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  • High Court: Online shoppers can be forced to pay sales tax

    Posted on AP News, by JESSICA GRESKO

    "WASHINGTON (AP) ó States will be able to force more shoppers to pay sales tax when they make online purchases under a Supreme Court decision Thursday that will leave shoppers with lighter wallets but is a big financial win for states.

    Consumers can expect to see sales tax being charged on more online purchases (likely over the next year and potentially before the Christmas shopping season) as states and retailers react to the courtís decision, said one attorney involved in the case.

    The Supreme Courtís 5-4 decision Thursday overruled two, decades-old Supreme Court decisions that states said cost them billions of dollars in lost revenue annually. The decisions made it more difficult for states to collect sales tax on certain online purchases, and more than 40 states had asked the high court to overrule them.

    The cases the court overturned said that if a business was shipping a customerís purchase to a state where the business didnít have a physical presence such as a warehouse or office, the business didnít have to collect the stateís sales tax. Customers were generally responsible for paying the sales tax to the state themselves if they werenít charged it, but most didnít realize they owed it and few paid.

    Justice Anthony Kennedy wrote that the previous decisions were flawed.

    ďEach year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States,Ē he wrote in an opinion joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch. Kennedy wrote that the rule ďlimited Statesí ability to seek long-term prosperity and has prevented market participants from competing on an even playing field.Ē

    The ruling is also a win for large retailers, who argued the physical presence rule was unfair. Large retailers including Apple, Macyís, Target and Walmart, which have brick-and-mortar stores, already generally collect sales tax from their customers who buy online. Thatís because they typically have a physical store in whatever state the purchase is being shipped to. Amazon.com, with its network of warehouses, also collects sales tax in every state that charges it, though third-party sellers who use the site donít have to." . . . [Read More at APNews.com]