Holiday shoppers paying state sales tax on internet purchases thanks to new law

If you’re shopping online this holiday season, you may notice your final total is more than you expected. New laws in Virginia and West Virginia, as well as in most states across the country, are requiring shoppers to pay state sales tax online for the first time.

The laws were all passed after

.

The decision in “South Dakota v. Wayfair, Inc.," struck a major blow to online retailers. It overturned a previous ruling and allowed states to collect sales tax from online purchases even if the seller doesn’t have a physical location in the state.

The Supreme Court's 5-4 decision overruled a pair of decades-old decisions that states said cost them billions of dollars in lost revenue annually. The decisions made it more difficult for states to collect sales tax on certain online purchases, and more than 40 states had asked the high court for action.

This year, Virginia’s General Assembly passed a law allowing them to collect sales tax from online purchases, regardless of the seller's physical location.

"When you're talking about, you know, maybe 100 or more dollars difference if you're not paying tax, they're going to go ahead and take the risk and make that purchase,” Elizabeth Cromwell, President of Charlottesville’s Chamber of Commerce, said. “Now, maybe, we'll get a little bit more of those kinds of purchases here locally."

For Virginia, this is a revenue stream that could bring in more than $100 million more in tax revenue a year. A portion of that money will be returned for use where customers live and shop.

"1% of that sales tax goes back to the locality where it was collected,” Neil Williamson of the Free Enterprise Forum said. “That helps fund your schools, your police officers, the things that you need for your local government."

One business with a large online presence told WVIR that they've seen a sharp decline in online sales to states with higher sales taxes. However, analysts say that could be a game changer for the majority of small businesses, as it levels the playing field between local businesses and large online retailers, since the large retailers had been able to get away without state sales tax for years.

“I think it's kind of an inevitable process,” Cromwell said. “You know, are those retailers locally who sell across state lines negatively impacted? Yes, but I think the overall importance is better overall for the business community here."

Since the law went into effect, more than 1,200 businesses around the Commonwealth have already signed on. Companies like Amazon had already been collecting and remitting state sales tax after the national decision.