Supreme Court Overturns Ban on Online Sales Tax

22 June, 2018, 18:32 | Author: Elena Summers

"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", Justice Anthony Kennedy wrote in an opinion Thursday, saying the court's earlier decisions had been incorrect. This gave them an advantage over brick-and-mortar stores.

New Yorkers will soon have nowhere to hide from the steep sales tax. She says the court decision will "level the playing field for IL brick-and-mortar retailers".

Hufstetler was instrumental in crafting legislation that drops the top tax rate to 5.75 percent, from 6 percent, next year and schedules a decrease to 5.5 percent in 2020. But retailers with stores in the state, which do have to collect sales taxes, have long argued that the ruling put them at a competitive disadvantage with companies like Amazon. It will leave shoppers with lighter wallets but is a big financial win for states.

The decision came on a South Dakota suit against, with the state claiming the company should collect sales taxes on sales in the state.

Corporate giants like Minnesota-based Target and Best Buy are also rejoicing, alongside the local business community.

The Trump administration had encouraged the Supreme Court to overturn the previous rulings and allow South Dakota to collect the sales tax. "Great victory for consumers and retailers".

The Supreme Court on Thursday ruled that states can collect sales tax from all retailers, even if those retailers do not have a "physical presence" in their state - ultimately paving the way for states to collect sales tax from online retailers.

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Only five states do not have a state-wide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

The Supreme Court overrules the Quill case, which previously set the precedent for collecting sales tax from online sellers. Customers in most cases are supposed to pay the tax themselves, but both sides of the debate admit few actually do.

Kennedy was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito, and Neil Gorsuch to make the decision.

Governor Pete Ricketts reacted to the ruling. Amazon began collecting sales taxes on purchases in every state past year, though it does not collect sales taxes on purchases made through third-party vendors. Now, rivals will be charging sales tax where they hadn't before. It has to do with the way states collect taxes from internet sales. See Sales Taxes Report 22 (indicating that "costs will likely increase the most for businesses that do not have established legal teams, software systems, or outside counsel to assist with compliance related questions").

Some online retailers have already been collecting some state taxes. The ruling explicitly exempts smaller businesses along with all but the most successful of individual sellers using, say, eBay or other online sales channels.

In the interim, many states tried in various ways to get around Quill to collect sales taxes, with some success.


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