Supreme Court: States to Collect Tax from Online sales. What’s in it for you.

In South Dakota vs. Wayfair, June 21, the Supreme Court decided states are entitled to collect tax on sales that occur within their boundaries, even when the seller does not have a physical presence, or nexus, in the state. Reversing a 1992 Supreme Court decision in Quill vs. North Dakota, where the court found a selling entity should have nexus, or a physical presence of some kind, inside the state borders in order for the state to collect sales tax on a transaction.


It is the biggest shake up in the Online Selling scene so far, the immediate question is what’s in it for me? The short answer is sooner or later everyone selling online will have to collect tax for all or most of the 50 US States. Consider it states like to collect tax if they can. As it stands the very moment states are still evaluating the ruling and are writing up the new tax laws, it will take some time to get a clear picture. Some states like South Dakota have already laws on books to collect sales tax, it’s unclear to me if the court ruling is imposed immediately. Other states will start collecting tax on October of this year and some beginning of next year. Some states will require Marketplaces like Amazon to collect the tax while others will leave it to the sellers themselves.


In short this is wild west, online sellers will have to deal with many tax code systems and details unless a streamlined tax systems for online sellers will be drafted somehow by congress or else.


A silver lining out of this, it’s likely states won’t tax you, requite to register and hire collectors if you sell a pair of extra shoes on eBay, that will never work. Very likely states will follow the South Dakota modal which is to a minimum on $100,000 in sales a year or 200 sales. So many of you smaller online websites may actually benefit of all this as the big guys will collect taxes while you may still be to small to be called and get the sale. The catch 22 is, you will get more sales and may reach the selling thresholds faster, but that’s a better outcome after all, It will give a better chance for new and smaller sellers to have some edge by not charging tax.

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