Supreme Court ruling says states can now tax online purchases

Alonzo Simpson
June 24, 2018

Thanks to a 1967 Supreme Court ruling that said states couldn't force mail-order catalogs to collect sales tax unless that company had a physical location in the state, online retailers have been able to skirt the issue of collecting sales tax. They had resulted in some companies not collecting sales tax on every online purchase.

The U.S. Supreme Court has announced their decision on the S. Dakota v. Wayfair case, overturning the long-standing rule that states could not tax businesses or sellers outside of that state's borders. However, legal experts say it remains unclear whether some states may impose taxes on retailers even smaller than those affected by South Dakota's law.

The 5-4 decision was a victory for South Dakota, which wanted the high court's blessing for its recently enacted sales tax on internet transactions.

Gov. Justice says this is a legislative issue that would have to be passed for the state to enforce the collection of out-of-state sales taxes.

Previous bills in the Utah State Legislature to require online retailers to collect sales taxes have failed under pushback from the public and taxpayer watchdog groups.

While this ruling is beneficial to state governments, it stands to have a negative impact on retailers and consumers alike. To be compliant with the Streamlined Sales Tax Agreement, a state must administer one tax rate.

Meanwhile, a statement release Thursday said the state Chamber was "very pleased" with the decision.

"We'd love to sit down with him and talk about this and educate him about the fairness of it", she said on "Talkline". He said the court should not be doing the work of Congress, even if its earlier precedents were wrongly decided.

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In turn, the US Government Accountability Office (GAO) said that sales taxes may generate $ 13 billion in revenues to local budgets. But it would affect the smaller business that exclusively have an online presence. The ruling upheld a South Dakota law that exempts sellers with $100,000 or less in sales in the state. "The storefront on Main Street is paying property taxes in their local community; they're paying the person that's helping you try on the shoes, and they've got to pay for the inventory", she said, but they lose a lot of sales because people know they can buy the same shoes online without paying taxes".

Lawmakers have tried unsuccessfully to pass online sales tax legislation for years, with the most recent attempt failing after several conservatives called the provision a tax increase on online shoppers.

Sales tax collection in Florida already has been evolving. now collects sales taxes in just four states.

A case study Vince Kadlubek was originally happy enough when he heard of the Supreme Court ruling.

Estimates have North Dakota bringing in as much as $20 to $50 million in sales tax now that the rules have changed.

"I'll do what needs to be done and get it taken care of", said Dave "Lando" Landis, owner of Rocker Rags, a New Mexico-based online seller of clothing with photos and logos of rock musicians.

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