The increasingly common internet sales tax
Some consumers shop at a particular company because they like the brand, others because they like the quality or selection. But a large number of shoppers go for the lowest common denominator and buy from places where they can spend the least amount of money.
This tendency is a leading cause for the rise in internet sales in the past few years – shoppers at brick-and-mortar stores pay sales tax on their purchases, but many shoppers can bypass the sales tax by purchasing those same items online, thereby increasing the popularity of online retail.
New York approves of sales tax
New York is one of the states currently working to tighten that tax loophole, after its highest court ruled that the state can now collect sales tax from out-of-state retailers. Large retailers including Amazon.com and Overstock.com submitted claims that this ruling violates the U.S. Constitution’s Commerce Clause, but the claims were rejected by the court.
Out-of-state companies that generate at least $10,000 in annual sales in New York will now be subject to New York’s state tax rules. The additional sales tax will likely be passed on to customers at the time of online checkout.
The Marketplace Fairness Act
The sales tax reform is being referred to as the Marketplace Fairness Act, and government officials are pushing for it in order to place brick-and-mortar businesses on an even playing field with online retailers. By imposing sales taxes for all retailers, regardless of physical location, officials hope to equalize the marketplace and takes away the existence or absence of sales tax as a determining purchase factor.
Any company that meets the $10,000 in online annual sales in New York is now required to collect sales tax from its customers and remit those amounts back to the state of New York. This will require increased responsibility and preparation for online retailers as they work to meet the new tax obligations.