Supreme Court rul­ing could add on­line sales tax

The Columbus Dispatch - - Front Page - By Jes­sica Gresko

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.

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