Local small business leaders think a recent U.S. Supreme Court decision to allow states to charge sales taxes for online purchases will "level the playing field" for brick-and-mortar retailers to compete against e-commerce.
By a 5-4 vote last …
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By a 5-4 vote last month, the nation's highest court ruled that remote online retailers that don't have a store or other physical presence in a state are now subject to sales and use tax. For example, the tax now could be collected from S.C. shoppers who shop online at outdoor retailer L.L. Bean.
Donnie Hines, owner of Hines Furniture Co., and Shawn Matthews, vice president of Simpson Hardware and Sports, both said Wednesday they support the new legislation.
"This levels the playing field and allows fairness in trade out there for the local businesses to compete against e-commerce and those companies that are just not collecting any taxes whatsoever," Hines said. "That's wrong and hurts the states and local businesses. You're talking a lot of dollars that are lost annually by a state when these things are not being collected."
Many states - including South Carolina - previously had a law stating that if an individual buys something online and doesn't pay sales tax at the time of purchase, he or she is supposed to self-report it on an income tax return.
University of South Carolina Economist Joey Von Nessen said a lack of self-reporting nationwide contributed to a loss of billions of dollars in tax revenue at the national level.
Matthews said retailers, and all businesses in general, don't want more regulations and taxes but that the new legislation provides a more level playing field for all businesses.
"If we are going to be taxed and regulated and have to pass that on to customers, we sure think other retailers - whether online or not - should have to play the same game," he said.
Chris Hardy, president and CEO of the Greater Sumter Chamber of Commerce, and Von Nessen said the retail industry will be more impacted by the new legislation than service industry businesses.
"The majority of items retailed that are also purchased online are going to have the biggest impacts," Hardy said. "As far as your locally owned businesses, it's going to be a positive effect for them in the long run because they are going to be able to compete with the strictly online retailers."
Implementation of the new legislation falls in the hands of the South Carolina Department of Revenue.
DOR Director Hartley Powell has said previously his agency is currently drafting guidance for remote retailers with no physical presence in the state regarding registration, collecting, filing and remitting sales and use tax and plans to ensure a smooth transition.
The guidance will apply the principles in the recent Supreme Court ruling to remote retailers who deliver more than $100,000 of goods and services in South Carolina or engage in 200 or more separate transactions for the delivery of goods and services annually with state residents. The state agency doesn't know exactly when it will begin collecting taxes from remote sellers, according to a spokeswoman.
The case the high court ruled in had to do with a law passed in South Dakota in 2016. That state's governor has said his state loses out on an estimated $50 million per year in sales tax that doesn't get collected by out-of-state sellers.
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