ALBANY — New York’s county governments hope to reap a windfall as a result of a ruling Thursday from the nation’s highest court allowing for the collection of sales taxes on all merchandise sold over the internet.
But in New York, there’s a hitch: Tacking on sales tax to all orders made from New York would require action from state lawmakers. And, so far, they are not scheduled to return to the statehouse this year.
The U.S. Supreme Court ruling could also pump billions of dollars into state treasuries across the nation while driving up the overall cost for consumers for some goods.
In New York, an expansion of the sales tax on internet transactions could generate $160 million for the state treasury annually, while sending another $160 million to county governments, many of which split the revenue with towns, villages and cities.
“Because of the failure of our Legislature to act, we lost a whole year of revenue for the state and local governments,” said Stephen Acquario, director of the New York State Association of Counties.
The justices, in a 5-4 ruling, overturned earlier decisions that had insulated some sellers from collecting sales tax from consumers in states where the retailer has no physical presence.
‘UNEVEN PLAYING FIELD’
Gov. Andrew Cuomo salted an internet sales tax proposal into the executive budget he released in January.
But despite a lobbying blitz by county treasurers at the statehouse in March, the measure was kept out of the final state spending plan by Senate Republicans who said they wanted to spare New Yorkers from any new taxes.
Among the advocates for extending the internet sales tax is the Retail Council of New York, representing the owners of brick-and-mortar stores. These stores have long contended that untaxed internet sales create an uneven playing field for them.
In some cases, said the council’s president, Ted Potrikus, shoppers have visited appliance stores to get advice, only to go home and buy the product on the web, just to keep from having to pay sales tax.
The court’s decision, Potrikus told CNHI, “recognizes that the world is a much different place” since internet retailers began competing for customers.
The majority decision was penned by Justice Anthony Kennedy, who opined that it was “unjust and unfair” to the competitors of remote sellers to have sales tax go uncollected.
Critics of the ruling argued it would create problems for smaller retailers who sell merchandise on such sites as Etsy.com because they will have to ensure they remit the proper sales tax to taxing jurisdictions that number in the thousands.
In Albany, State Department of Taxation and Finance spokesman James Gazzale said the decision is being reviewed by officials at his agency.
Acquario said counties rely on sales tax revenue to pay for many services.
He also noted the tax has become increasingly vital for county leaders who are facing limitations on raising revenue through the property tax due to a state-imposed cap.
Clinton County Administrator and Budget Officer Michael Zurlo said the county supports the collection of online sales tax.
“Obviously, with sales tax as the largest source of revenue for the county, and the fact that we share that revenue with all of our municipalities, we think fair and equitable collection of online sales tax is a prudent course of action,” he said.
— Staff Writer Joe LoTemplio contributed to this report.