April 22, 2019

Online Sales Tax Ruling Could Help California Pocket Millions

Many are aware that California has been trying to pull more taxes out of online retailers for some time now. However, a new ruling could make it all possible and bring millions of dollars to California.

More than 2,500 online retailers with out-of-state addresses were notified last fall that they owed sales taxes in California. These letters from California’s Department of Tax and Fee Administration reveal how determined the state is in trying to collect sales and taxes from online retailers. These efforts have been ongoing since 2012, when the state struck a deal that required Amazon to begin collecting sales taxes in California.

Now, the state is reaching out for more. Nic Maduros, the tax department director, explained to the Senate committee in April that potential taxes from the companies who received those letters had the potential to reach “hundreds of millions of dollars” a year in revenue. In Maduros’ opinion, “It’s not an area we can afford to overlook.”

A recent ruling has definitely caught people’s attention: the Supreme Court’s recent decision in South Dakota vs. Wayfair. According to those involved, it could easily expand the state’s efforts even further. Essentially, this ruling overturns a 1992 decision (Quill Corp. v. North Dakota), in which states were only allowed to collect online sales taxes from sellers if the seller had a physical presence in that state.

After the hearing, Paul Cambra, spokesman for the tax department, estimated California has missed out on $1.8 billion in revenue from internet retailers. “The department is currently reviewing the court’s opinion to determine the next steps to support taxpayers,” he said.

Ultimately, this ruling would mean that states will be able to collect sales tax from all online retailers (as long as they meet criteria determined by each state). How do businesses feel about this decision? Brick-and-mortar retailers are celebrating. They have been subject to states sales tax, and have long felt that they have a disadvantage to online retailers.

Does your business need support as California moves forward with its plans for online sales tax? It can be hard for some businesses to find the merchant services they need, due to their business type or industry. If you are one of the many that do, consider working with a high-risk specialist.

These alternative providers specialize in offering services that are tailored to meet the needs of each industry it works with. Chargeback protection and prevention, high risk merchant accounts and flexible business funding options are just a few of the services you will find. Make sure your business has the merchant services it needs to operate smoothly and safely accept customers’ payments.

Author Bio:Electronic payments expert Blair Thomas co-founded eMerchantBroker, serving both traditional and high-risk merchants with options like high risk merchant accounts. His passions include producing music, and traveling.