June 22, 2018
A Supreme Court decision Thursday “evened the playing field,” by allowing states to force online retailers to collect sales tax from shoppers. In the past, retailers weren’t required to collect state sales taxes when items were shipped to customers in states where it didn’t have a physical presence, such as a store, office or warehouse.
The new sales tax charges on more online purchases are expected to start showing up over the coming year, and even as early as the Christmas shopping season. The 5-4 ruling overturns two decades-old decisions, which weren’t popular with states because they argued it cost them billions in lost revenue annually.
Consumers were generally always responsible for paying any required sales tax to the state if they weren’t charged it, though most weren’t aware it was owed and not many paid. Though consumers may not see it as a victory, the change is expected to be viewed as a win by big retail chains.
Justice Anthony Kennedy wrote in the opinion: “Each year, the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States.”
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