So as online retail has grown, states have sought increasingly clever ways to force out-of-state sellers to collect sales tax where they know their own residents are unlikely to pay use tax.
Crowe & Dunlevy attorney Hayley R. Scott, said many people don't report online sales on their state income taxes and making businesses responsible will likely mean a difference of billions of dollars nationwide. "We're not interested in applying more taxes", said Blair. The decision in Thursday's South Dakota vs Wayfair ruling uses economic nexus with minimum thresholds as the standard for substantial nexus. "They have very different needs and challenges than larger online retailers and we are encouraging them to sign a petition that tells policy makers to support microbusinesses like theirs". The nonpartisan Government Accountability Office estimated last year that collecting sales tax on all remote sales could bring state and local governments in Florida anywhere from $486 million to $758 million a year.
For example, South Dakota makes software available to out-of-state retailers, for free, to help them comply with its sales tax. "The Court should not act on this important question of current economic policy, exclusively to expiate a mistake it made over 50 years ago". The court gave South Dakota a victory, knocking aside the physical-presence rule as arbitrary and obsolete in the digital age.
There's still an opening for Congress to consider tax legislation to simplify the collection process, but this decision is good for business at traditional stores without being unfair to online merchants.
"More than three quarters of Etsy sellers are businesses of one".
We asked David Campbell, CEO of TaxCloud the same questions. "While that is one possible response, we don't believe the situation is quite so absolute", he said. However, legal experts say it remains unclear whether some states may impose taxes on retailers even smaller than those affected by South Dakota's law. He said the court should not be doing the work of Congress, even if its earlier precedents were wrongly decided.
"For this answer, it may be easier to answer the second part first: beginning when?"
"New Hampshire's lack of a sales tax is a competitive advantage for our state, and this decision will unfairly punish small businesses that are the backbone of our economy", U.S. Senator Maggie Hassan said in a statement.
The case is South Dakota v. Wayfair, 17-494.
The tax compliance software and services are created to work with the programs retailers use to process their sales transactions.
TaxCloud's Campbell advised sellers, "Take a deep breath".
"(Local option sales tax revenue) is 24 percent of our general fund budget.
Campbell found a silver lining for online sellers in the Supreme Court decision. Experts say it won't really affect big stores like Amazon because they already collect a sales tax. As the court opinion notes, online retailers from out of state essentially offer lower prices because so few consumers voluntarily pay the sales tax themselves.