Your online shopping addiction may soon set you back even more as the U.S. Supreme Court this week will hear the case against retailers that have not been collecting sales tax from customers.
The rule allowing retailers based in states with no sales tax who don’t have a brick-and-mortar shop or offices in states that do — such as electronics retailer Crutchfield, 1-800-Contacts and jewelry seller BlueNile, among many others — to sidestep sales tax stems from two decades-old Supreme Court cases.
The court ruled that: if a business is shipping to a state where it doesn’t have an office, warehouse of physical presence — it doesn’t have to collect that state’s sales tax.
More than 40 states are asking the Supreme Court to reconsider that rule, saying they’re losing out on “billions of dollars in tax revenue each year” causing them to have to cut government programs, according to The Associated Press.
But small stores say changing the rule could put them out of business, because of how complex and expensive collecting taxes nationwide is.
Larger retailers though — like Apple, Macy’s, Target and Walmart, which have brick-and-mortar stores nationwide, generally do collect sales tax. They want everyone to “be playing by the same set of rules,” Deborah White, the president of the litigation arm of the Retail Industry Leaders Association told The Associated Press.
For years, this rule mainly involved Amazon — which is said to account for almost half of US online retail sales.
As the company grew, it began dotting the country with warehouses, and had to charge sales tax in more and more places. Since 2017, Amazon has been collecting sales tax in every state that charges it.
But third-party sellers that use the online giant as a platform to peddle their wares make their own tax-collection decisions.
The case before the Supreme Court could affect those third-party sellers like jewelry website Blue Nile, pet product sire Chewy.com, clothing retailer L.L. Bean, electronics seller Newegg and internet retailer Overstock.com.
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,” said Andy Pincus, who filed a brief on behalf on eBay and small business who use its platform.
It’s unclear how the bench might align but three justices — Neil Gorsuch, Clarence Thomas and Anthony Kennedy — have indicated a willingness to reconsider the rule.
With Associated Press