Technically, you may have been a tax cheat for many years. Perhaps you’ve shopped online buying some necessary, or maybe an unnecessary item. Chances are that the business you made the purchase from did not charge you, as an Illinois resident, the 6.25 percent sales tax.
If the company didn’t collect the tax, you were supposed to calculate the figure yourself and report it. We bet you didn’t do that but after today you don’t have to worry about calculating taxes.
Instead, you can worry about paying sales tax because today is the last day you can avoid paying sales taxes while shopping online due to this past June’s Supreme Court decision that ruled that online purchases are subject to the state’s sale tax regardless of whether the retailer has a “physical presence” in the state.
The good news, for the State of Illinois, is that it expects to collect revenue of $140 million from the tax. The bad news, for you, is that the tax will come from you.
It’s no secret that Americans have done more and more of their shopping online in recent years. A Pew Research study placed the percentage of online shoppers at 79 percent up from 22 percent in the year 2000.
Many brick and mortar stores have complained that it was unfair competition that allowed the online retailers to sell without the sales tax while they had to charge taxes and maintain their buildings putting those stores at a competitive disadvantage and cutting into local municipal revenue.
In Supreme court, ironically, effectively overturned a system that it created in 1992, in another case that had barred states from requiring businesses to collect sales tax unless they have a substantial connection to the state. That decision opened the flood gates in the internet age for online retail sales on a national level without paying local sales tax.
Simply put, the old law created companies like Amazon, which had $119 billion in revenue from product sales last year while decimating box stores such as Sears and KMart.
In the new Supreme Court decision, the 5-4 majority acknowledged that the 1992 case caused states to lose annual tax revenues of up to $33 billion and created a competitive disadvantage for the brick and mortar retailers who collect sales tax. The good news, for communities like Oak Lawn that are trying to attract retailers, is that every business will be on the same level.
So, shop today online or pay the sales tax tomorrow.