Supreme Court rules states can require online retailers to collect sales tax
26 June, 2018, 03:15 | Author: Juana Mckenzie
He also had supported Nebraska joining with 33 other states and the District of Columbia a year ago in supporting South Dakota's case before the high court. So it passed a law requiring all but the smallest retailers, including Internet companies, to collect taxes on the sales they make in the state, even if they had no physical presence there.
"For years, online-only retailers have exploited this loophole that allows them not to collect sales tax, which has given them an unfair competitive advantage over brick-and-mortar stores", said James Miller, a spokesman for retailers.
The court's 5-4 ruling, issued Thursday, overturns a 1992 decision that held states can only tax businesses with a physical presence in the state.
States were eager to collect the estimated$13.4 billion in annual revenue they could potentially glean from charging online sales taxes.
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Though the company earlier collected sales taxes in just five states, it more recently moved to start collecting the taxes in each of the 45 states with such a tax, as well as Washington, DC, prior to the Supreme Court ruling.
"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", wrote Justice Anthony Kennedy in the court's opinion.
"The physical presence rule has always been criticized as giving out-of-state sellers an advantage", the ruling says.
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Amazon, which was not involved in the Supreme Court case, collects sales taxes on direct purchases from its site but does not typically collect taxes for merchandise sold on its platform by third-party vendors, representing about half of total sales. "We're very excited to see what the Supreme Court did".
"I would really love for our government to get behind the idea of small business and when you do something like this it does not encourage small business", Keyton said. She says the court decision will "level the playing field for IL brick-and-mortar retailers".
Amazon.com and some other online retailers began collecting the 6 percent sales tax from MI in October 2015 under the state's Main Street Fairness Act. The decision means that South Dakota can now dictate some of the business operations of firms that have no representation in the South Dakota legislature.
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U.S. court backs states over web sales tax
Or, it could raise little new money for the state . "It's going to revive Main Street South Dakota and Main Street America". Supreme Court Justice Kennedy delivered the opinion of the Court, in which Thomas, Ginsburg, Alito, and Gorsuch joined.
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