States' authority to collect sales online impacts retailers

The Supreme Court ruled on Thursday for states to have the authority to collect a sales tax from online retailers....

Posted: Jun 24, 2018 4:25 PM
Updated: Jun 24, 2018 4:25 PM

The Supreme Court ruled on Thursday for states to have the authority to collect a sales tax from online retailers.

Channel 3 spoke with retailers who say the change will have an impact on small business.

Middletown clothing and accessories boutique 'Cinder and Salt' opened three years ago on Main Street.

"Our name is inspired by the residue for a weekend well spent," said 'Cinder and Salt' owner, Rachel DeCabage.

"The smell of campfire on our clothes and salt water on our skin."

DaCabage said in the shops' first year, most of its sales were online. With experience in store and online, DeCabage said she supports the most recent Supreme Court decision.

"I think shopping local is really important. Not just for our local economy, but it's good for the planet. It's good for the people. It's great to get out and experience your communities so hopefully it'll have good residual effects," said DeCabage.

In a 5-4 decision, states can now collect sales tax from online retailers if the transactions happen in the state of purchase.

University of Hartford Professor Patricia Jaeger told Channel 3 that the states have missed out on as much as $30 billion in sales tax revenue each year.

"It should help the states. Most of the states are in a budget crunch. We know in Connecticut we've had budget problems so they should help that," said Jaeger.

Under the old rules, if a customer bought an item online and didn't pay a sales tax, it becomes necessary to report it on an income tax return and pay the State of Connecticut.

"The problem is nationwide the rate of people doing that is only about 4 percent," added Jaeger.

Retail giants like WalMart, Target, and online giant Amazon have sales tax on their products already.

Jaeger said it is small, online businesses with a presence on eBay or Etsy that will have to adjust.

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