority opinion.

The ruling means some states can expand their tax collection systems, but it will take months to get systems up and running, Behlke said.

"There has been pushback against these new laws but the new ruling gives states more support for these positions", said Fitch's Walsh.

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The Trump administration had urged the justices to side with South Dakota.

"Consumers are used to paying sales tax, so no big deal", Tim Bajarin, principal analyst with Campbell-based Creative Strategies, a market researcher, said Thursday. Chief Justice John Roberts echoed our stance in his dissent, stating "The burden will fall disproportionately on small businesses".

The Supreme Court ruled 5-4 in favor of South Dakota.

The department indicated that businesses now collecting sales taxes should continue, but it is unclear when online sellers will need to begin collecting the taxes. The next step will be to see how strictly the courts interpret this ruling, specifically, whether it would allow states to force retailers to also pay excise taxes-also known as OTP taxes-on products. The state argued it was losing between $48 million and $58 million per year in uncollected sales tax, and the issue ended up in the Supreme Court.

Ross said without the pending state law sales-tax collection is hard to enforce because compliance is voluntary.

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