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ASSOCIATED PRESS
The packages of Internet retailers are delivered with US mail in a mail room of a Washington apartment building in April. Buyers who buy online after Thanksgiving and start shopping for the holidays will increasingly see their sales tax billed on websites where they were not. The reason: the Supreme Court of the United States.
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WASHINGTON >> Buyers who go online to buy holiday gifts will find that sales taxes will be billed to them on some websites where they were not previously. The reason: the Supreme Court.
A June decision gave states the power to require more businesses to collect sales tax on online purchases. Now, more than two dozen have taken steps to take advantage of the decision, many of them ahead of the holiday shopping season.
"Will your purchase invoice be different? … The answer at the present time is that it depends, "said Jason Brewer, spokesman for the Retail Industry Leaders Association, which represents more than 70 major retailers.
That buyers receive sales tax on their online purchases depends on where they live and where they shop.
Prior to the recent Supreme Court ruling, the rule was that companies selling online only had to collect sales tax in states where they had stores, warehouses or other physical presence. This meant that large retailers such as Apple, Best Buy, Macy's and Target, which have physical stores across the country, typically collected sales tax from online customers. But this was not the case for companies with a strong online presence but few physical jobs.
States can now oblige outside sellers to collect sales tax if they carry out a substantial activity in their state. This means that retailers such as Overstock.com, the housewares company Wayfair and the Newegg electronics retailer may be required to collect tax in several states. These companies have been involved in the Supreme Court case, but a wide range of companies ranging from the Blue Nile jewelry website to the LL Bean outdoor clothing and clothing company and the B & H electronics retailer. Photo-Video are also concerned.
Prior to the Supreme Court decision, Overstock collected sales tax in eight states. Now he is collecting the sales tax nationally. Jonathan Johnson, Overstock board member, said a small number of customers have questioned the change that has occurred, but the company has not had any questions about it since month. Wayfair, on the other hand, collected sales tax in 25 states prior to the decision. Now, he collects sales tax in 36 of the 45 states with a sales tax.
The place of residence of online shoppers can also determine if sales tax is being billed to them.
States have every interest in taking advantage of the Supreme Court's decision by passing laws or issuing regulations before the holiday season, if possible, said Richard Cram of the Multi-State Tax Commission, which works with States on tax issues. Those who followed it generally followed the example of South Dakota, which brought the case to the Supreme Court. South Dakota requires sellers who do not have a physical presence in the state to collect sales tax on online purchases if they make more than $ 100,000 in business in South Dakota or more 200 transactions a year with residents of the state.
Many states – Alabama, Illinois, Indiana, Kentucky, Maryland, Minnesota, Nevada, New Jersey, North Dakota, Washington and Wisconsin – have started enforcing their own requirements as of October 1st. About half a dozen other states next two months.
However, a number of large states, including California, Texas, New York and Florida, have not yet implemented similar collection requirements. As a result, consumers shopping online in these states and others who have not yet acted may not have to collect sales tax on some websites for a little longer. Online shoppers in these states – especially those who make expensive holiday purchases like television, computers, and luxury goods – may be encouraged to buy from a website that does not charge sales tax. Although this may sound like a mild tax saving, buyers are usually supposed to pay the tax themselves to the state, but few do.
Nevertheless, it is increasingly difficult to find sellers who do not collect online sales tax, said lawyer Eric Lemon, involved in the Supreme Court case. And Citron said it would become even tougher in 2019, as more states would put in place tougher requirements for collecting sales tax. States also have websites such as eBay, Etsy and Amazon.
Amazon collects sales tax when customers buy products sold, but third-party retailers selling products on Amazon make their own sales tax collection decisions. Sellers on eBay and Etsy also make their own decisions. At present, the states are working to ensure that these large markets collect taxes on behalf of sellers using their platform.
"States tend to use the powers conferred on them by the Supreme Court, particularly with respect to tax collection," said Citron.
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