Thursday's decision in the case of South Dakota v. Wayfair overturns a 1992 ruling that said retailers could be required to collect state sales taxes only in sales in states where the retailers had a physical presence.
"The old physical presence rule created these pockets where businesses were structuring and locating in states where they didn't have a lot of sales so they could sell online and sell across the border, not having to collect sales tax", North Dakota Tax Commissioner Ryan Rauschenberger said.
The Retail Industry Leaders Association, another trade group, said the ruling allows retailers to compete "without government's thumb on the scale" and called it "a win for all those who believe in free markets". Lawmakers can model the South Dakota law that was at issue before the Supreme Court, which would require retailers to collect the tax only if they delivered more than $100,000 of goods or services into the state or had more than 200 deliveries a year. Other sellers she's spoken with "are afraid they are going to have to do 50 sales tax returns".
Honestly, this shouldn't be surprising to anyone, but it's a bummer nonetheless. Henchman thinks the real figure is about half that, based on his analysis of states' experience as they have succeeded in taxing a larger fraction of online sales over the last few years. The court gave South Dakota a victory, knocking aside the physical-presence rule as arbitrary and obsolete in the digital age. 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. But smaller online stores may not have been collecting sales tax, which the Supreme Court ruling could change.
And for the state of Georgia and local governments, a U.S. Supreme Court ruling Thursday means hundreds of millions of dollars in extra revenue pouring in annually.
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For example, the popular electronics seller B&H only charges sales tax in NY and New Jersey, where it has a physical presence. Oklahoma sales tax collections should make a significant jump thanks to a decision issued Thursday by the U.S.
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"(Local option sales tax revenue) is 24 percent of our general fund budget.
"The Supreme Case opens the opportunity for Oklahoma to craft more laws in the future that applies to a broader range of entities that are out of state", she said. "I suspect that we will be hearing from SD shortly on this point". Online sellers that don't charge sales tax on goods shipped to every state include jewelry website Blue Nile, pet products site Chewy.com and clothing retailer L.L. Bean. OH has even asserted that online retailers have a "presence" in the state that obligates them to collect taxes if they put cookies on their customers' computers.
"There's no reason you should have to pay sales taxes in one scenario and not the other", Deskins said.
We asked Campbell who would have to collect taxes for transactions with South Dakota residents and when. Both states already require retailers to collect tax if they have digital ties to the states.
Most states now have some kind of sales tax, though the amount-and what items or services are taxed-varies widely from state to state. If a company doesn't expect to reach the threshold in a state, it may decide not to collect tax.