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Governor, Finance chair do not support internet sales tax

24 June, 2018, 23:50 | Author: Shawna Walton
  • Supreme Court closes online sales tax loophole

The Supreme Court just handed down a decision in South Dakota v Wayfair, Inc. that states can force online retailers to collect sales taxes from purchases.

The nation's top court ruled on Thursday that states can collect sales taxes for purchases from businesses not within their borders. Alaska and Montana allow individual cities to collect local sales taxes, according to the Tax Foundation. 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). B&H doesn't require that buyers pay sales tax if they place orders outside of NY or New Jersey, and while you're supposed to later pay those uncollected funds when tax time comes around, the vast majority of people don't.

The cases the court overturned said that if a business was shipping a customer's purchase to a state where the business didn't have a physical presence such as a warehouse or office, the business didn't have to collect sales tax for the state.

But when and if that happens depends on the state: Some may pass laws quickly, others can take years and some states, like the ones that don't have a sales tax, may choose not to require it, says Bishop-Henchman. Rocky Cummings of BDO the accounting, tax, and advisory firm said: "There was very little voluntary compliance with the use tax". That earlier ruling placed the responsibility of paying the online sales tax on customers who generally did not realize they owed it. "It's taxes and regulation all combined in one unfortunate tax", says Raymond Keating, chief economist with the Small Business & Entrepreneurship Council. Some states have exemptions for collecting sales tax.

"I don't have to travel anywhere and typically online prices are still lower than retail stores", Teisanu said.

"The South Dakota model is a safe bet for states, so it's reasonable for them to start there" said Max Behlke, who directs budget and tax issues at the National Conference of State Legislatures.

We asked some vendors of sales-tax services for their advice.

This court decision will create a fairer playing field for retailers and make it easier for governments to continue financing themselves effectively through sales tax.

Washington, Florida, South Dakota, Nevada and Tennessee get more than half of their total revenues from sales taxes, meaning big gains could be in store. The decision was seen as a victory for brick-and-mortar stores, which felt they were at a disadvantage to online outlets that did not need to collect the taxes. To be compliant with the Streamlined Sales Tax Agreement, a State must administer one tax rate.

You may, depending on where you live and what online store you shop at.

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

However, FOX 13 reported last month that the Utah Tax Commission has been quietly inking deals with a number of online retailers to get them to collect taxes.


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