With Quill Protection Gone, What Should Online Sellers Do?

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The decision reverses two Supreme Court rulings from decades ago, which said states couldn't require retailers to collect and remit sales taxes if those retailers weren't physically located in the taxing state. The court's decision says states can force companies to collect sales tax for online sales.

Bridgett Lambert, the executive director of the West Virginia Retailers Association, said she was not sure if Justice understands the impact of the ruling.

Previous bills in the Utah State Legislature to require online retailers to collect sales taxes have failed under pushback from the public and taxpayer watchdog groups.

Honestly, this shouldn't be surprising to anyone, but it's a bummer nonetheless. 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.

The Illinois law takes effect on October 1, and it's built on legislation passed in South Dakota that is the focus of the recent Supreme Court decision. The ruling should also eliminate the need for the kind of workarounds that MA regulators have recently devised to snare more online vendors, such as arguing that Internet "cookies" constituted a physical presence, a policy Kennedy cited as he dispensed with the physical-presence test.

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Its law was effective even before the court ruling, Behlke said, by expanding sales tax collections to third-party marketplaces - a category that in most places has so far gone untaxed. The use tax Many states have a use tax equivalent to the sales tax that applies to online purchases but most online businesses do not comply with it. The decision overturned its 1992 decision - Quill Corp. v. 2514), which provides that a seller is considered to be doing business in the State and subject to our General Excise Tax if the seller has $100,000 in sales or more than 200 transactions in the current or immediately preceding taxable year. Many states will still have to pass laws in order to do that, so it won't be instantaneous. "I suspect that we will be hearing from SD shortly on this point".

South Dakota wanted out-of-state retailers to begin collecting the tax and sued several of them: Overstock.com, electronics retailer Newegg and home goods company Wayfair.

The ruling is a victory for states that said they were losing billions of dollars in revenue every year, and for large retailers that had argued that the physical presence rule meant they were playing by different rules than online-only sellers.

"It was an issue of fairness since brick-and-mortar businesses must pay property and sales taxes while online retailers were exempt", said England, who serves as chairman of the House's appropriations committee.

"Big Supreme Court win on internet sales tax - about time!" He's concerned about consumers cutting back their purchases when they see they have to pay sales tax, but he also believes in time they'll get used to the added cost. If a company doesn't expect to reach the threshold in a state, it may decide not to collect tax.

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