Wayfair: No big impact from Supreme Court case

The eBay Inc. application is seen on an Apple Inc. iPhone in this arranged

The eBay Inc. application is seen on an Apple Inc. iPhone in this arranged

The U.S. Supreme Court ruled in a 5-4 decision Thursday that online retailers can now collect sales taxes on out-of-state purchases.

Crowe & Dunlevy attorney Hayley R. Scott, said many people don't report online sales on their state income taxes and making businesses responsible will likely mean a difference of billions of dollars nationwide. A Bicycle Retailer retailer survey earlier this year found that 40 percent of retailers who responded do some online sales. This will create a new revenue stream from state and local governments.

Now, for the first time since 1992, any of the U.S. states have the right to impose a tax on online shopping. She says the court decision will "level the playing field for IL brick-and-mortar retailers".

We asked some vendors of sales-tax services for their advice. Smaller, local businesses also complained that the previous decisions put them at a disadvantage with online competitors.

The US Supreme Court says states can force online shoppers to pay sales tax. Even before the Supreme Court's ruling, however, Amazon had said it was moving to collect state sales taxes on its inventory sold in all 45 states with statewide taxes.

Ed Teisanu, a 39-year-old sales manager in Minnesota, doesn't think a new tax will change his buying habits, which is a mix of in-store and online. Big victory for fairness and for our country. These small retailers will be less impacted by an uptick in prices as they will be able to pass that on to the consumer.

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The decision provides clarity that could lead to Congress passing legislation to create uniform national rules for collecting state taxes, to avoid a hodgepodge of individual state rules that would make the tax collection especially onerous for small e-commerce businesses.

The law specifically protects small businesses from collecting sales taxes if they have less than $100,000 in sales or fewer than 200 transactions in the state.

Home goods seller Wayfair and other e-commerce companies had attempted to challenge a South Dakota law that levies taxes on purchases made through certain online retailers.

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. Forty-five of the 50 states impose sales taxes on purchases. More than 20 states define a seller's physical presence as including any affiliated website. The internet retailers argued that allowing every state to collect taxes on online sales would cause confusion and unreasonable burdens in today's online-heavy retail economy.

CPA and Senior Director of Tax & Accounting North America for Wolters Kluwer (publisher of CCH SureTax) said under the 1992 Quill ruling, the interpretation of the Commerce Clause was that the "substantial nexus" required to justify imposition of a sales tax was "physical presence" (that is, property or employees) of the company in the state. The firm already collects sales tax on the goods it sells directly, but it does not always do so for products sold by independent merchants using its platform.

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