Online sales tax ruling could add $150 million to Minnesota’s coffers

Online sales tax ruling could add $150 million to Minnesota’s coffers

Today the Supreme Court upheld South Dakota's law, with a 5-4 decision that states could, indeed, force sales taxes on residents' online purchases from out-of-state retailers. 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.

Since Amazon has a local presence in most states, in fact, it has been collecting sales taxes for customers located in the 45 states that actually collect them since April 2017.

Three large retailers-Wayfair, Overstock and Newegg-do not, and South Dakota sued them for failing to collect taxes after the state's law went into effect.

But sellers that only have a physical presence in a single state or a few states have been able to avoid charging customers sales tax when they shipped to addresses outside those states.

"If we keep getting good news like this, we won't have anything to worry about", Schumacher said, pointing to demands on state programs.

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"As Amazon has continued to thrive despite losing the obvious pricing benefit it used to have from not collecting sales taxes in its proprietary business, it remains to be seen if this new ruling will have any real impact on its third-party sales, or if the convenience for shoppers and growing benefits to Prime members will mitigate the pricing shift", he 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". "Rejecting the physical presence rule is necessary to ensure that artificial competitive advantages are not created by this court's precedents". Justice Anthony Kennedy noted the difference between mail-order sales back then, which totaled around $180 billion, and ecommerce sales now. This overturns a decision from 1992 that mandated that states could levy taxes on businesses only if they had a brick-and-mortar presence within that state's borders.

Chief Justice John G. Roberts Jr. disagreed in his dissent. Furthermore, because most of the larger catalog and online retailers are based in Florida and Pennsylvania-two states with no tax on cigars-the move to collect additional taxes would be dramatic. "Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress". Even though the effective date of the decision is today, Rauschenberger is unsure when online retailers will be on the hook. More than a dozen states have already adopted laws like that ahead of the court's decision, according to state tax policy expert Joseph Crosby. Florida also finally should join 24 states that have adopted the Streamlined Sales and Use Tax Agreement, which provides common definitions of products and services and uniform rules to make it easier for retailers to administer and collect the tax.

"Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", Roberts wrote in a dissent joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor. In that case, Quill v.

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