In a recent U.S. Supreme Court decision, States will now be able to collect sales tax from internet retailers who sell their products online. This change appears to be a big victory for the States, and is expected to increase revenue that individual States argued they have been missing out on for decades.
Prior to this ruling, the law did not require businesses to collect sales tax on customer’s purchases if the business was shipping the purchase to a State where the business did not have a physical presence. In these situations, customers who resided in a State with sales tax were required to report and pay ‘use tax’ for their online purchase directly to their home State. This tax reporting requirement was not widely known, and the home States seldom received the use tax. This is all about to change as a result of this recent U.S. Supreme Court decision.
What Does This Means for Businesses?
Could this only apply to larger companies?
Will all businesses face the same sales tax collection requirement?
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