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You’re About to Pay Higher Online Taxes After Supreme Court Ruling

Shopping online is about to get more expensive.

The Supreme Court ruled on Thursday that states can force retailers to collect sales tax even if they don't have a physical presence in that state.

Credit: Shutterstock

(Image credit: Shutterstock)

The 5-4 decision overturns the 1992 Supreme Court ruling that barred states from collecting sales tax in states where they have no physical storefront.

How will this affect your wallet? Prior to the ruling, if you lived in New York and bought a TV from a retailer like Newegg — which has no physical stores in New York state — you wouldn't have to pay sales tax on your purchase. This would amount to substantial savings for shoppers.

However, under the new ruling, New York consumers would have to pay sales tax even though Newegg has no physical storefront in the Empire state.

Many e-commerce giants like Amazon and Walmart already collect sales tax because they're so big they have a large enough presence throughout various states to collect sales tax. However, smaller e-tailers like Newegg used to have a no-tax advantage. As a result, states argued they would lose millions in sales tax each year.

Shares of Amazon, Etsy, and eBay dropped after the ruling, though it's too early to tell if this will deter shoppers from purchasing online, which is unlikely considering how fast e-commerce is growing.

  • malibber
    I suspect it will help Amazon as they were already collecting sales tax everywhere. Smaller mom and pop retailers, eBay sellers, Ecstasy sellers and so on won't be able to afford to comply with the new rules. You literally would be required to be familiar with all 50 states sales tax systems and the District of Colombia's. Then most of those states have local taxing districts within them, so you would have to be familiar with all of those as well. Most states require you to file sales tax returns (different than income tax returns) on a quarterly basis. Literally, all of you time as a small merchant, eBay seller or whatnot will be spent filling out those sales tax returns. The big merchants like Amazon will benefit because all the small ones will have to close up shop leaving the totality e-commerce to a handful of large companies.
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  • dandeb71
    Ruined? RUINED? Hyperbole is under the normal high standards of Tom's Guide.
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  • pchapa
    LOL government trolls
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  • woolley651
    What about all the cash money people get for gratuity. Just did a trip to Alaska 35 of us from NZ we all have the driver 20 USA each. Not bad cash money plus his wage. How much money is the government missing out there. In our country that is tax avoidance.
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  • kc.koellein
    Agreed. The very definition of "Yellow Journalism".
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  • Karadjgne
    Just another way for ppl to stick their hands in my pocket. I honestly cannot see the difference between eBay and a yard sale. Private individuals buying already taxed items from other private individuals. Why does the government think it has any right to be a part of that. They already got paid taxes on the original sale.

    As far as etailers go, half the time the products are not even in the same state. If Im in Florida and I buy a psu from newegg (California), it'll get shipped from Georgia. Just how is California loosing out on that deal? Why should they get paid sales taxes for product that's not even sold out of that state? If I lived in Georgia, sure, pay Georgia sales tax, be the same as if I'd gone to the store physically, but out of state?

    I'd put money down on the fact that more than one of those Supreme Court judges stands to profit personally from this ruling.
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  • nooisemaker3333
    RETIRED LIVE I EUROPE ! IT DON'T APPLY TO ME .AMERICA IS ONLY GOING TO GET WORST FOR ALL WILL NEVER BE BETTER FOR THE PEOPLE
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  • vitoarmiano
    RICH ARISTOCRATIC PIGS RULE THE COURTS LIKE THEY RULE THE BANKS , ITS ABOUT CONTROL , IF THERE IS A DOLLAR TO BE MADE SOMEWHERE ALONG THE LINE BE ASSURED THAT THEIR FILTHY PRESENCE IS THERE , THE SAME THING IS ABOUT TO HAPPEN IN AUSTRALIA FROM THE FIRST OF JULY.
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  • Mousemonkey
    Please turn off your caps lock, no one likes to be shouted at.
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  • baughmankr
    The negative effect of this ruling isn't so much on the consumer as it is on the small business owner. Consider the mom and pop store who sells one item to a customer in Utah. Now he will have to figure out what that tax is, collect the money and figure out how to send it to State Revenue office in Utah. Multiply this times 50. This is bad news for the little guy.
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