Friday, 20 July, 2018

Supreme court rules states can collect sales tax from online retailers

States stand to pocket billions as Supreme Court rules internet businesses must collect sales taxes The U.S. Supreme Court in Washington
Nina Mathis | 21 June, 2018, 19:57

South Dakota then filed a lawsuit to declare that the new law was valid, a suit that eventually found its way to the Supreme Court.

On a 5-4 vote, the high court overruled a 1992 decision that forbid states from requiring businesses to collect taxes on internet sales.

This overturns a decision from 1992 that mandated that states could levy taxes on businesses only if they had a brick-and-mortar presence within that state's borders.

"The Internet's prevalence and power have changed the dynamics of the national economy", Justice Anthony Kennedy wrote for the majority.

Amazon, by far the nation's largest online seller, is not a party to the case, since it now has a physical presence in many states, with warehouses, and pays the taxes. Louisiana is beefing up its efforts to collect taxes on purchases made from out-of-state in...




But sellers that only have a physical presence in a single state or a few states have been able to avoid charging customers sales tax when they shipped to addresses outside those states.

The decision ends years of work by the retail industry "to reverse a pre-internet era rule that distorts free markets and puts local brick and mortar stores at a competitive disadvantage with their online-only counterparts", said Deborah White, general counsel for the Retail Industry Leaders Association. Chief Justice John Roberts wrote a dissenting opinion.

The case the court ruled in has to do with a law passed by South Dakota in 2016. Although technically consumers are required to pay sales tax on all purchases, it is practically impossible to collect without the retailer applying it at the point of sale. South Dakota's governor has said his state has been losing out on an estimated $50 million a year in sales tax that doesn't get collected by out-of-state sellers. "State taxes fund the police and fire departments that protect the homes containing their customers' furniture and ensure goods are safely delivered; maintain the public roads and municipal services that allow communication with and access to customers". Amazon stock is down over 1.2%. Major online retailers such as Wayfair, Overstock, eBay, Shopify and Etsy, opposed the law change.

After states and traditional retailers have grumbled about this situation for years, South Dakota finally chose to do something to change it.

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