The City of Lone Tree can now access a statewide portal to collect sales taxes that were paid by its residents when making online purchases. Following the 2018 United States Supreme Court ruling of …
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The City of Lone Tree can now access a statewide portal to collect sales taxes that were paid by its residents when making online purchases.
Following the 2018 United States Supreme Court ruling of what is known as the “Wayfair Law,” states can now collect sales taxes from purchases made online by their residents. Each state will develop a portal for cities to access, which tracks purchases made through a geographic information system (GIS).
Lone Tree can now access the state portal to collect sales taxes from online purchases made by residents and businesses within city boundaries.
The online portal will only track purchases from companies with no physical presence in the state. Lone Tree already requires brick-and-mortar stores in its borders to remit sales taxes to the city. Companies with both a brick-and-mortar location and online store will still remit sales tax to wherever the item was purchased.
Online shopping skyrocketed in the 2010s, creating a new problem for cities, particularly ones heavily reliant on sales tax revenue. Before the 2018 Supreme Court ruling, some online retailers had no way of charging local sales tax because they had no physical location. Meanwhile, package deliveries skyrocketed, wreaking havoc on city streets funded primarily through sales tax revenue.
“We really wanted to level the playing field so everybody is benefiting from city services and Lone Tree citizens are paying those taxes,” said Deputy City Manager Kristin Baumgartner, “and we don't want it to be a disadvantage to have a physical location.”
The additional sales tax dollars will not likely make a large difference in the city budget's bottom line, Baumgartner said. Cities with larger populations stand to benefit more from the new system.
The ordinance could, however, be a difference-maker if the online shopping trend continues, Baumgartner said. The fallout of COVID-19 could have an impact on people's general shopping habits, too, Baumgartner said.
Baumgartner said the city will collect sales taxes from big companies like Amazon, Wayfair and eBay. It is more difficult for the city to collect from smaller companies, Baumgartner said.
“If we're at least getting our share from the bigger ones, it definitely will have an impact” on the city, Baumgartner said.
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