Cyber Monday has come and gone. And it may have been the biggest online shopping day in history. It was also the first Cyber Monday since the U.S. Supreme Court ruled that states have the authority to require online retailers to collect sales taxes.
According to the Associated Press, the landscape remains uneven. About two dozen states acted to take advantage of the ruling. Washington’s new reporting and collecting requirements went into effect October 1. Somewhat surprisingly,
a number of big states, including California, Texas, New York and Florida, do not yet have similar collection requirements in place. As a result, consumers shopping online from those states and others that have yet to act may not be charged sales tax on some websites for a little longer.
Still, it’s getting harder to find sellers that aren’t collecting sales tax online, said lawyer Eric Citron, who was involved in the Supreme Court case. And Citron said it will become even harder in 2019, with more states putting in place expanded sales tax collection requirements.
Liz Farmer reports at Governing magazine that the new ruling may not produce a substantial windfall for state governments.
…as online retailers like Amazon have built more distribution centers across the country, more online sales were subject to the sales tax even before the ruling. Maryland, for example, now collects about one-fifth of its monthly sales tax revenue from out-of-state vendors.
That evolution has led to wildly different projections of how much revenue states are missing out on. On the low end, a U.S. Government Accountability Office report estimated that state and local governments could gain between $8 billion and $13 billion in additional annual revenue from online sales taxes. The National Conference of State Legislatures, however, pegs that figure at around $23 billion a year.
Kelly Phillips Erb, writing in Forbes, points out,
To ensure that they’re in compliance in the midst of uncertainty, some retailers are opting to go the “better safe than sorry” route and collecting in all states that impose a sales tax. That means that many shoppers can expect to spend between 6% and 8% more than last year at some online sites…
The bottom line is that the days of sales-tax-free shopping are disappearing for most consumers.
Consumer confidence, a good indicator of willingness to spend, remains strong. Our state had already anticipated a modest, positive increase in tax collections. We’ll see soon just how much this year’s cyber sales produce.