Online shopping taxes in 50 states and over 3000 counties across the US has become reality for businesses – small and large with the recent Supreme Court decision. States and counties have been searching for ways to boost their revenue streams. Online retailers and marketplaces are now faced with compliance to collect tax on orders placed by residents of states where they do not have a physical presence.
On Thursday, June 19th, 2018 the Supreme Court overturned a previous decision from 1992 exempting retailers from collecting taxes from online sales in states where they do not have a physical presence. If your business has an online presence, you have already been collecting taxes from online sales.
eCommerce has grown substantially with the use of technology. States have their own ways/systems for us to report and pay taxes. This ruling and how states will select to apply it will impact anyone who markets and sells products and services online.
Before this decision, we were obligated within the state of our “physical presence” only. Now, online retailers have virtually no time to react and respond to ALL states. Some states have already outlined online sales tax laws “triggered” into current policy with the new Supreme Court Decision.
eCommerce is a broad and general term. Let’s consider ways this may impact you.
Bottom line, the biggest impact is to those of us who offer our products and services online to clients beyond your home state. This ruling applies to anyone engaged in business and/or doing business with others using the internet to sell something from you.
The challenge now is to interpret and apply tax legislation from 50 states and over 3000 counties across the US. Keeping up with a) Sales Tax Permits, b) Collection of Sales Tax and c) Reporting / Filing of Sales Tax is now in full force.
Here are a few examples of the varying policies across the country. States with online sales tax laws.
| State | Effective date | Minimum sales thresholds |
|---|---|---|
| Georgia | In effect | $250,000 or 200 transactions |
| Illinois | Oct. 1, 2018 | $100,000 or 200 transactions |
| Indiana | In effect | $100,000 or 200 transactions |
| Tennessee* | In effect | $500,000 |
| Wyoming | In effect | $100,000 or 200 transactions |
| Colorado** | In effect | $100,000 |
| Alabama | In effect | $250,000 |
| Iowa | Jan. 1, 2019 | $100,000 or 200 transactions |
| Massachusetts | In effect | $500,000 or 100 transactions |
| Connecticut | Dec. 1, 2018 | $250,000 or 200 transactions |
| Hawaii | July 1, 2018 | $100,000 or 200 transactions |
| Kentucky | July 1, 2018 | $100,000 or 200 transactions |
| South Dakota | In effect | $100,000 or 200 transactions |
| North Dakota | June 21, 2018 | $100,000 or 200 transactions |
| Maine | NA | $100,000 or 200 transactions |
| Vermont | July 1, 2018 | $100,000 or 200 transactions |
| State | Effective date | Type |
|---|---|---|
| Pennsylvania | In effect | Collect and remit |
| Washington | In effect | Collect and remit |
| Rhode Island | In effect | Marketplace operators report sales to state |
| Connecticut | Dec. 1, 2018 | Collect and remit |
| Oklahoma | July 1, 2018 | Collect and remit |
| Minnesota | July 1, 2018 | Collect and remit |
| Alabama | January 1, 2019 | Collect and remit |
This ruling is a big deal. It’s a good time to dedicate people and resources to this issue to ensure you are not in store for an audit …
How we are prepared to react and respond in all situations is a key component of what we do at The Living Planner©. What’s next on the horizon is known and unknown. Advance consideration of change/impact at home and in business is what we love to do.
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