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Supreme Court Rules US States Can Tax Goods Sold Online
Source: www.telecompaper.com
Source Date: Friday, June 22, 2018
Focus: Institution and HR Management
Country: United States
Created: Jun 25, 2018

US states can now collect tax from online purchases, following a ruling from the US Supreme Court, the Wall Street Journal reported. Before this, the law stated that sales tax could only by collected from sellers with a physical presence within the state’s borders. It will be up to the states themselves to determine how they want to collect taxes. 

The ruling means people will now have to pay taxes when purchasing goods online. It will also directly affect sellers hocking their goods on Amazon. Amazon does charge sales tax in all states but does not collect taxes for most independent merchants selling on its platform. About USD 200 billion in sales originated with independent merchants selling on Amazon world-wide last year, according to Factset analyst estimates, against 116 billion in direct sales by Amazon. The company declined to comment on the ruling. 

A Supreme Court judge said the “physical presence” rule had become untenable, citing studies suggesting that the rule costs states up to USD 33.9 billion per year in uncollected sales taxes and distorts the market by giving the advantage to remote sellers, over those anchored in the community. 

The suit was brought to court by groups representing conventional store retailers like Walmart and Target. South Dakota brought the suit, so that out-of-state companies like Wayfair, Overstock.com and Newegg to collect sales tax on transactions with the state’s residents. Antitax groups and retail platforms including eBay and Etsy supported the defendants. Wayfair said it collects sales tax on some 80 percent of its US orders and didn’t expect the decision to have “any noticeable impact on our business.”
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