How Supreme Court tax ruling could affect states, small businesses - and you


A surprise Supreme Court ruling could make your next online shopping spree more expensive, after deciding that states can impose sales tax on internet purchases made from out-of-state retailers.

The cases the court overturned said that if a business was shipping a customer's purchase to a state where the business didn't have a physical presence such as a warehouse or office, the business didn't have to collect sales tax for the state. He argued that Quill was "a judicially created tax shelter for businesses that limit their physical presence in a State but sell their goods and services to the State's consumers, something that has become easier and more prevalent as technology has advanced".

Retailers with many bricks-and-mortar locations, or larger online retailers with large networks of distribution centers, argued the exemption for companies without a physical location gave online competitors who didn't have to collect taxes an unfair advantage.

But Nebraska won't be able to start collecting sales taxes from online retailers until next year at the earliest, after an Internet sales tax bill fell victim to a filibuster this year.

"Any state with sales taxes already has some sort of variance when it comes to exemptions and reporting rules", he said. In California, for example, tax filers are supposed to indicate how much tax we think we owe on out-of-state purchases. Justice Anthony M. Kennedy wrote the majority opinion, joined by Justice Ruth Bader Ginsburg and the court's three most conservative justices. Marketplace sellers weren't previously required to automatically collect sales tax on their sales, and the ruling may hurt their sales. Other states looking to tax internet sales will also likely have to exclude small businesses in order to withstand legal scrutiny.

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Allowing some online retailers off the hook in collecting sales taxes put small local businesses at a disadvantage, Kadoun said.

"At this time, the Department is reviewing the ruling and its impact on Florida sales tax", a Revenue spokeswoman said. Soon after the law went into effect, South Dakota sued online retailers Wayfair, Newegg and Overstock for allegedly failing to comply.

States would have to adopt laws such as South Dakota's first, which was the subject of the Supreme Court ruling (PDF).

Davids said if he is back next session as House tax leader - state House representatives are up for election in November - he will try to lower taxes so overall there is no tax increase. "If you're buying online from Walmart or Target, you're still paying sales taxes". "Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", Roberts wrote in a dissent joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor.