As the holidays near, more and more shoppers are turning to online methods of procuring that special gift. And it makes complete sense. The world of e-commerce opens the buyer up to products that may be unavailable in the local area, and it’s often cost-efficient. With this massive turn in consumer spending, tax systems are struggling to keep up. By now most taxpayers have heard of the South Dakota v. Wayfair ruling that overturned the 1992 Quillcase and now imposes sales taxes on retailers with no physical presence in the state, as long as they have a clear connection to state consumers and certain threshold of sales. With this, smaller brick and mortar shops may start to see an increase in their sales again. It will also help local state and municipalities by bringing in more revenue through the taxation.
It is not great news for businesses that rely on e-commerce sales, however. Smaller businesses will feel the impact of Wayfair far more than larger companies like Amazon and Overstock.com. These large-scale businesses have been anticipating and preparing for these changes for years. In fact, many of them have already been collecting and submitting sales tax with the assumption that this is where the nation was headed. It is the smaller companies that merely dabble in online or across-border sales, that need to bring themselves up to speed on the new regulations and how it will affect them. Likewise, new start-ups that plan to rely on e-commerce need to understand where they will owe taxes, and how much tax they will pay in each state in each year. Small retailers should brace themselves for state and local tax collectors, as well as auditors, to start scrutinizing their operations looking for any missed taxation opportunities.
Recent Comments