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How Internet Sales Tax Will Affect eCommerce

The Decision by the US Supreme Court

The Supreme Court’s rule allows states to require the collection of sales taxes for online purchases. This refers to any area in the US that the seller might be located. This new decision stems from a lawsuit filed by the State of South Dakota in 2016 against online retailers Wayfair,, and Newegg.

Daniel Castro, who’s the Vice President of the Information Technology and Innovation Foundation, says that the ruling aims to ensure consumers will pay sales taxes through large corporations like Amazon or Etsy. Beyond that, it’s made to stop unfair competition with brick-and-mortar retailers as well.

According to Justice Anthony Kennedy, the situation has changed, and now, online retailers don’t qualify for “an arbitrary advantage over their competitors who collect state sales taxes.”

The National Retail Federation is for the decision by the Supreme Court. The Federation hopes that the decision will help high street retailers such as Forever 21, Urban Outfitters, Adidas, and others stay competitive among online businesses.

Internet Sales Tax and Alternative Business Loans

Are you selling goods online? You’ve probably been collecting sales taxes in your home state because you have a physical presence there, haven’t you? Of course, you haven’t necessarily been obliged to collect sales taxes outside of your own state, have you?

Now, the situation has changed; you can be required to do so. It’s expected that states will express their attitude towards the decision with updated sales tax rules. In any case, merchants should take the right steps to avoid running into an obstacle. For this, you, as a merchant, should work only with a reputable merchant services provider like to get the best deal for your business.

First American Merchant is an award-winning alternative online lender and payment processor that provides exceptional business funding and payment processing solutions both for low and high risk businesses. With FAM, you can be sure to secure affordable and reliable alternative business loans without challenges.

Higher sales taxes on small businesses usually result in higher prices for consumers. Small retail businesses operating online, specifically those that don’t have a physical presence, may need to offer higher prices on products so that not to lose their business.

What can you expect from the new sales tax? Well, it’ll bring its impact on thousands of entrepreneurs selling over the internet. Thus, it’ll affect millions of consumers and retailers. To avoid major headaches associated with these changes, business owners should evaluate the possible effects and impact on their budget, systems, and staffing.

According to an article published in Entrepreneur, small businesses should expect the following major impacts:

  • States must give individual approvals to taxes across state lines
  • Online retailers must keep tracking of sales levels and tax law changes in any state where they run a business
  • Systems for collecting sales tax must set up by retailers where they do business
  • Online retailers must reevaluate their bottom line
  • Brick-and-mortar retailers are expected to enjoy benefits

Overall, it isn’t clear yet whether this change will bring about a positive or negative impact on smaller retail brick-and-mortar businesses. Now, they may get faced with taxes from both their physical and online locations.