How Does the Supreme Court Ruling on Sales Tax Effect Oregon Ecommerce Businesses?
How are Oregon Ecommerce Businesses Being Effected by the Supreme Court Ruling on Sales Tax
Ecommerce businesses in Oregon, along with several other states that don’t collect sales taxes, may be facing added difficulties with ecommerce sales in the near future after the Supreme Court’s ruling early Thursday morning that state taxes can be imposed on internet sales made beyond the nexus.
This overturns the 1992 Supreme Court ruling, which said that states could collect sales taxes only if the business was headquartered or had a physical presence in the state. For the Oregon ecommerce market, this can be a difficult boundary to define when shipping to customers across the nation.
The change is more likely to leave Amazon largely unaffected. For some of Amazon’s third-party sellers and local ecommerce sellers that is not the case. Also, the question of retroactively collecting taxes is still undetermined.
Because Amazon is physically located in most states already and has accounted for sales taxes on products that are sold directly from their site, the added burden for them would be little to nothing on Amazon-direct sales. The third-party merchants selling through Amazon, which account for the other half of Amazon’s products, and smaller ecommerce companies are expected to need to begin collecting sales taxes online.
It seems that online sellers with limited multi-state physical presences are at greater risk with this ruling, and even more so states like Oregon with companies that solely have an ecommerce model. Because Oregon has never implemented sales taxes, most small and medium sized ecommerce companies are more than likely to face problems managing their sales or understanding the taxing process without the help of third-party technologies.
They may face the challenge of understanding how to charge state taxes specific to the regions where their products are being shipped. Not to mention the concern of having the technology readily available to assess and monitor the accurate tax rates of the buyer. For smaller companies, purchasing such software or investing in the additional help can take a toll on their current business models.
The idea that collecting online sales taxes will hurt ecommerce sales overall may be overblown, though, as online shoppers have consistently voted with their wallet that they value product selection, convenience, and fast shipping. With the proper tax solutions and help of third party digital providers, ecommerce companies can meet these new requirements.