Saturday, June 23, 2018

Supreme Court Helps to Level the Playing Field


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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