Online sales tax has differing effects on Iowa businesses
Supreme Court ruled Thursday that states can force shoppers to pay online sales tax
Supreme Court ruled Thursday that states can force shoppers to pay online sales tax
Supreme Court ruled Thursday that states can force shoppers to pay online sales tax
Online purchases from other states will likely become more expensive after the U.S. Supreme Court ruled Thursday that states can collect taxes from online retailers.
Individual states can compel internet sellers to collect sales tax regardless of whether they have a physical presence in the state. The decision overrules a 1992 Supreme Court precedent, which means regulation may be coming to the "Wild West" of online retail.
"You're so much that you're like, 'There's no way they're just not going to charge us forever," said Mike Draper, owner of Des-Moines based Raygun. Online sales account for 25 percent of Raygun's business. The Supreme Court announced it will allow states to impose sales taxes on all online sales from other states.
"The idea is, if you live in Minnesota, and you buy one of our shirts, it's 7 or 8 percent less, currently, than if Minnesota started charging us a sales tax," Draper said.
States are set to rake in billions of dollars. Some people argue that it will hurt small businesses in the process. But some Iowans, such as Cindy Lane, who owns Cindy's Boutique, don't see it, that way. Her business doesn't sell anything online.
"I think it's going to be great that people aren't going to sit at home and shop online," Lane said. "If they think they're getting a good deal, now they have to pay tax, and they'll come to my small business."
But small businesses that do sell online, like Raygun, may have to account for up to 50 different sales tax rates.
"Some people will say, 'Oh, this is going to be too complicated for business," Draper said.
Law experts say Amazon will benefit from the ruling because it’s already required to collect sales taxes in every state. There are only five states without a sales tax.