Is tax-free shopping soon to be a thing of the past?
The impending decision by the Supreme Court on economic nexus could impact many remote sellers. Vice President of Tax Policy and Government Relations Scott Peterson, explains why South Dakota v. Wayfair, Inc. might end our concept of tax-free shopping for consumers.
"If South Dakota wins their case against Wayfair it will go a long way to ending the concept that most people think that the internet is tax-free. Of course, we all know that legally the internet is not tax-free, shopping is not tax-free. You owe the use-tax as a consumer, if you weren’t charged a sales tax by your seller. Most of us don’t pay the use-tax, which is why the states are going after all the sellers. It’s easier to get a seller to collect a sales tax than it is to get a consumer to pay the use-tax. That is the point of the economic nexus legislation that South Dakota and those states have adopted. In addition, that’s also the point of the marketplace facilitator legislation that Washington and Pennsylvania and Puerto Rico have adopted, and others will soon adopt. And it’s also the point of the use-tax reporting legislation that’s in effect in Colorado and Minnesota and Louisiana. Those states are trying to come up with tools that they can use to force sellers to collect the sales tax because the use-tax is so hard to collect. The answer is yes, this will probably end the concept of tax-free shopping because eventually these things will all work and every seller will have to start collecting sales tax. "