If you like shopping online and getting things shipped right to your door, you might just have to pay extra after a Supreme Court ruling this week. The U.S. Supreme Court is set to hear a case this week against retailers that have not been collecting sales tax on the items purchased by their customers.
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Retailers who don’t have a brick-and-mortar shop or offices in states that do not require them to charge sales tax, such as Crutchfield, 1-800-Contacts, and BlueNile, have been able to sidestep sales tax for two decades thanks to old Supreme Court cases. The decades-old ruling said if a business is shipping to a state where it doesn't have an office or warehouse of physical presence, then it doesn't have to collect state's sales tax.
Now, over 40 states are asking the Supreme Court to reconsider that ruling because they are losing out on "billions of dollars in tax revenue each year." The states argue that loss is so big they are having to cut government programs. On the other side of things, small businesses say changing the rule could force them out of business because of the complex and expensive tax collecting system.
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Brick and mortar retailers like Apple, Target, and Walmart all generally collect sales tax. The president of the litigation arm of the Retail Industry Leaders Deborah White said they want everyone to "be playing by the same set of rules." This rule mainly applied to Amazon for years and even now Amazon accounts for nearly a half of all online sales in the U.S. Amazon began collecting sales tax in every state that requires it in 2017.
Andy Pincus filed a brief on behalf of eBay and the small businesses who use the platform since sellers on eBay and Etsy could also be affected. "For small businesses on tight margins, these costs are going to be fatal in many cases," Pincus said. At least three justices have shown willingness to reconsider the rule, Neil Gorsuch, Clarence Thomas, and Anthony Kennedy.
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