NEW YORK – The U.S. Supreme Court will make a critical decision in the coming weeks that could give states the right to tax small businesses on the Internet. What is being decided is whether or not a decision from 1992 should be upheld in a new case, which prevents States form being able to tax, audit or regulate businesses and individuals that do not reside in their state (Ex: online businesses, who are located elsewhere but do transact business in a state).
If the court does not uphold its earlier decision from 1992 (Quill Corp vs. North Dakota) then online businesses will need to fully understand and collect different taxes and different tax rates based on over 10,000 different jurisdictions and all sorts of different product and service categories throughout the entire United States.
This will be an extremely costly bookkeeping disaster that will only horrifically complicate small business everywhere in the Country. Some states are fighting for this as it will greatly increase tax revenue as States will be able to collect on not only brick and mortar transactions within their own boundaries, but they will now be able to collect on ‘all transactions’, regardless of venue, to any resident or business based in their territory giving them a new and broadened far-reaching power.
The decision will be on South Dakota v. Wayfair and if the court does not uphold its earlier decision, the change is expected to bring a total revenue gain for States from $8.5 billion to $13.4 billion.
Ebay is one of many online merchants gathering signatures to prevent this. If you care about this issue, you might want to play, even a tiny role, in how all this plays out by filing in the form, or at least learn and prepare. Take my word for it; it’s not going to fun for small businesses and startups.