The Supreme Court has ruled that states can force online retailers to collect state sales taxes, even in states where they have no physical presence. While the decision will not have an immediate impact on travel agents, it highlights the importance of state taxes to the industry’s future, several travel industry executives tell Travel Agent.
According to the New York Times, the decision reverses an earlier precedent set in 1992. As a result, states will now have the authority to force online retailers to collect state sales taxes from residents -- increasing tax revenue in an era when consumers do more and more of their shopping online.
“Because very few states tax travel services, this decision will have little impact on our members today,” Eben Peck, executive vice president of advocacy for the American Society of Travel Agents (ASTA), tells Travel Agent. “It does, however, add urgency to ASTA’s ongoing campaign to push back on state attempts to expand their sales taxes to include travel agency services.”
Other major travel agency organizations agree that the immediate impact will be limited, but they have vowed to work with ASTA on the larger issue of state taxes on travel.
“It’s too early to tell how this decision will impact small businesses across the country,” said Travel Leaders Group CEO Ninan Chacko. “However, we believe states should not put a tax burden on small businesses located outside their jurisdictions. We will continue to work with ASTA to prevent the imposition of such taxes.”
“ASTA is our go-to advocate and watchdog on government and industry issues,” agreed Ensemble Travel Group’s Brian Chapin, senior director, Air & Travel Solutions. “We’ve been in touch with them on the matter today and agree with their position that this decision will have little impact on the agency community.”
State sales taxes have been one of ASTA’s focuses for government advocacy for some time now. Peck says that, in 2017 alone, the organization and its members successfully defeated proposals in four states that would have cost agencies there almost $63 million per year in new taxes.
“Given the interstate nature of our members’ businesses and the potential for new taxes in the future, we will continue this fight and are generally concerned about giving states more power to tax out-of-state businesses,” Peck says.