Supreme Court rules States can impose sales tax for out of state online shoppers
Supreme Court rules in internet sales tax case: States
can charge online shoppers
June 21, 2018, 1:53 PM
WASHINGTON — The Supreme Court says states can force
online shoppers to pay sales tax, clearing the way for major changes in the
world of e-commerce.
The 5-4 ruling Thursday is a win for states, who said
they were losing out on billions of dollars annually under two decades-old
Supreme Court decisions that affected online sales tax collections.
The high court ruled Thursday to overturn those
decisions. "The Internet's prevalence and power have changed the dynamics
of the national economy," the court said in its decision in the case,
South Dakota v. Wayfair.
Under the previous law, some companies did not collect
sales tax on every online purchase. Businesses had to collect sales tax only
when shipping products to a state where they had a physical presence, such as a
warehouse or office. Otherwise, they didn't have to collect the state's sales
tax.
Customers were generally supposed to pay the tax to the
state themselves if they were not charged by the merchant, but the vast
majority did not.
"If you're a pure-play online retailer and have very
limited geography, say, one distribution center, this is going to be
meaningful," said Charlie O'Shea, lead retail analyst at Moody's.
"There are a lot of retailers out there that have only collected sales tax
in states where they have to."
Not least of those is Amazon, a large part of whose
business consists of sales through other merchants operating on Amazon
Marketplace. While the e-commerce giant collects sales tax on all items it
sells directly, third-party purchases are taxed in just two states, Washington
and Pennsylvania. Those purchases could make up a third or more of Amazon's
revenue, by some estimates.
Last year, third-party sales earned Amazon nearly $32
billion across the globe, according to SEC filings, and the business is growing
rapidly.
Wayfair stock was down 2.5 percent Thursday, while shares
of online craft marketplace Etsy dropped more than 3 percent. Amazon nudged
down half a percentage point.
CBS News' Irina Ivanova contributed reporting.
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