Supreme Court closes online sales tax loophole

The eBay Inc. application is seen on an Apple Inc. iPhone in this arranged

"I would really love for our government to get behind the idea of small business and when you do something like this it does not encourage small business", Keyton said.

In a widely anticipated ruling, the US Supreme Court said that states can force online sellers to collect sales tax, even when the vendors lack a physical presence in the state.

Now, states can push ahead with legislation requiring companies to collect and remit sales taxes for goods bought online elsewhere. Those retailers understandably have had concerns over the years when they faced increasingly intense competition from online sellers who, in some cases, boasted that purchases from their sites were not subject to the same taxes that would need to be added to the price of the same goods from a local store.

In 1992, it was ruled that consumers didn't have to pay sales tax on an item if it was being shipped from a store that didn't have a physical presence in the state of the buyer. However, legal experts say it remains unclear whether some states may impose taxes on retailers even smaller than those affected by South Dakota's law. Small and medium size businesses are most negatively impacted These business are faced with a huge problem because compliance is complicated.

Some internet retailers are shrugging and making plans to adhere to the new rules. "It's not something that needs to be a panic situation".

Some big-time retailers, such as Wal-Mart, already collect sales taxes because they have stores in all 50 states.

There are still many unknowns. In South Dakota, the minimum standards are $100,000 in sales or more than 200 transactions over a 12-month period.

Kosewicz says for her, sales may not reach the threshold in each state. "We do have a mechanism in place in Tennessee that we can begin collecting sales tax", Hawk said. "Remote sellers will no longer be using the tax code as an arbitrary competitive advantage", Rob Karr, president and CEO of the Illinois Retail Merchants Association, tells us.

More news: European Union tariffs target United States goods from motorbikes to jeans

HBK's Tax Advisory Group (TAG) will provide updates about the decision as they become available. Some states have exemptions for collecting sales tax.

Owners will also have to absorb the costs of complying, or pass it along to customers - something they want to avoid. And if you're shopping for sales-tax software, note there are additional services including Avalara and TaxJar. To be compliant with the Streamlined Sales Tax Agreement, a State must administer one tax rate. Betty Lou Kranz initially anxious about being able to stay in business if she had to track tax rates in hundreds of jurisdictions where her Port Jervis, New York-based company, The Pretzel Princess, sells candy and snacks.

Assistant Majority Leader Rep. David Hawk, who also serves on the House Finance, Ways & Means Committee, said he is confident that rule will be revisited during the next Tennessee General Assembly session. One leading voice in that argument, eBay, says many small online businesses will be forced to close. He believes the new ruling will "level the playing field" for brick and mortar stores in West Virginia.

Walls think people understand the importance of keeping brick and mortar businesses for our communities.

Do you shop online?

Businesses that aren't traditional retailers hope they'll get back lost sales.

The state government also is expected to receive hundreds of millions of dollars through online sales tax, according to estimates from Georgia State University's Fiscal Research Center.

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