Supreme Court Clears Way for Collection of Sales Tax Online; Local Government Reaction

A decision by the United States Supreme Court could mean more revenue for state and local governments.  The court ruled that businesses that sell merchandise online are not exempt from sales taxes, even if they don’t have a physical presence in a state.  That overturns previous decisions by the court.  An analysis conducted by the United States Government Accountability Office estimates that Missouri misses out on as much as $275 million annually in state and local sales and use taxes from online purchases.  The Missouri Budget Project says that’s money that could be used to restore or expand home and community services, including prescription assistance for seniors and higher education funding.

 

That ruling has local governments excited about the prospects of additional revenue.  Prior to the decision issued on Thursday, businesses only had to collect sales tax if they had a physical presence in a state.  Now, that exemption has been removed.  That opens the door to collections from potentially thousands of new merchants.  Osage Beach Mayor John Olivarri says it’s a decision they’re exploring and following closely.

 

 

City residents would have to approve a use tax in order for the city to collect the tax from online sales, but Olivarri says the potential economic benefits could be big.