10 US States Enforce New E-Commerce Taxes

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By Published On: October 2, 20180 Comments

Online retailers in the US will now have to pay sales taxes on goods sold via e-commerce platforms, even if they don’t have a physical footprint in the state that’s collecting the tax.

Earlier this year, the US Supreme Court voted in favour of South Dakota’s request to enforce sales taxes on online purchases, a decision that set the precedent for other states to follow suit.
Back in July, several states including Hawaii and Tennessee started collecting online sales taxes, while Mississippi starting enforcing its new tax legislation in September.
On October 1, online sales taxes came into force in 10 more states, including Alabama, Illinois, Indiana, Kentucky, Michigan, Minnesota, New Jersey, North Dakota, Washington and Wisconsin.
There are also a few states that will be implanting their own laws in the months to come, with Colorado looking to crack down on e-commerce companies in November and Connecticut in December.
While the laws will differ in each state, online taxes will only be paid by e-tailer’s that generate a minimum number of sales or revenue within a state, each year. For instance, in Michigan, the laws will only be enforced if a retailer generates more than $100,000 in sales per year within the state or processes 200 transactions.
According to Jason Brewer, the executive vice president, communications and state affairs at the Retail Industry Leaders Association, a number of local authorities are keen to enforce the new legislation.
“States, in their own way, are implementing either via regulation or statute what they need to promote or compel sellers to comply,” he said.
It’s believed that the booming e-commerce industry has cost states not collecting tax anywhere from $8 to $33 billion in possible revenue each year. It’s not surprising that states are now rushing to take advantage of this new revenue stream.
The US’ laws follow on from similar laws that were introduced in Australia earlier in the year, stipulating that a 10 percent GST standard is payable on all overseas purchases that are less than $1,000.
It’s believed the online GST collection scheme for international purchases will raise as much as $300 million in extra revenue for the Australian Government each year.
Europe is also reportedly implementing online sales taxes to suit the new digital economy.
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