Say Goodbye To Tax-Free Online Shopping

There’s a “tax loophole” we’ve all been unknowingly using when buying things from out-of-state companies, and it might be ending.

By on June 22, 2018
(Photo by Spencer Platt/Getty Images)

We all shop online, and although now that Amazon has warehouses everywhere we’ve started paying taxes on online purchases for California, we can still find things from out of state vendors. Let’s say you want some new bath bombs that company in COlorado that makes them. Well, they’d fall under the tax-free online purchase, since they’re out of state. What about those new yoga pants from that company you love in Oregon? Tax-free online.

Well, all that might be changing soon. See, there was a loophole we all have been unknowingly taking advantage of. It basically says that when people purchase goods from a store that doesn’t have a physical presence “within their borders,” the state was prohibited to collect taxes on that purchase. So when you buy something from a store in Indiana or Florida, California gets no tax benefit. The US Supreme Court just ruled by majority (5-4) to END that “loophole.”

There were a couple reasons for their decision. One legislator says that the states can “lose between $8 and $33bn every year” because of the amount of out-of-state online shopping people do. That’s valuable money that the states can use for infrastructure, police and fire department funding, and other things. Another reason says that it’s a “competitive disadvantage” for actual physical stores. Sure, you can buy an item from a boutique shop around the corner from your house. But why do that when you can get the same thing online from Texas, tax-free, and free shipping? The argument is that local stores are suffering because their customers are shopping online. That’s what they’re battling. See more info here.

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