Online shopping prices likely to rise after new sales tax ruling

Lloyd Doyle
June 24, 2018

The 5-4 decision overturns the 1992 Supreme Court ruling that barred states from collecting sales tax in states where they have no physical storefront. Companies like Wayfair, Etsy, Newegg, and Overstock, who do not own in-state locations, and now face tax collection requirements in many states-and possibly in Texas. Big-box retailers like Walmart, Target, and Costco, on the other hand, recorded modest gains.

The state can now force all online retailers to collect the 8.875 percent combined state and city sales tax on purchases made by Big Apple residents, according to a US Supreme Court ruling Thursday.

The Supreme Court of the US (SCOTUS) has just overruled 1992's Quill Corp v. South Dakota had passed a bill in 2016 that said online retailers must collect sales tax if they make more than $100,000 worth of sales in their state, or do 200 transactions in their state. If they are forced to charge sales tax, how will they keep track of the amount they owe each state?

This week's court decision lets states close that loophole and will ultimately lead to a more rational tax system - which will be good for the public, even if it means missing out on deals from time to time.

Justice Anthony M. Kennedy, who wrote Thursday's majority decision, and five of the nine SCOTUS judges all agreed that Quill was obsolete and that it unfairly disadvantaged brick-and-mortar stores. In essence, he sees the divide more practically: consumers and online retailers vs. local business.

"New Hampshire's lack of a sales tax is a competitive advantage for our state, and this decision will unfairly punish small businesses that are the backbone of our economy", said Sen. In 2014, Amazon said it would pay sales tax in this state before it set up distribution centers here.

The ruling is widely considered a win for retailers with traditional brick-and-mortar stores struggling to compete with pricing of Amazon and the like.

It's likely that Congress will take up some form of legislation to unify sales tax collection efforts.

State director Mike Hickey of the National Federation of Independent Businesses said his members are split on the sales tax issue. 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. Meanwhile, Amazon's expansive operations meant it was already charging sales tax nearly everywhere. "We think that incentive, that carrot if you will, is strong enough to clean up our state and local sales tax codes", McCarthy said. "Over 10,000 jurisdictions levy sales taxes".

If you've long enjoyed buying expensive camera gear tax-free from industry giants such as B&H and Adorama, those days will likely soon be over as states start taking advantage of their new powers.

Other reports by Iphone Fresh

Discuss This Article