accountant checking taxes on sales receipt

Retailers And The Internet Sales Tax Ruling

The Supreme Court has recently ruled that states have the ability to tax internet sales. Needless to say, this ruling is going to have a substantial effect on the E-commerce industry, and retailers like Amazon and eBay are most likely going to start adding a sales tax to products that you purchase from them — at least in certain states.

This ruling overturns a 1992 case called Quill Corporation v. North Dakota — which essentially stated that the Constitution prohibits states from requiring businesses to collect sales tax unless those businesses have a worthwhile connection to that state. Basically, the law that was overturned allowed online retailers to have a competitive advantage over brick and mortar businesses because they weren’t required to collect sales tax.

“State and local governments have really been dealing with a nightmare scenario for several years now,” said Carl Davis, research director at the Institute on Taxation and Economic Policy, a Washington think tank. “This is going to allow state and local governments to improve their tax enforcement and to put local business on a more level playing field.”

Justice Anthony Kennedy event stated that “the Quill decision caused states to lose annual tax revenues of up to $33 billion.”

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