IN officials react to Supreme Court's online sales tax decision

Supreme Court closes online sales tax loophole

Supreme Court closes online sales tax loophole

States will be able to force shoppers to pay sales tax when they make online purchases under a Supreme Court decision Thursday, June 21, that will leave shoppers with lighter wallets but is a big win for states. That ruling held that a state can not require an out-of-state seller with no physical presence in the state to collect and remit sales taxes on goods the seller ships to consumers there.

"If you are a local business that also has an online presence and you have a sale in California or Georgia, you are going to have to invest in a software program or do a lot of bookkeeping because you are going to have to pay sales tax in every state that you ship too". They said local tax laws vary widely across the nation and calculating sales taxes for 10,000 local taxing jurisdictions remains a daunting task.

Honestly, this shouldn't be surprising to anyone, but it's a bummer nonetheless. "Each state gets to determine whether the products, goods, and services sold by the sellers should be subject to that state's sales tax".

The Illinois law takes effect on October 1, and it's built on legislation passed in South Dakota that is the focus of the recent Supreme Court decision.

For several years, Norman businesses have said all they want is a level playing field when competing with online sales. 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).

What happens next? IL has on the books a provision identical to South Dakota's, so it should be able to move quickly to require sales tax in most online transactions.

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The case the court ruled in has to do with a law passed by South Dakota in 2016.

"When I took office and our state was struggling financially, at that desperate time, I might have considered supporting legislation to enforce West Virginia sales tax on out-of-state transactions", Justice said. The Act takes effect on July 1, 2018 and applies to taxable years beginning after December 31, 2017.

This week's ruling worries some small retailers that having the extra sales tax charge could drive away customers. Republican state lawmaker Jeff Partridge, who sponsored the provision in the teacher pay measure, said he's looking forward to the "prospect of a tax cut for the citizens of South Dakota".

The Legislature should pass legislation next year to finally require retailers to collect sales tax regardless of whether they have a physical presence in Florida.

In Oklahoma and in Norman, the biggest online retailer, Amazon, was already voluntarily remitting sales tax which comes to the city from the Oklahoma Tax Commission as a use tax. Some states have exemptions for collecting sales tax.

In any event, today's decision is a victory for bricks and mortar retailers who have built stores in Hawaii and have employed local residents. "While we don't know how much this will specifically mean for our sales tax revenue, we are certain it will have a positive impact on our sales tax revenue".

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