Published: Fri, June 22, 2018
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SCOTUS Ruling on Internet Sales Tax Called 'Disastrous' for N.H. Economy

SCOTUS Ruling on Internet Sales Tax Called 'Disastrous' for N.H. Economy

The imbalance has also hurt brick-and-mortar stores.

Big chains have been collecting sales tax nationwide because they typically have physical stores in whatever state a purchase is being shipped to. Newly-public sales tax automation company Avalara saw its shares spike 30 percent immediately following the ruling. So it passed a law requiring all but the smallest retailers, including Internet companies, to collect taxes on the sales they make in the state, even if they had no physical presence there.

"This decision will help ensure fairness for Tennessee businesses and will specifically help local businesses compete on an even tax playing field with out-of-state online companies, he said".

Retail trade groups praised the ruling, saying it levels the playing field for local and online businesses.

Online shopping might be getting a bit more expensive in the US.

El Paso, TX - The Supreme Court ruled on Thursday that local and state governments can now force online retailers to collect sales tax in states where they do not have an online presence such as a storefront or a warehouse. Until now, online retailers with no physical presence in a state were not. That minimum requirement was likely meant to avoid an undue burden on small-time mom-and-pop sellers on eBay, Amazon or other online marketplaces. Customers bore the responsibility for paying those taxes, but many were unaware of the responsibility, and states felt they were losing out on potentially billions in lost revenue.

However, on October 1, 2017, the Massachusetts Department of Revenue, under Baker and working with Attorney General Maura Healey, issued a new regulation reinterpreting existing law.

Sixteen states already have "economic nexus" laws created to avoid relying on the physical presence standard, according to MultiState Associates, a consulting firm that tracks state tax policies.

The American Legislative Exchange Council, which lobbies state legislatures across the country, and other groups denounced the ruling in South Dakota v. Wayfair. Now the legislature should consider going back into session to broaden that law and "eliminate the disadvantage retailers with physical locations in CT have long struggled to overcome", said Senate Republican President Pro Tempore Len Fasano.

In Maryland, Comptroller Peter Franchot said in a statement that he was "exceedingly pleased" with the Supreme Court ruling.

Wayfair said that it "welcome [s] the additional clarity provided by the Court's decision today".

You can read the lengthy decision here (PDF).

"You will certainly see, absent congressional action, significant litigation as states try to push the envelope on this", said Mike Dabbs, eBay's senior director of government relations. For instance, South Dakota is hoping to collect as much as $50 million per year which is still fairly noticeable for a state that only collects $1.5B in total revenue per year.

With the ruling, Congress may now be inclined to act on the sales tax issue, he said. But the third party sellers on Amazon do not. Instead, consumers were responsible for send states the necessary taxes - something that most people never do.

"The Court's decision is good news for Main Street business and for states".

Sen. Eric Lesser, D-Longmeadow, Senate chairman of the Committee on Economic Development and Emerging Technologies, said the decision was the correct one.

The current regulation "allows remote sellers to escape an obligation to remit a lawful state tax is unfair and unjust", added Kennedy.

On the flip side, there are a lot of brick-and-mortar small businesses who don't have an online presence.

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