Supreme Court ruling on online state sales tax won't see immediate impacts in Arizona

Fox10 News AZ
Friday, June 22, 2018
Matt Galka
PHOENIX (KSAZ) - A Supreme Court ruling is making shopping on the internet more expensive. It has to do with the way states collect taxes from internet sales.

Fox 10's Matt Galka breaks it down by simplifying the complex issue. Matt has a Syracuse gnome that he bought online, and since the store has no physical presence in Arizona, he didn't have to pay sales tax.

This ruling is going to change that, but it's going to take time.

Online shopping sales have grown steadily for the past decade, but when it comes to sales tax, things get tricky.

Buyers have to pay sales tax if they are shopping from a big box store online because many have stores in every state. But state's were missing out on big bucks if there was no physical store.

A 5 to 4 ruling from the Supreme Court will change that, but Kevin McCarthy with the Arizona Tax Research Association says the impact won't immediately be felt in Arizona.

"We are a state, we're most famous for having one of the most complicated and quite frankly, screwed up sales tax systems in the United States," McCarthy said.

Estimates have states missing out on $8 to $13 billion just last year.

"We're talking not millions, we're talking tens of millions of potential revenue. We think that incentive, that carrot if you will, is strong enough to clean up our state and local sales tax codes," McCarthy said.

And for local brick and mortar stores, the ruling represents a level playing field.

"We've seen a lot of show-rooming where people will go into a local brick and mortar store, try out a product and go to an online retailer and purchase it, so we've seen businesses close," said Thomas Barr with Local First Arizona.

We're likely to see this issue addressed legislatively next session.

This also may impact eBay sellers. If you like to sell stuff on the auction website, you should be exempt from this unless you're making six figures from sales.