U.S. Supreme Court Rules States Can Collect Taxes from Internet Purchases

The U.S. Supreme Court recently ruled that states can collect sales taxes from purchases made from online retailers, regardless whether or not the retailer had a “physical presence” in the state where the consumer resided.

On June 21, the Court ruled 5-4 in South Dakota v. Wayfair that the determination of physical presence in a 1992 precedent was “wrong on its own terms”; further, the increase in Internet usage to make online purchases only proved to be “all the more egregious and harmful,” the Court said, because it placed local brick-and-mortar shops at a competitive disadvantage.

As a result of this decision, companies which conduct their business online may have to collect and remit local sales taxes, and consumers may have to comply with the use tax, which states impose when no sales tax has been paid on a taxable product. States, meanwhile, are currently looking to recoup as much lost sales tax revenue as possible.

However, this ruling will place a myriad of new regulations on retail businesses to ensure that they are in compliance and that they pay the proper amount of state and local taxes on all sold products. The Certified Public Accountants at KVLM LLP will assist you in navigating the complexities of regulatory compliance under the recent Supreme Court ruling. For more information, call (516) 938-5219 or visit www.kvlmcpa.com.