This
week the U.S. Supreme Court, in a 5-4 decision, voted that states can
force online etailers to charge sales tax irrespective if that retailer
has a physical presence in their jurisdiction. This decision spells
good news for every brick-and-mortar retailer that has been placed at an
unfair competitive advantage compared to online sellers of products who
previously were not required to charge or collect sales taxes.
Last year, Amazon reported $32 billion in third-party sales, up
from $23 billion in 2016. The company stated that in the first quarter
of 2018, 52 percent of all sales were made by third-parties, many of
which, up until the time of this week's Supreme Court decision, did not
pay state sales tax to jurisdictions where the etailer did not have a
physical location.
The Supreme Court decision stemmed from a suit brought by the state
of South Dakota that claimed it was denied millions of dollars in sales
tax by etailers that were shipping products to its citizens. As a
result of the decision, every online etailer is going to fax sales tax
requirements in all 50 states and the District of Columbia. For many
smaller businesses, the cost of compliance could be enormous, helping to
further level competitive playing fields with brick-and-mortar stores.
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