Online retailers now have to pay the sales tax to the government. This judgment of the US Supreme court created a lot of buzz in the country. Previously in 1992, retailers had to collect the government’s sales tax if they had a physical existence. In 1998 a new law was passed by the Supreme court that even online retailers have to do sales tax filing.
The quill corp Vs. the North Dakota case made the online retailers pay the government’s sales tax. Several arguments have risen in favor of it and also against it. Now there are some fundamental issues that you need to address here in the context of these decisions.
We all know that sales tax is one of the major parts of government revenue. Today, we all live in the digital world, and the eCommerce business is on a hike. In such a scenario, the offline retail shops are losing their importance.
Maximum revenue is generated from online retail stores. So collecting the sales tax from the online stores can help the government invest that money in the state’s infrastructure development.
As per the Forbes review, State governments rely on the sales tax hugely. It is the main mode of earning for the state governments. Now, online stores are increasing at a rapid pace in the USA. Brands like Amazon, eBay, and Walmart are earning huge from their stores.
Now, due to stiff competition, offline stores cannot become big in the country. This results in the closure of the small scale offline stores and loss of a job. The government can support these areas by collecting the sales tax to create more jobs for its citizens.
The sales tax collection is quite tricky as the internet business gets operated from ambiguous and remote locations. State sales tax depends on the geographic location of your organization. This is why imposing the tax becomes difficult, and the tax collection is also tricky.
The policies of the government are not very sound to impose taxes on online retailers. The framework is not ready properly. This may lead to the loss of revenue from the counterpart of the government. These are some of the crucial aspects that can provide hindrances in collecting the sales tax properly.
Sales tax collection is important because the US economy is gradually shifting towards a virtual economy due to various renowned e-commerce sites. Customers are also shifting their attention to it. This is the reason why online sales tax plays a crucial role in generating government revenue in the state.
The chances of earning will be more, and the scope of ambiguity will be less. A huge chunk of revenue is generated from this section. This is the reason why the collection of sales tax from online channels is very important.
Therefore, if you own an online retail store, you must pay the sales tax to keep your business fair in the government’s eyes. The new tax policy will help strike the right balance between your online and offline stores for your business. You must try to abide by the rules and the regulation of the state while you are running your online store in the USA.