USA court backs states over web sales tax

21 June, 2018, 19:55 | Author: Brenda Erickson
  • Supreme Court rules that states may require online retailers to collect sales taxes

States may require online retailers to collect sales taxes, the Supreme Court ruled Thursday.

The high court ruled Thursday to overturn those decisions.

Justice Anthony Kennedy, who wrote the majority opinion, said the physical presence rule put brick-and-mortar businesses at a disadvantage, because they had to charge sales taxes but Internet retailers did not.

With this ruling look for more states and local governments to push for taxes on online physical and digital sales.

The court chose to overturn a 1992 decision that a physical presence was necessary to require retailers to collect and send sales taxes to a state. Customers in most cases are supposed to pay the tax themselves, but both sides of the debate admit few actually do.

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Although in the past Americans may have purchased online to avoid paying sales tax, they are increasingly shopping online to get items quickly and without having to leave the house, retail experts say. He argued that Quill was "a judicially created tax shelter for businesses that limit their physical presence in a State but sell their goods and services to the State's consumers, something that has become easier and more prevalent as technology has advanced".

In truth, this doesn't have much impact on Amazon, which has been collecting sales tax across the country since a year ago. "Issues regarding smaller mom-and-pop retailers, and the amount of sales necessary to impose the collection obligation on them, would be decided on a case-by-case basis", he said.

The Trump administration had encouraged the Supreme Court to overturn the previous rulings and allow South Dakota to collect the sales tax. Some Marketplace sellers have contracted with Amazon to collect sales taxes for them. The conservative chief justice, John Roberts dissented along with liberals Stephen Breyer, Sonia Sotomayor and Elena Kagan. The law requires out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and turn it over to the state.

Amazon's stock is down almost a percent since the announcement, Etsy is down 3.12 percent. "This Court should not prevent States from collecting lawful taxes through a physical presence rule that can be satisfied only if there is an employee or a building in the State".

South Dakota wanted out-of-state retailers to begin collecting the tax and sued several of them: Overstock.com, electronics retailer Newegg and home goods company Wayfair.

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