Politics

Trump celebrates Supreme Court decision that could force his online store to collect more taxes

Key Points
  • The Supreme Court ruled Thursday that states are allowed to require online sellers to collect sales taxes — a decision applauded by President Donald Trump, who has long been critical of Amazon's tax practices.
  • But Trumpstore.com, which brands itself as "the official retail website of The Trump Organization," currently names just four states in which it collects sales taxes.
  • The high court's ruling could force the Trump Organization's online store to collect sales taxes in more states.
A detail from the TrumpStore.com
Source: TrumpStore.com

President Donald Trump lauded the Supreme Court's ruling allowing states to require online sellers to collect sales taxes, calling it a "great victory for consumers and retailers."

But the ruling on Thursday could be a burden for at least one e-commerce website: the Trump Organization's official online shop, Trumpstore.com.

The store, which brands itself as "the official retail website of The Trump Organization," currently names just four states in which it collects sales taxes. Before April, only two were listed.

"The end game here is that internet stores like Trumpstore should begin collecting sales tax" in more states, said Carl Davis, research director for the Institute on Taxation and Economic Policy.

Forty-five states currently levy sales taxes. But before the high court's ruling on Thursday, online retailers could not be forced to collect sales taxes in states where they did not have a "physical presence."

Even with that caveat, it wasn't immediately clear how Trumpstore did not collect sales taxes in states with Trump-branded physical properties, such as Illinois and New Jersey. Tax experts have speculated that the company could be using a practice that would classify the website as a separate entity from its properties around the country and therefore wouldn't abide by the physical presence rule even if it did business in that state.

That window could be closed in short order. Many states have complained about tax-free online sales and will likely jump at the chance to collect taxes from e-commerce sites that have been able to avoid them so far.

A Trump Organization representative did not respond to multiple requests for comment.

In the Supreme Court's decision in the case, South Dakota v. Wayfair, Justice Anthony Kennedy cited studies that said the exception for online retailers could cost states up to $33 billion each year in uncollected sales taxes.

Trump, in a tweet on Thursday, said it was "about time" the high court made its ruling on internet sales tax. "Big victory for fairness and for our country," he added.

Trump tweet

Trump has complained about e-commerce sales tax requirements that allow online companies to avoid paying sales taxes, focusing most of his ire on Jeff Bezos' retail behemoth Amazon. In March, Trump tweeted that Amazon pays "little or no taxes to state & local governments" and said it was "putting many thousands of retailers out of business."

Trump's fusillade came just before Amazon started collecting sales taxes nationwide, including in Puerto Rico, according to its website.

But until mid-April, Trumpstore listed Florida and Louisiana on its customer service page as the only states where it collected sales taxes.

The website quietly added Virginia on April 9. A Trump Organization representative told CNBC at the time only that the store has always collected sales taxes "in jurisdictions where it has an obligation to do so."

Even if Trumpstore could skirt sales tax collection in states without a physical presence, it wasn't clear why the list at that point did not include New York, which is home to the Trump Organization's headquarters.

Tax experts previously told CNBC that the explicit connections made between Trumpstore and Manhattan's Trump Tower — including graphics encouraging customers to "visit our brand new Trump Tower flagship retail store" in the building's garden level — mean the website could potentially be considered a sales tax vendor under New York state law.

New York's Department of Taxation and Finance considers online retailers sales tax vendors if they "maintain a place of business in the state, such as a store, office, or warehouse, and sell taxable, tangible personal property or services to persons within the state."

Less than a month after adding Virginia, the site again updated the list to include New York. "We are very pleased to offer this service to our customers along with gift wrapping which was just rolled out earlier this month," the representative said in a statement to CNBC at the time.

"Trumpstore could begin collecting sales tax in every state if it wanted to," Davis said, but "it's just choosing not to."

After the Supreme Court's ruling on Thursday, Davis said, Trumpstore is "not going to be able to get away with this non-collection for much longer."