On June 21, the Supreme Court ruled that states can force online retailers to collect sales tax. This could place a burden on smaller businesses in Maryland and throughout the country. By not collecting sales taxes, companies that did business online could offer their goods cheaper than those with physical retail locations. Furthermore, smaller retailers will now have to deal with the regulatory burden of collecting sales taxes.
There are over 10,000 different jurisdictions that collect sales taxes at varying rates. Typically, these smaller operations rely on an outside accounting firm to do their taxes as opposed to a dedicated team of employees. One CFO for a medium online retailer said that he was worried that states could make an attempt to collect back taxes owed. However, those who study the issue say that companies like Amazon won’t be impacted much by the court’s decision.
This is because Amazon began collecting sales taxes before the ruling was issued. Furthermore, the fact that online retailers now have to collect sales taxes is not expected to lead to a surge of sales at physical locations. Therefore, large retailers like Target or Walmart may not see a significant upside from the Supreme Court’s ruling. Most acknowledge that shoppers buy items online because it is convenient as opposed to avoiding sales taxes.
A failure to remit sales tax could result in fines or other penalties levied against a business. This may be true whether it has a physical or online presence. If a business has been audited, the owner of that company could benefit from speaking with an attorney. Doing so may increase the odds of obtaining a favorable outcome. An attorney might negotiate with a tax authority on behalf of the company or otherwise provide guidance throughout the audit process.