Online sellers consider how to comply with sales-tax ruling

The U.S. Supreme Court building

The U.S. Supreme Court building

The Supreme Court heard the case in April of this year and decided in South Dakota's favor. Hart Posen an associate professor at the Wisconsin School of Business thinks that the decision can be a boon for Amazon.

The 5-4 Thursday decision in South Dakota v. Wayfair overturned a 1992 ruling that said retailers could only be required to collect sales taxes in states where the sellers had a physical presence.

In theory, customers who shopped on those sites were supposed to pay taxes themselves, through the state's use tax, but few did.

While online shoppers will surely groan about paying more sales tax, Washington County Finance Director Mitch Meredith said 100 percent of those dollars, at least in Washington County, will go toward education. Shirzay believes the verdict will "level the playing field a little bit more" between online and offline retailers.

"More than three quarters of Etsy sellers are businesses of one".

Owners who have never collected out-of-state sales tax will need to get up to speed. Amazon has said that half the items purchased from its site come from third-party sellers. The whole system became a messy patchwork.

This week's ruling worries some small retailers that having the extra sales tax charge could drive away customers. But random loopholes are not the hallmark of a good tax code. For example, if you buy a laptop or printer from Newegg or a loveseat from Overstock you should budget for state sales tax.

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That means the government either has to cut back on services or it has to raise taxes on something else.

We asked some vendors of sales-tax services for their advice.

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In any event, today's decision is a victory for bricks and mortar retailers who have built stores in Hawaii and have employed local residents.

Because of the Commerce Clause of the US Constitution, states are still subject to a requirement not to discriminate against or unduly burden out-of-state sellers.

Gary Herbert is praising a ruling by the U.S. Supreme Court on sales tax collection from online purchases. "This is a significant increase in competitiveness for local retail".

But the party does not extend to places that do not charge sales taxes: Alaska, Delaware, Montana, New Hampshire and Oregon.

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Only about half of states that levy sales tax are now parties to the SSTA.

Another question for states to consider will be whether to push to collect tax on previous transactions. South Dakota has estimated it loses about $50 million annually to e-commerce.

"If sales tax was the only barrier keeping them from shopping local and then throw in you might to have pay shipping fee if you shop online, I think it's encouraging for local businesses", Wilson said. He sells most of his admission tickets online. "It is important to keep money in Macon".

Over the decades, states have faced growing problems with tax adequacy.

Two years later, that's on the horizon.

Higher sales tax rates hurt the economy, and since sales taxes focus mostly on goods, they tend to take a larger bite out of low-income Americans' wallets.

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