As we discussed in our last blog post, the news has been concentrating on the federal income tax reform, leaving little conversation to what is transpiring in the sales tax world. However, 2018 is shaping up to bring significant changes depending on future court rulings. The most publicized being South Dakota v Wayfair, which requests the U.S. Supreme Court to decide regarding sales tax collection for internet and remote sellers.
Jurisdictions are claiming that they are losing significant revenue from the ever-increasing sales from internet transactions, while brick and mortar stores are claiming they are at an unfair advantage because they must charge sales tax, making it difficult to fairly compete.
Currently, the U.S. Supreme Court has agreed to move forward in hearing the case, which will create precedence for the future application of sales tax collection for internet retailers. Additionally, the impact of this ruling could be significant in the way consumers continue to shop. As stated above, brick and mortar stores feel they are at unfair advantage since online retailers may not have nexus or physical presence, therefore they do not have to collect sales tax. With consumers getting an instant discount by not paying sales tax when shopping online, it will be interesting to see if the discount impacts future sales for the retailers, or if the convenience of shopping online is really the changing force in revenue streams.
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