Supreme Court ruling could add online sales tax
WASHINGTON — Sales tax: $0.
Online shoppers have gotten used to seeing that line on checkout screens before they click “purchase.” But a case before the Supreme Court could change that.
At issue is a rule stemming from a pair of decades-old Supreme Court cases: If a business is shipping to a state where it doesn’t have an office, warehouse or other physical presence, it doesn’t have to collect the state’s sales tax.
That means large retailers such as Apple, Macy’s, Target and Walmart, which have brick-and-mortar stores nationwide, generally collect sales tax from customers who buy from them online. But other online sellers can often sidestep charging the tax.
More than 40 states are asking the Supreme Court to reconsider that rule in a case being argued Tuesday. They say they’re losing out on “billions of dollars in tax revenue each year.” But small businesses that sell online say the complexity and expense of collecting taxes nationwide could drive them out of business.
For years, the issue of whether out-ofstate sellers should collect sales tax had to do mostly with one company: Amazon. com. The online giant is said to account for more than 40 percent of U.S. online retail sales. But as Amazon has grown, dotting the country with warehouses, it has had to charge sales tax in more and more places.
Since 2017, Amazon has been collecting sales tax in every state that charges it. Thirdparty sellers that use Amazon to sell products make their own tax collection decisions, however.
The case now before the Supreme Court could affect those third-party Amazon sellers and many other sellers that don’t collect taxes in all states — sellers such as jewelry website Blue Nile and clothing retailer L.L. Bean.
States generally require consumers who weren’t charged sales tax on a purchase to pay it themselves, often through self-reporting on their income tax returns. But states have found that only about 1 percent to 2 percent actually pay.
States would capture more of that tax if outof-state sellers had to collect it, and states say software has made sales tax collection simple.
Out-of-state sellers disagree, calling it costly and extraordinarily complex, with tax rates and rules that vary not only by state but also by city and county.