On Tuesday, April 17th, the US Supreme Court will hear the case for imposing sales tax on all online purchases even if an online retailer does not have a physical presence in the state where the purchase is being made. While the debate will likely rage for some time, and advocates on both sides will present their case, we are of the opinion that the Court will likely rule in favor of imposing the tax on all online purchases, thereby leveling the playing field somewhat with brick-and-mortar stores and helping to raise revenue for many cash-strapped states. If they do rule in favor of the tax, it will likely go into effect beginning in 2019, obviously making it more costly to shop online, no matter if you purchase from an online megalith such as Amazon or a vastly smaller operation such as The Motor Pool.
For us, it will make the collection and disbursement of said taxes across all fifty states extremely cumbersome and time-consuming, requiring added paperwork and a revamped infrastructure that monitors when sales tax fluctuates across the entire nation, on a county-by-county basis. If the Court is indeed serious about levying an Internet sales tax, they might want to consider a low-rate flat tax of say 4% across the entire nation, thereby making the collection of taxes, particularly for smaller businesses, a less problematic issue.
We’ll keep an eye on the Supreme Court’s ruling when it breaks and let everyone know how we will approach things going forward should the Court rule in favor of the tax imposition.