- New Hampshire online retailers could be on the hook to collect sales tax from dozens of states and thousands of localities after the U.S. Supreme Court Thursday upheld South Dakota's online sales tax law.
Online shoppers could find costs going up after the Supreme Court did away Thursday with a decades-old precedent limiting the ability of states to collect sales tax on certain out-of-state Internet purchases. But retailers with stores in the state, which do have to collect sales taxes, have long argued that the ruling put them at a competitive disadvantage with companies like Amazon.
The National Retail Federation trade group, said in a statement that the court's decision was a "major victory" but the group said federal legislation is necessary to spell out details on how sales tax collection will take place, rather than leaving it to each of the states to interpret the court's decision. Now governments will be able to collect billions of dollars in local sales tax. It's likely to negate some of the price advantages that come from buying online, as you might guess, but there's also the possibility of creating headaches for smaller e-commerce outfits that might lose a price advantage over heavyweights already paying state sales taxes. Chief Justice John Roberts joined Stephen Breyer, Sonia Sotomayor and Elena Kagan in the dissent.
Forty-five states rely on sales taxes for revenue, and for those states that have no income tax, sales taxes are very important.
Three large retailers-Wayfair, Overstock and Newegg-do not, and South Dakota sued them for failing to collect taxes after the state's law went into effect. "New Hampshire small businesses do not have the time or resources to become tax collectors for other states". Amazon only charges tax for purchases made directly from the online shop, but independent sellers using the site are not required to do so. That will open the door to more states passing laws similar to South Dakota's. Amazon.com Inc. shares fell as much as 1.9 percent before paring losses. "State taxes fund the police and fire departments that protect the homes containing their customers' furniture and ensure goods are safely delivered; maintain the public roads and municipal services that allow communication with and access to customers". First, the Act applies a safe harbor to those who transact only limited business in South Dakota.