Sales Tax Ruling May Not Affect Direct-To-Consumer Shipping

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The Supreme Court recently ruled that states have the authority to require online vendors to collect state sales tax--even if those online retailers are not physically present in a given state. This overturns the previous law, where online vendors did not need to charge sales tax if they were not brick-and-mortar retailers. Bev News Online, however, explains why this may not harm direct-to-consumer shippers as much as we think:

...we don’t think the decision will have any meaningful impact on DtC shipments.

Neither does Steve Gross, vp-state government relations at the Wine Institute.  “For the most part this will have only a limited impact on wineries making Direct-to-Consumer (DTC) shipments, as most states already are collecting sales taxes on wine DTC since those provisions were included in the DTC statutes when they were passed,” he told us.

The decision overturned two earlier decisions – the most recent being 25 years old – involving catalog sales.  Those cases held out-of-state retailers cannot be required to collect and remit sales taxes to any state in which it didn’t have a physical presence...

Read the entire article here. Chain Storage offers a similar perspective here, with some elaboration on the law's protectionist nature.

According to Wine Searcher, the Supreme Court officially confirmed that this tax will apply specifically to wine:

Wine sales have been somewhat of a laissez-faire business in the US for some decades – some retailers charged taxes on out-of-state purchases while others elected not to do so. As a result, the same bottle of wine might cost a New York consumer less online in New Jersey than at the shop down the street.

However all of that has changed as last week with the Supreme Court case of South Dakota v Wayfair Inc. In keeping with the justices' ruling, the wine retail market is going to be revamped and standardized in terms of taxes across the country. This telling case – which comes just nine months on the heels of wholesaler pressure pushing UPS and FedEx wine deliveries out of 36 states – will mandate a retail market in which taxes will be paid by retailers large and small.

Most major internet wine sales entities, such as Amazon and Wine.com, have been charging their out-of-state customers taxes all along. Until six months ago, Amazon didn't charge sales tax on sales in areas where it didn't have a brick-and-mortar presence, says Eric F. Citron, counsel of record for South Dakota in the recent Supreme Court case and a partner in the Maryland law firm Goldstein & Russell, P.C. They changed that policy six months ago, he notes. Amazon did not respond in time to comment for this story...

Read more about the taxes here.