Estimates show potential for e-retail taxes in Oklahoma

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Estimates show potential for e-retail taxes in Oklahoma

The U.S. Supreme Court ruled Thursday that states can require retailers to collect and remit sales taxes on out-of-state purchases.

While the court made clear that the states do not have unlimited power to require sales tax collection, "The court blessed South Dakota's law", said Carl Davis, research director for the Institute of Taxation and Economic policy.

Brick-and-mortar retailers in Florida and other states have long complained that allowing some online retailers to evade sales taxes creates a competitive advantage for remote sellers.

But sellers that only have a physical presence in a single state or a few states could avoid charging customers sales tax when they're shipping to addresses outside those states.

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.

One thing's for sure: Consumers who live in one of the five states without a sales tax won't be affected by the Supreme Court's ruling.

The biggest beneficiary of the ruling would be the states. USA Today points out that most of the top 20 e-commerce sellers already collect sales taxes in most states because they have warehouses or local showrooms there or because state laws can successfully reach them. "There is a chance here that it raises prices for consumers by passing on this tax increase".

Tennessee, Louisiana, Arkansas, Oklahoma and Alabama are among the top states that could see more revenue in their coffers due to their high reliance on sales taxes, according to a report released by Fitch Ratings on Friday. The decision could result in billions of dollars in extra tax revenues at the state and local level.

Sales tax collection previously followed that is commonly known as the physical presence rule. Thursday's decision overturned that ruling, saying that the omnipresent nature of internet commerce calls for an updated tax structure.

President Donald Trump says the Supreme Court decision in Wayfair vs. Legislators in their 2017-19 state operating budget raised an estimated $432 million through a partial expansion of online sale taxes.

But to brick-and-mortar stores, the ruling righted a decades-old imbalance that favored internet retailers and led to the demise of thousands of merchants. That software, too, can be an added cost.

Chief Justice John Roberts and three of his colleagues would have kept the court's previous decisions in place. The state conceded in court, however, that it could only win by persuading the Supreme Court to do away with its physical presence rule. "Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", Roberts wrote in a dissent joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor. Lawmakers in the state, which has no income tax, passed a law created to directly challenge the physical presence rule. Missouri officials believe this law will bring in an extra $275-million more in sales taxes every year. The 5-4 decision sided with the state of South Dakota against online retailers Wayfair, Overstock.com, and Newegg. Wayfair (W) operates five online retail sites that sell a variety of goods for the home. In upholding South Dakota's sales tax law, the court identified several steps the state had taken to ensure it followed that requirement.

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