The United States Supreme Court’s 5-4 ruling allowing states to require online retailers to collect and pay sales tax is seen as an equalizer for traditional brick and mortar retailers.
Besides the convenience of shopping from home, online retailers can charge lower prices because they weren’t required, for the most part, to pay state sales tax. Traditional retailers have long criticized this as an uneven playing field. Thursday’s ruling is a game changer for the retail industry.
“The ruling is great news for Florida retailers and the retail industry nationwide,” Florida Retail Federation President & CEO R. Scott Shalley. “Retailers have been adamant in seeking equity in taxation of bricks and mortar and online sales. This decision paves the way for a level playing field throughout the industry.”
The current rule – which the Supreme Court called “unsound and incorrect” – said businesses shipping a product to another state where it does not have a “physical presence” — a store, office or warehouse — are not forced to collect that state’s sales tax. Online retail giant Amazon already collects sales tax on purchases made in Florida.
The onus to pay sales tax for online purchases in Florida is on the buyer, though very few people actually pay. Past estimates have shown uniform sales tax collection could bring between $200 to $700 million into state coffers.
Florida Taxwatch, a non-profit research institute, applauded the Supreme Court ruling because it brings clarity for both retailers and consumers. “Not only will the state be able to collect the sales and use tax that has always been legally due, but Floridians will no longer be unknowingly breaking the law,” said Dominic Calabro, Florida Taxwatch CEO & President.
Thursday’s ruling doesn’t automatically require states to collect sales tax. It simply gives states the option. That requires action by the legislature and governor before any collection can take place. It’s an issue Florida retailers will push.
“The Florida Retail Federation looks forward to working with Florida’s legislative leaders and the Department of Revenue to ensure fair and equitable application of the law,” added Shalley.