Supreme Court rules that internet sales can be taxed by states

Supreme Court rules that internet sales can be taxed by states

Investors in the online retail sector must be fearing a backlash from customers who will now be forced to pay more for their online goods.

In anticipation of the ruling, IL lawmakers included language in budget bills passed last month to allow the state to begin collecting sales tax from a broader swath of online purchases.

"It certainly clears up any confusion, clears up some of the rhetoric", said Rep. Jay Kaufman, D-Lexington, chairman of the Committee on Revenue. But after the court ruling, most others will be required to collect them.

But sellers that only have a physical presence in a single state or a few states could avoid charging customers sales tax when they're shipping to addresses outside those states. "It's a drain on our economy and a drain on our main streets and our local sellers", said Jon Hurst, president of the Retailers Association of MA.

A U.S. Supreme Court ruling Thursday will allow states and local governments to pursue sales taxes on more online transactions. "Each year, it becomes further removed from economic reality and results in significant revenue losses to the States". They often don't have the resources to handle the patchwork of sales taxes across multiple states, according to the retailers, while larger outlets like Amazon don't have that problem. The issue has also been an irritant to state governments, deprived of billions of dollars a year at a time many are struggling to balance budgets.

The news sent Amazon's share price tumbling. "However, it's premature to expect large windfalls from this decision".

Estimates have varied on how much Florida would get if it captured taxes on its residents' online purchases, from $200 million to more than $750 million.

MA law was similar to laws in several other states.

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.

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The state Department of Finance could not say how much NY was losing under the old ruling - or when it would enact new regulations to take advantage of the new ruling.

Attorneys for Crutchfield Corporation could not immediately be reached.

The retail industry hailed the decision.

The Minnesota Revenue Department said its staff is "analyzing the court's decision" and will provide guidance to retailers within 30 days.

Kaufman said he does not anticipate any legislative action either.

"It would have been a bigger deal for Amazon if this ruling has been made 10 years ago", Sucharita Kodali, a vice president and principal analyst at Forrester Research, told Business Insider.

Small online businesses may be exempt, but just where the line will be drawn is unclear. "Issues regarding smaller mom-and-pop retailers, and the amount of sales necessary to impose the collection obligation on them, would be decided on a case-by-case basis", he said.

Forty-one states back the effort, saying the problem is growing worse as e-commerce continues to grow nationwide.

South Dakota, which does not have an income tax, enacted a law that deliberately challenged the requirement and local officials are calling its victory in the high court a win for all states.

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