Paying Sales Tax on Out of State Purchases

Grand Forks City Hall

Grand Forks City Hall

The debate about paying sales tax on online purchases is heading to the U.S. Supreme Court. States say they're losing out in billions of dollars in tax revenue.

Big retailers like Amazon and Walmart collect sales tax on all online sales in the 45 states with a statewide sales tax.

President Donald Trump has argued Amazon doesn't collect sales taxes; even though the company does.

In fact, chances are pretty good that you already pay sales tax on at least some of your online purchases if you live in a state that has sales tax.

A reversal could mean that all online retailers must collect sales tax everywhere.

The Trump administration will join the oral argument in favor of online retailers being required to collect sales taxes everywhere.

Still, the change in precedent could put a burden on small- and medium-size online retailers who will have to navigate up to 16,000 different taxing units, according to Wayfair, which wants the current rule should stay in place.

And while the issue is portrayed as one of fairness for small brick-and-mortar retailers that have to compete against online retailers, experts say those small retailers could be among the ones that get hurt.

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