Vermont Tax Commissioner Kaj Samsom is hailing a U.S. Supreme Court ruling allowing states to collect taxes for online purchases made by residents.
The court ruled Thursday that internet companies that don’t have a physical presence, but have more than $100,000 of sales in a state, can be required to collect and remit state sales taxes.
In 2016, Vermont enacted a law calling for state taxes to be levied on remote retailers if the U.S. Supreme Court ruled that it was legal.
Samsom said in light of the law and the recent ruling, Vermont could be collecting some taxes as early as July 1.
"There’s a lot of variability in that — you know, how quickly can they get up to speed and compliant," Samsom said.
States have long argued that online retailers’ failure to pay a sales tax puts in-state brick-and-mortar businesses at a disadvantage.
“Downtown retailers were really suffering,” said Rep. Peter Welch. “Those retailers are so essential to having vital downtowns and town centers, so this levels the playing field.”
Welch was a co-sponsor of the Main Street Fairness Act, which included a mechanism to require remote sellers to collect state sales taxes.
"Downtown retailers were really suffering. Those retailers are so essential to having vital downtowns and town centers, so this levels the playing field." — Rep. Peter Welch
There’s also the question of how much revenue the online sales tax will generate.
“Of course estimating ... what you don’t know — which is how many sales happen on the internet — is a bit of an art form, but we’ve looked at it in many different ways," said Samsom. "And we have a range of between 4 [million] and 12 million [dollars] that we think this could bring in."
Samsom said the revenue would be somewhat offset by a reduction in use taxes from online and out-of-state purchases that Vermonters declare when they file their income taxes.
In a year when the governor and lawmakers are at odds over how to use surplus revenues, this may be another pot of money to argue over.
“You could put this in the category of yet more potential surplus money,” said Samsom.
The largest online retailer, Amazon, already collects sales taxes for items it sells directly, but not for products sold by third parties through its website.
