A 5-4 ruling by the U.S. Supreme Court will enable states to collect a sales tax on online purchases. The decision made in South Dakota v. Wayfair, which overturned two previous rulings on the subject, is expected to net states billions in previously unrealized tax dollars, including Georgia.
Under the previous law, businesses had to collect sales tax only when shipping products to a state where they had a physical presence, such as a warehouse or office. Outside of that, there was no requirement to collect a state's sales tax on online purchases. The decision will have major implications for large online retailers like Amazon, Wayfair, and Etsy, who are increasingly replacing brick-and-mortar storefronts as the place where shoppers look for goods. For example, a large part of Amazon’s business is centered around Amazon Marketplace, where other merchants make sales online through Amazon. According to CBS, Amazon collects state taxes on Marketplace purchases in just two states, Washington and Pennsylvania.
Stock prices for Etsy, Wayfair, and Amazon all dropped between one and three percentage points as of 1 p.m. on Thursday. Georgia House Bill 61, which was passed during the legislative session, will require online retailers who make at least $250,000 or 200 sales a year in Georgia to either collect the state sales taxes on purchases, or to send “tax due” notices each year to customers who spend at least $500 on their sites.
When it takes effect on January 1, House Bill 61 could mean an extra $500 million to $600 million a year in sales tax collections for the state and local governments, according to state estimates cited by the AJC.
