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Online Sales Tax Collection Laws Go Into Effect in 10 States

Online Sales Tax Collection Laws Go Into Effect in 10 States

CHICAGO — Sales tax collection statutes and regulations that require online retailers to collect sales tax on online orders from residents of 10 states go into effect today, Oct. 1, 2018.

The statutes and regulations, the details of which vary by state, apply to online retailers that do not have a physical presence in the taxing jurisdiction.

Sales tax collection laws applicable to online retail sales go into effect today in Alabama, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, Michigan, North Dakota, Washington, and Wisconsin. Similar laws will go into effect in Connecticut and Iowa in the coming months.

In deciding the South Dakota v. Wayfair Inc. case in June, the U.S. Supreme Court overturned its previous precedent that required a business to have a physical presence, or nexus, in a state to be subject to local taxes.

32 states have now passed statutes or regulations to require sales tax collection by remote sellers, according to Internet Retailer Magazine and DigitalCommerce360.com, a publishing group on e-commerce business intelligence.

While collection laws are going into effect at the state level, lawsuits challenging states’ moves remain active, and three bills have been introduced in Congress to address the issue. “The roots of the battle over an online sales tax go back decades before the birth of the World Wide Web,” says Zak Stambor, editor of Internet Retailer magazine. “While the Wayfair decision fundamentally alters the playing field, I’m not sure we’re done with the fight over online sales tax.”

Visit Internet Retailer/DigitalCommerce360.com, for deeper coverage of the online sales tax issue.

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