Illinois Shoppers Pay More for Online Purchases, Good News for Small Businesses

Now collecting sales tax

Shares of large internet sellers tumbled in midday trading on June 21 after the US Supreme Court said those merchants could be required to collect sales tax in US states where they don't have a physical presence.

How will this affect your wallet?

"The court has rightly sided with the states on this issue, allowing states to choose to collect sales tax on all goods sold, whether the item is purchased through a local retailer or through an out-of-state website", Schmidt said. This would amount to substantial savings for shoppers.

"By validating South Dakota's law, the Court has granted states the power to tax any business anywhere in the country simply for daring to use the internet to access a nationwide market", he added.

Some small businesses worry that their online sales will become overly complex if they have to collect sales taxes for many states.

The nine justices of the Supreme Court of the United States. Legislative action has been stalled while the Supreme Court was deciding this case. It has one, centralized agency for tax collection - retailers don't need to deal with individual city or county tax departments to remit local sales tax.

"The National Association of Realtors has long held that our nation's tax policy must be modernized to reflect new realities in consumer activity".

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That's not to say the 6.25 sales tax is anything new. The decisions made it more hard for states to collect sales tax on certain online purchases, and more than 40 states had asked the high court for action. This will be a huge boost to state budgets, but online retailers won't be pleased.

Already, South Carolina expects to collect about $346 million in sales taxes from online sales in 2017-18, according to an October analysis by the state's Revenue and Fiscal Affairs Office.

The Supreme Court ruling in a 2016 South Dakota case overturns a 1992 decision, Quill Corp. v. The problem isn't the tax rates, but rather the administrative burden that goes with collecting and paying those sales taxes.

And for local brick and mortar stores, the ruling represents a level playing field.

"We're talking not millions, we're talking tens of millions of potential revenue". That may change as state laws are modified.

Horstman could not say how much money was collected annually when the burden was on the consumer to pay the state, but he said the change "will bring in a significant amount of additional revenue".

For now, Dowell said that the ruling will be a win for those mom and pop shops.

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