Cy­ber Mon­day shop­pers to see some­thing new — taxes

Baltimore Sun Sunday - - FRONT PAGE -

WASH­ING­TON — Shop­pers head­ing on­line to pur­chase hol­i­day gifts on Cy­ber Mon­day will find they’re be­ing charged sales tax at some web­sites where they weren’t be­fore.

The rea­son: the Supreme Court.

A June rul­ing gave states the go-ahead to re­quire more com­pa­nies to col­lect sales tax on on­line pur­chases.

Now, more than two dozen have moved to take ad­van­tage of the rul­ing, many ahead of the busy hol­i­day shop­ping sea­son.

“Will your shop­ping bill look any dif­fer­ent? The an­swer right now is it de­pends,” said Ja­son Brewer, a spokesman for the Re­tail In­dus­try Lead­ers As­so­ci­a­tion, which rep­re­sents more than 70 ma­jor re­tail­ers.

Whether shop­pers get charged sales tax on their on­line pur­chases comes down to where they live and where they’re shop­ping.

Be­fore the Supreme Court’s re­cent de­ci­sion , the rule was that busi­nesses sell­ing on­line had to col­lect sales tax only in states where they had stores, ware­houses

PROV­I­DENCE, R.I. — Adobe An­a­lyt­ics re­ported Satur­day that more cus­tomers are go­ing to stores to get items they bought on­line. That trend con­trib­uted to a record $6.22 bil­lion spent on­line Fri­day, up nearly 24 per­cent from last year.

But the fastest-grow­ing on­line shop­ping day is Thanks­giv­ing. On­line sales to­taled $3.7 bil­lion Thurs­day, up 28 per­cent from last year.

Adobe said a record $2.1 bil­lion in sales were done from cus­tomers on their smart­phones. About a third of on­line Black Fri­day sales were made from phones. or an­other phys­i­cal pres­ence. That meant that ma­jor re­tail­ers such as Ap­ple, Best Buy, Macy’s and Tar­get, which have brick-and-mor­tar stores na­tion­wide, were col­lect­ing sales tax from on­line cus­tomers.

But that wasn’t the case for busi­nesses with a big on­line pres­ence but few phys­i­cal lo­ca­tions.

Now, states can force outof-state sell­ers to col­lect sales tax if they’re do­ing a fair amount of busi­ness in the state.

That means re­tail­ers such as Over­, home goods com­pany Way­fair and elec­tron­ics re­tailer Newegg can be re­quired to col­lect tax in more states. Those com­pa­nies were in­volved in the case be­fore the Supreme Court, but a wide range of busi­nesses from jewelry web­site Blue Nile to cloth­ing and out­door com­pany L.L. Bean and elec­tron­ics re­tailer B&H Photo-Video are also af­fected.

Be­fore the Supreme Court’s de­ci­sion, Over­stock was col­lect­ing sales tax in eight states. Now, it’s col­lect­ing sales tax na­tion­wide. Jonathan John­son, a mem­ber of Over­stock’s board of di­rec­tors, said a small num­ber of cus­tomers reached out to ask about the change when it hap­pened, but the com­pany now hasn’t had a ques­tion about it in months.

Way­fair, for its part, was col­lect­ing sales tax in 25 states be­fore the de­ci­sion. Now it’s col­lect­ing sales tax in 36 of the 45 states with a sales tax.

Where on­line shop­pers live also can af­fect whether they’re be­ing charged sales tax.

States had a strong in­ter­est in tak­ing ad­van­tage of the Supreme Court’s de­ci­sion by pass­ing laws or pub­lish­ing reg­u­la­tions prior to this hol­i­day shop­ping sea­son if at all pos­si­ble, said Richard Cram of the Mul­ti­state Tax Com­mis­sion, which works with states on tax is­sues.

Those that did have been fol­low­ing the lead of South Dakota, which brought the is­sue to the Supreme Court.

South Dakota re­quires sell­ers who don’t have a phys­i­cal pres­ence in the state to col­lect sales tax on on­line pur­chases if they do more than $100,000 in busi­ness in South Dakota or more than 200 trans­ac­tions an­nu­ally with state res­i­dents.

A host of states — Alabama, Illi­nois, In­di­ana, Ken­tucky, Mary­land, Min­nesota, Ne­vada, New Jersey, North Dakota, Wash­ing­ton and Wis­con­sin — be­gan en­forc­ing their own re­quire­ments start­ing Oct. 1. About an­other half a dozen states will start in the next two months.

But a num­ber of big states, in­clud­ing Cal­i­for­nia, Texas, New York and Florida, do not yet have sim­i­lar col­lec­tion re­quire­ments in place.

As a re­sult, con­sumers shop­ping on­line from those states and oth­ers that have yet to act may not be charged sales tax on some web­sites for a lit­tle longer. On­line shop­pers in those states — par­tic­u­larly those mak­ing ex­pen­sive hol­i­day pur­chases like tele­vi­sions, com­put­ers and lux­ury goods — may be mo­ti­vated to try to pur­chase from a web­site that isn’t charg­ing them sales tax.

While that may look like a sweet tax sav­ings, shop­pers are sup­posed to pay the tax to the state them­selves, but few do.

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