Shop online? You may be paying sales taxes after Oct. 1

INDIANAPOLIS (Statehouse File) — Attention online shoppers: You might soon be paying sales taxes on what you buy online.

The Indiana Department of Revenue announced Friday that it will begin enforcing a year-old law to collect taxes on out-of-state sales effective Oct. 1, pending a final ruling in its favor in a lawsuit.

In June, the U.S. Supreme Court reversed a 1992 ruling that effectively barred states from collecting sales taxes through businesses that did not have a physical location in the state. The ruling in South Dakota v. Wayfair said that states can compel businesses to collect sales taxes on goods and services purchase online.

The Indiana General Assembly, in the 2017 session, enacted legislation requiring retail merchants that do not have a physical location in the state to collect sales taxes on purchases. Hoosiers should have paid sales taxes on out-of-state purchases all along by reporting the transactions on their tax returns, but most don't.

The 2017 law was challenged and has been on hold pending the outcome of the Wayfair case. If the law is upheld in light of the Wayfair decision, state revenue officials will require out-of-state retail merchants with sales exceeding $100,000, or 200 or more separate Indiana transactions, to register and remit the state sales tax.

Remote sellers seeking to comply with the laws of multiple states (including Indiana) should register with the Streamlined Sales Tax Registration system. Remote sellers seeking to comply with only Indiana’s economic nexus law should register through the online portal, INBiz.

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