States Collecting Sales Tax from Businesses Out of State

The move from brick and mortar merchants to full-scale online businesses has increased dramatically over the past decade. More and more people around the country and the world have access to the Internet, making the consumer base for online businesses that much bigger.  While the business owners and consumers are enjoying the freedom of shopping online and having their merchandise delivered straight to their door, the United States government, at the state level, has certainly noticed.  From their perspective, they are losing sales tax because more people are shopping online and not paying sales tax versus consumers driving down to the mall where the collection of sales tax is guaranteed. 

For this reason, the Unites States Supreme Court has ruled to allow states to collect sales tax from online retailers who do not have a physical presence in their borders.  The decision was reached by a 5-4 vote in the case South Dakota v. Wayfair.  

This will bring in billions of dollars for the states, according to The New National Journal.  South Dakota's attorney general said, Our state is losing millions for education, health care and infrastructure, and our citizens are harmed by an uneven playing field."  Even President Donald Trump has something to say about the ruling, saying it was a great victory for consumers", although as stated, consumers will be paying more for the luxury of online shopping.

But what about online business owners?  How will this new law affect them?  While most of the big online retailers, like Walmart, already charge sales tax, most small online business owners do not, particularly those who sell for eBay and Amazon.  According to The Mercury News, "The ruling will hit hardest the small businesses that don’t currently charge sales tax for online transactions. That affects not just the businesses themselves, but consumer choice — though the effects may not be felt right away." eBay has spoken up in a post about the new ruling, saying that Congress needs to provide very clear rules regarding this new wave of online sales tax, going so far as to say that small businesses should be exempt. 

President of the Computer & Communications Industry Association, Ed Black, also said, “Today’s decision promises to subject small businesses reliant on e-commerce to new and burdensome tax obligations in states across the nation,” said Ed Black, president of the Computer & Communications Industry Association, in a statement Thursday. “CCIA has serious concerns about the future implications for e-commerce if governments are empowered to tax those who reside beyond their borders.”

One thing is for sure, when it comes time to pay your online business sales tax, this new law will make it even more complicated.  Just think about having to pay sales tax to fifty different states, with the correct amount, and on time.  If you own a small online business and find yourself confused or unsure of this new law and how it will affect your quarterly sales tax payments, seek an experienced local tax attorney in Oklahoma to help you understand the laws and how you can take care of your end of the new sales tax law without risking an audit in the future. Call Travis W. Watkins Tax Resolution and Accounting Firm for your Free consultation at 800-721-7054.

Travis Watkins
Senior Tax Attorney
Be the first to comment!
Post a Comment