Supreme Court ruling lets states collect sales tax from online purchases

  • Supreme Court ruling lets states collect sales tax from online purchases

Supreme Court ruling lets states collect sales tax from online purchases

One Greenfield business said it's not about avoiding the sales tax for most online shoppers.

That physical presence standard was just overturned by the Supreme Court in the case South Dakota v. Wayfair, by a 5-4 decision.

With this ruling look for more states and local governments to push for taxes on online physical and digital sales. As a result, states argued they would lose millions in sales tax each year.

Justice Anthony Kennedy wrote that the previous decisions were flawed. "These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause", he wrote in an opinion joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch. Kennedy wrote that the rule "limited States' ability to seek long-term prosperity and has prevented market participants from competing on an even playing field".

As an example, lawyers for the online retailers told the high court that in IL, a Snickers bar costs more in taxes than a Twix bar, since food items containing flour are not treated as candy for tax purposes.

Companies will pass the cost of sales tax on to consumers.

He said the ruling was "good news, but it's not a windfall".

Sucharita Kodali, a retail analyst with Forrester, called the ruling "bad news" for thousands of major online retailers.

State and local governments had grown increasingly agitated as sales from brick and mortar retailers gave way to online retail, which now comprises approximately 9.5% of the dollar value of total purchases. "They will need to stop thinking about where they have employees and other potential physical presence, and start thinking about where they're making sales". The exception is when buying from a third-party seller that sells goods on Amazon. Well, most streaming services taxes are there they are far less than what you would pay with a cable TV package. "It does seem like it should be more fair if you paid sales tax no matter where you were purchasing".

"New Hampshire's lack of a sales tax is a competitive advantage for our state, and this decision will unfairly punish small businesses that are the backbone of our economy", U.S. Senator Maggie Hassan said in a statement.

Sununu said this ruling goes against the New Hampshire way, as it forces small businesses and small states to bear the burden for big businesses and high tax states. 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.

Chief Justice John Roberts was in the minority.

"Main Street retailers that employ your neighbors, pay property tax and support the little league team and high school band have always been required to collect sales tax that online stores did not, putting them at an automatic disadvantage", association President Andy Ellen said in a statement.

This has been a point of contention between states and online retailers for a long time.

National retailers such as Apple, Target and Walmart are already collecting online sales taxes.

The U.S. Supreme Court's decision about online sales tax is viewed as a win for states - but those with aggressive collection policies, such as NY and California, could face challenges from online retailers. 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.

"A lot about our world and economy has changed in the 26 years since our nation's highest court last ruled on this issue", said Gov. Eric Holcomb.

South Dakota was backed by President Donald Trump's administration in the case.