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SD may see lower rate after sales tax ruling

24 June 2018

Thursday's Wayfair Supreme Court decision could mean state legislatures can now force online retailers to start preparing for new rules in the sales tax world. That ruling held that a state can not require an out-of-state seller with no physical presence in the state to collect and remit sales taxes on goods the seller ships to consumers there.

With the larger sites having to pay sales taxes, smaller businesses have a bit more of an even playing field, especially if they have tech-savvy local marketing ads on Google and content-rich sites that attract prospective customers.

The decision allows states to require out-of-state businesses to collect sales tax from customers in other states - for example, a retailer in Utah who sells goods to a customer in NY would have to calculate and collect the NY sales tax.

The US Supreme Court ruled in favour of South Dakota.

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Currently, online retailers that have a physical location in Georgia have to collect sales tax when Georgia shoppers use their websites.

States that rely more heavily on sales tax - as opposed to personal income tax, for instance - "are the big winners here and could see real budget gains if they follow South Dakota's example", said Fitch Ratings analyst Stephen Walsh.

For a better understanding of how the ruling could impact consumers and businesses in the Chicago area, reach out to local legal experts. Kennedy also noted the existence of software that "may make it easier for small businesses to cope" with compliance. The Quill decision, based on an interpretation of the Constitution related to interstate commerce, gave a boost to mail-order firms, which would have struggled with the paperwork burdens of collecting and remitting sales taxes nationally.

Ed Teisanu, a 39-year-old sales manager in Minnesota, doesn't think a new tax will change his buying habits, which is a mix of in-store and online.

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Lawmakers in the state, which has no income tax , passed a law created to directly challenge the physical presence rule . Thanks to Amazon's nationwide network of warehouses, the company already collects sales tax for the majority of states.

EBay also said in a statement Thursday that Congress needs to "provide clear tax rules, with a strong small business exemption". In 2015, 72.5 percent of Tennessee's total tax revenues came from sales tax. "I don't have to drive", said Thornsberry. Kennedy wrote that the unfairness of the tax collection situation also could be an incentive to avoid opening storefronts or distribution centers in states such as Florida, just to avoid collecting the sales tax. Oklahoma has benefited to the tune of about $25.9 million, he said, while OKC has seen an increase of $4 million and Moore has netted about $320,344 in additional taxes. Retailers including Apple, Macy's, Target and Walmart, which have brick-and-mortar stores nationwide, generally collect sales tax from their customers who buy online.

"It really is a disadvantage to local brick and mortar stores".

A recent loosening of states' sales tax collection affects purchases of products online.

While almost impossible to determine how much revenue Johnson City or Washington County loses to online sales, state officials estimate Tennessee loses between $200 million and $450 million annually.

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SD may see lower rate after sales tax ruling