Online tax ruling could mean $20M for NM

22 June, 2018, 18:31 | Author: Lynette Payne
  • The Supreme Court rules against Wayfair and other online retailers and overturns ban on the collection of online sales taxes. Jenny Kane  AP

However, one online retailer, Nick Martin, the owner The Pro's Closet, argued in a 2014 BRAIN opinion piece that a system to collect state taxes nationally would be a burden on small operations. "The Internet's prevalence and power have changed the dynamics of the national economy", the court said in its decision in the case, South Dakota v. Wayfair.

"This is just insuring that all businesses.regardless of whether or not they have a presence in the State of Florida are collecting the tax", said Carolyn Johnson, the Director of Business Economic Development for the Florida Chamber of Commerce.

The high court has said for more than 50 years in various rulings that states can not collect taxes from sellers without a "physical presence" in those states.

The decision could generate "hundreds of millions of dollars" in new revenue for NY state, according to Joseph Bishop-Henchman, vice president of the Tax Foundation think tank.

Stocks for several major online retailers dropped in response to the news, including Amazon, Wayfair, and eBay.

The ruling puts an end to a legal regime that "distorts free markets and puts local brick and mortar stores at a competitive disadvantage with their online-only counterparts", said Deborah White, general counsel of the Retail Industry Leaders' Association.

"The taxpayers of Florida really rely heavily on the sales tax".

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The Supreme Court ruled 5-4 in favor of South Dakota. The next step will be to see how strictly the courts interpret this ruling, specifically, whether it would allow states to force retailers to also pay excise taxes-also known as OTP taxes-on products.

"Startups and small businesses may benefit from the physical presence rule, but here South Dakota affords small merchants a reasonable degree of protection", the ruling says. Amazon actually already charges sales taxes on the goods that it sells directly.

"We're reviewing the decision", was all agency rep James Gazzale said in an emailed statement. In upholding the ruling the Supreme Court overturned a 1992 ruling that required a "physical presence" in a state in order to mandate collection of sales tax. "This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both". Expected to generate more than $24 billion for the state government in the current fiscal year, the sales tax is the single largest source of funding for the state. All but five states impose sales taxes.

Chief Justice John G. Roberts Jr. dissented in an opinion joined by Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan. While the Supreme Court spoke approvingly of the law, it sent it back to South Dakota's highest court to be revisited in light of the court's decision.

Some popular "e-tailers" already collected at least some state sales tax. "Big victory for fairness and for our country". They had resulted in some companies not collecting sales tax on every online purchase.

"This is a great day for South Dakota". South Dakota does not collect income tax, and therefore relies heavily on sales taxes to keep its coffers full.

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