Big Bucks At Stake In SCOTUS Sales Tax Case

  • Big Bucks At Stake In SCOTUS Sales Tax Case

Big Bucks At Stake In SCOTUS Sales Tax Case

Initially meant to regulate catalog-based sellers, the ruling has been challenged again and again by states seeking to claim their fair shake of online sales.

That sort of discrepancy is at the heart of a multibillion-dollar U.S. Supreme Court case set for argument Tuesday.

A high-stakes showdown at the U.S. Supreme Court on Tuesday will determine whether states can force out-of-state online retailers to collect sales taxes in a fight between South Dakota and e-commerce businesses.

Big retailers like Amazon and Walmart collect sales tax on all online sales in the 45 states with a statewide sales tax.

E-commerce companies supporting Way fair, Overstock and Newegg include two that provide online platforms for individuals to sell online: eBay Inc and Etsy Inc. The court will also rule whether states have the authority to tax all online purchases. If they have to start complying with the complexities of collecting and remitting sales taxes nationwide, many could be forced to abandon that part of their business.

Broader taxing power would let state and local governments collect an extra $8 billion to $23 billion a year, according to various estimates.

Out-of-state sellers disagree, calling it costly and extraordinarily complex, with tax rates and rules that vary not only by state but also by city and county. "And the more types of products I sell, the more hard it is to map to the software that's out there". Consumers must pay sales tax on the item at both the local Macy's department store or on Amazon, which sells the appliance out of its own stock for $39.95, plus $2.40 in tax.

In fact, chances are pretty good that you already pay sales tax on at least some of your online purchases if you live in a state that has sales tax. "The entire nature of interstate commerce has changed", Martz said.

Justice John Paul Stevens wrote for the court that the physical-presence requirement, despite its "artificiality", provided a clear standard for applying the dormant commerce clause.

States would capture more of that tax if out-of-state sellers had to collect it, and states say software has made sales tax collection simple. The state is urging the court to let sales taxes be imposed on companies with an "economic presence" in a state - a test South Dakota says its law would pass. The state has the backing of the Trump administration.

The said ruling was imposed in response to the case of North Dakota vs. Quill, an online office supply firm. The court reaffirmed that ruling in 1992. But three justices - Neil Gorsuch, Clarence Thomas and Anthony Kennedy - have suggested a willingness to rethink those decisions. The online giant is said to account for more than 40 percent of US online retail sales. "The "physical presence" rule of those eras was enunciated by the Court long before virtual presence was even imaginable", added White.

The case is South Dakota v. Wayfair, 17-494.