U.S. states can now force consumers to pay online sales tax

By Joe Maring
published

In other words, you might have to start paying tax on B&H orders.

On Thursday, June 21, the Supreme Court voted in favor (5-4) of allowing states to require online buyers pay sales tax no matter what site they're shopping at.

In 1992, it was ruled that consumers didn't have to pay sales tax on an item if it was being shipped from a store that didn't have a physical presence in the state of the buyer. However, following this recent decision from the Supreme Court, that's no longer the case.

According to The Hill —

Delivering the opinion of the court, Justice Anthony Kennedy said the physical presence rule in that former case, known as Quill Corp. v. North Dakota, is unsound and incorrect.

For readers of our site, one of the biggest implications this ruling will have is on B&H. B&H doesn't require that buyers pay sales tax if they place orders outside of New York or New Jersey, and while you're supposed to later pay those uncollected funds when tax time comes around, the vast majority of people don't.

From here on out, states can now force shoppers to pay the sales tax upfront no matter where you're buying from.

Do you agree or disagree with how the Supreme Court ruled in this case?

I want to start seeing more crazy beautiful finishes on flagship phones

Joe Maring
Joe Maring
27 Comments
  • Yet another middle class tax has been enacted.
  • Well technically that tax has always been there it's just consumers are "supposed" to report and pay that tax on their yearly tax returns. Most people don't (thereby "dodging" the tax) so this is basically enforcing a law that already exists by just changing the method of collection. I hate taxes like the next guy but I can't in good conscious call this a new tax.
  • Yeah, I'm not a fan of this, for selfish reasons, but I can't really say it's a bad decision.
  • @krayziehustler: SCOTUS doesn't enact taxes. Congress does. Get your facts straight.
  • As for facts, SCOTUS didn't enact this tax. South Dakota did. And a lot of other states as well. They certainly do have the authority to do so. The tax was challenged based on a pre-internet commerce ruling that a state could only tax if a business had a physical presence in the state. Most states aren't interested in putting businesses located there at a competitive disadvantage to online retailers. Large online retailers have accepted this premise and collect tax in all states with a sales tax. Other online retailers fought this and sued. Today SCOTUS ruled that South Dakota, and the other states, can legally force all online retailers to collect sales tax within their state. The ruling specifically calls out the what was reasonable national tax policy in 1992 is not today. The online retailers who don't collect the tax now will need to begin to do so. As for Congress. Well, they certainly could have passed a legislation to address this issue. Sadly, Congress can barely do anything at all these days.
  • why not the same taxes in every state?
  • Because these are state taxes, and many states don't even tax products, just as many states don't tax income.
  • I would say "many" in both cases is an exaggeration
  • @Apfel Schorle: Because each state determines its own revenue needs.
  • This one just floors me. Particularly since you had a mix of liberal and conservative justices who agreed with Kennedy on this one. Sickening.
  • I mean this is npthing new. They just are making sure tax evasion doesn't keep happening.
  • Why give a competitive edge to merchants in other states over your own state's merchants? I think its is important to level the playing field for my local merchants against online merchants who are driving them out of business. There are many other factors, of course, but this decision at least deals with one.
  • Unfortunately, if B&H starts charging sales tax, I may just have to go back to Amazon. I've been completely satisfied with B&H and have spent nearly 15K in photography gear over the last two years but if they charge tax, there isn't a huge benefit in using them vs Amazon in some instances. Amazon offers a greater selection of bundled gear but B&H's no tax and free shipping has saved us thousands of dollars. I bought a lens for exactly $2,598 and it arrived in 2 days, no tax, free expedited shipping. If B&H would have charged tax and shipping, bringing it closer to $2,800, I would have just bought from Amazon and got a bundle with the lens, filters, cleaning items, straps and more for around $2,800 with tax and shipping. I am interested in seeing what B&H does. They are my favorite place to shop due to excellent savings on tax and shipping, quality shipping, service and support. I have 4 items arriving tomorrow from them. B&H has been service customers for around 40 years, I hope the best and look forward to working with them in the future.
  • Wouldn't this affect Amazon too?
  • Yes this affects everybody in every state
  • At least in California, Amazon is already applying sales tax when checking out.
  • Here in Louisiana too, but only for their stuff. They aren't forcing their marketplace sellers to yet, this wi change that.
  • Amazon has collected state tax on everything "it sells" for years, however, it has not collected on third party sellers (leaving that to them) that loophole will be closed. Given the hit or miss nature of seller quality from such merchants on Amazon, I personally have stuck with first party sales there.
  • but you would have paid the tax when you did your tax return right?
  • The headline is incorrect. The ruling can force merchants to collect sales tax. Consumers have always had to pay "use tax" but most don't. Thus the outcry.
  • For most online purchases, Amazon has been collecting sales tax anyway. The impact for Amazon shoppers will be more limited than for B&H and NewEgg (or even digital stores like Steam). All this did was change the court's prior decision. People can still sue to stop the tax on other grounds.
  • That will stop those pesky impulse purchases.
  • I'll admit it - I don't know what B&H refers to.
  • https://www.bhphotovideo.com/ Has been a well known mail order business for a loooong time.
  • Bye bye cheap PC games...
  • First this is not something that will be enforced tomorrow...It will take some time for the state to enforce it if they choose, and not all states would start enforcing it at the same time...This is not a good decision in a long run and does not seem fair...As revealed by supreme court vote (5-4) which was non-unanimous, four judges voted against. One vote could have changed the outcome of this vote! The out of state retailers, eBay retailers and other online stores would see reduced sales and some would probably go bankrupt. It is true states would see more state sales tax revenue above and beyond the use tax at the filing, but at the same time they see less state income tax due to reduced commerce, so the whole thing would probably be a wash...
    I am not against enforcing this law to charge sales tax for out of state purchases but not at the full rate. A more reasonable rate at least to start with would be 1% of sales. This would be a nationwide rate for All States. Is Trump man enough to propose this??!!
  • Always made sense to me that on-line retailers should collect the sales tax based on where the item is going. That's how it works if you go buy an appliance in town and have it delivered to your house in the county most places I've lived. (i.e if you don't live in the city limits SEARS charges county and state tax, not city). Always understood that I was technically/legally responsible for the sales tax on stuff I bought, though like most, ignored that. The merchant's responsibility was always collecting the tax that I owed. Now the online merchants should do that as well. Taxes are onerous, but a necessary evil. There are services we all depend on that only exist because of taxes.