Published: Fri, June 22, 2018
Money | By Hannah Jacobs

Will You Have to Pay More Sales Taxes on Your Online Purchases?

Will You Have to Pay More Sales Taxes on Your Online Purchases?

"It will further level the playing field between in-state brick-and-mortar retailers and their online competitors, while also boosting Indiana's sales tax base".

The Supreme Court said the physical presence rule was "unsound and incorrect".

Sen. Tom Briese of Albion said he plans to introduce an Internet sales tax bill next year that would direct the additional dollars into property tax relief.

In truth, this doesn't have much impact on Amazon, which has been collecting sales tax across the country since a year ago. The ruling came on a 5-4 majority decision with Justices Anthony Kennedy, Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch voting in favor, with John Roberts voting against along with Stephen Breyer, Sonia Sotomayor and Elena Kagan.


If a business had a physical address in a state, it's required to charge sales tax for all orders in that state.

Richard Anklam, executive director of the New Mexico Tax Research Institute, described the ruling as "a favorable decision for the state, which has tried to achieve this result for quite some time".

Nellen said it's also possible Congress will step in and "tone down" the ruling, or "require states to do something to make it easier". North Dakota from 1992, which set the property or employees standard for sales taxes using the Court's (debated) dormant commerce clause power to restrict state taxation of interstate commerce. "States are already confronting the complexities of defining physical presence in the Cyber Age", he wrote.

"Today's decision promises to subject small businesses reliant on e-commerce to new and burdensome tax obligations in states across the nation", said Ed Black, president of the Computer & Communications Industry Association, in a statement Thursday.


Washington, Pennsylvania and Minnesota enacted laws previous year requiring Amazon and other online platforms to collect taxes on marketplace sales.

The federal Government Accountability Office estimated last november that states could have collected between $8.5 billion and $13.4 billion in sales taxes in 2017 if they had expanded taxing authority.

The court upheld a 2016 South Dakota law requiring some online merchants - those with more than $100,000 in annual sales to state residents or 200 transactions with state residents - to collect the South Dakota sales tax, which is 4.5 percent.

In the digital era, the costs of complying with different tax regimes "are largely unrelated to whether a company happens to have a physical presence in a state", Kennedy wrote. "(They) pay property taxes, lease or own retail space, support their communities through charitable contributions and help their communities recover after natural disasters". The case is South Dakota v. Wayfair.


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