CA, NY & TX, slow to act following Wayfair ruling, are missing out on holiday online shopping sales taxes

December 8, 2018

Shopping-bags-computer-Rampart-Group-Online-Shopping-Tips-v2

I've never been a big shopper. So when the ability to virtually peruse shelves and racks came along, it was like a gift from heaven.

I am not alone. Even folks who enjoy the in-store experience have been shifting to online shopping in recent years. Cyber Monday 2018 hit a new shopping record.

You'd think that this burst of online shopping would be good for state tax departments, more of which are now getting additional sales tax money following this summer's 5-to-4 U.S. Supreme Court decision in South Dakota v. Wayfair. That ruling struck down the prior Quill nexus requirement and now allows states to devise systems to collect sales tax from remote sellers even if they don't have a physical presence in the states.

But apparently, this holiday season the big states still are missing out on online sales taxes.

No sales tax collection in big states: California, New York and my home state of Texas likely will miss out on millions in sales tax revenue this holiday shopping season because they have failed to implement laws and regulations for collecting state sales tax from online purchases, writes Elaine S. Povich a recent post at Pew Charitable Trusts website.

As the holiday shopping season heads into high gear, Povich's article gets this weekend's Saturday Shout Out. I'll let you peruse it at your leisure, but here are a few highlights.

  • A host of states have written and put into effect post-Wayfair remote sales tax laws, but clashes over how much business an online seller has to do in a state in order to collect has stalled implementation, particularly in some big states.
  • In states that haven't acted, the soonest that such laws could be on the books is 2019, meaning states are missing out on the 2018 holiday shopping season.
  • The U.S. Government Accountability Office in 2017 reported that state and local governments could have collected $8.5 billion to $13.4 billion in 2016 if they could have taxed remote retailers the way they can now.

Use taxes still in effect: Have you been holiday shopping online?

Did your purchases include sales taxes? Some major e-tailers, notably Amazon, were already collecting sales taxes before the Supreme Court ruling.

If your state has a sales tax and it wasn't part of your recent online purchase, you're not off the tax hook. I hate being the tax Grinch and stealing your tax-free online Christmas shopping joy, but you still owe your state a use tax on all that you bought online.

Sure, most states don't have effective systems to collect use taxes or come after residents who ignore the law. But it is the season where being naughty or nice is paramount.

So if you owe a use tax, check with your state's tax department on how to remit what you owe.

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