California And Other States Contemplate Streamlining Collection Of Internet Sales Taxes
The United States Supreme Court recently ruled that states can require online retailers to collect and remit sales taxes on purchases that are made out-of-state. This decision reversed decades-old decisions that shielded out-of-state vendors from an obligation to pay sales tax.
According to NPR:
“Those earlier decisions, one half century ago, the other a quarter-century ago, dating back to a time when mail-order sales were relatively small and online sales were all but nonexistent. As the justices acknowledged Thursday, however, the court back then ‘could not have envisioned’ a world in which e-commerce sales have revolutionized the dynamics of the national economy.
Furthermore, Kennedy said, the previous decisions effectively functioned as a ‘judicially-created tax shelter’ for out-of-state retailers, and put local businesses at a ‘competitive disadvantage.’
The problems with these earlier decisions, Kennedy said, were made “all the more egregious” by technological innovation. ‘The Internet’s prevalence and power have changed the dynamics of the national economy,’ he wrote in the majority opinion.”
Justice Anthony Kennedy, who wrote the five to four majority decision, is quoted saying that past decisions “were flawed,” and that in the modern economy these previous laws “create, rather than resolve market distortions.”
The effects of the Supreme Court’s ruling are still to be seen and determined, but one thing is for sure, states are going to start implementing sales taxes on online retailers, and most likely, one of the states that are going to do that is California. Time will only tell at what percentage those taxes will be set at.
Whether you owe money to the IRS or you have a State tax debt, our staff of Enrolled Agents and Tax Attorneys can help. We have experience negotiating with the IRS in all 50 States.