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Looks like we might end up seeing more online retailers being required to collect sales tax with this ruling. The Supreme Court ruled in favor of South Dakota, with Wayfair, Overstock, and Newegg now being required to collect sales tax. I expect that other states will soon follow.
What will be interesting is if online retailers will also be required to collect local taxes. This can create a bunch of problems, since the retailer needs to be sure they are collecting and remitting the proper rate such as city vs. county etc., since ZIP code alone doesn't verify residency of a particular jurisdiction.
The ruling does not Require any state to collect sales tax. It simply says a state can pass legislation to collect sales tax from online retailers. It's up to each individual state to decide how they will implement any sales tax collection, if they decide to require collection. The citizen (voters) of each state can still raise heck with their elected state legislature and keep sales tax from being collected. Don't forget, this doesn't apply to all retailers, just those who have nexus, goes over the dollar sales numbers or the minimum required number of sales before taxes can even be considered by the states.
And, of course, online retailers could just say they don't ship to certain states, like many already do for Alaska and Hawaii.
It seems like I always end up having to pay taxes here in CA, because most of the big online retailers I buy from have warehouses here. If they have a physical presence in the state, they have to collect taxes.
Pretty much the only vendors I don't have to pay taxes to are people selling stuff on Craigslist.
Probably afraid of losing more sellers to Craigslist lol. Or Amazon, who collects the taxes for the sellers, if I remember correctly.
Truly, though, it had to catch up eventually. It's really not reasonable to expect states not to want to collect sales tax. The challenge has always been how to police it. It makes sense to require tax when the business has a presence in the state - like shipping warehouses. I just don't see how they're going to be able to otherwise find out who is selling something to a customer in a different state. Unless, they require the venues to tattle - like Ebay or Etsy. Or require the larger venues to collect the taxes for the sellers, like Amazon does.
I guess there's enough lost money out there for them to try and figure it out.
Probably afraid of losing more sellers to Craigslist lol. Or Amazon, who collects the taxes for the sellers, if I remember correctly.
Truly, though, it had to catch up eventually. It's really not reasonable to expect states not to want to collect sales tax. The challenge has always been how to police it. It makes sense to require tax when the business has a presence in the state - like shipping warehouses. I just don't see how they're going to be able to otherwise find out who is selling something to a customer in a different state. Unless, they require the venues to tattle - like Ebay or Etsy. Or require the larger venues to collect the taxes for the sellers, like Amazon does.
I guess there's enough lost money out there for them to try and figure it out.
Yeah, if they are taking it that serious, it must be a threat to them. I guess it will depend on how it is implemented. If every small eBay seller is expected to collect thousands of different sales taxes from different states, counties, cities, and districts, it would be pretty ridiculous. I can see how that would hurt eBay.
Personally it doesn't really affect me, since I live in a state with no sales tax. But this could destroy a lot of online businesses that I use.
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