Buying online is about to get more expensive.
This week, the Supreme Court ruled states can now force all online retailers to collect sales tax from consumers.
The decision overturned a 1992 ruling that said retailers without a “physical presence” in a state were not required to charge consumers sales taxes.
In an interview with CNBC’s On The Money, retail expert Jan Kniffen recalled he was a senior retail executive when the court judgement came down. “We all knew at the time this it was going to be a real problem because it will create a differential in pricing,” he said.
That price difference, he explained, is now about 8 percent, “if you take the average of the [state] sales taxes across the nation.” In the past, buyers who bought online could often avoid paying the sales tax.
“The good news at the time was online was so small, nobody was too concerned about it. But we all saw something coming there.”
Kniffen, who is CEO of J. Rogers Kniffen WWE, stated that “If you buy something in New York and have it shipped to New Jersey, you don’t pay New York tax, you don’t pay New Jersey tax. But you owe New Jersey tax. But nobody pays it."
Technically, buyers were supposed to pay the tax themselves to their state, but few did. The Supreme Court cited an estimate from a California tax board, that found 96 percent didn’t do it.