SUPREME COURT HEARS HUGE SALES TAX CASE AFFECTING ONLINE SALES
This week, the Supreme Court will hear the case of South Dakota v. Wayfair Inc.. As much as $34 billion in uncollected sales taxes, and a major boost for brick and mortar stores, hangs in the Court???s decision
Twenty six years ago, the U.S. Supreme Court ruled that the commerce clause in the Constitution prohibits the states from imposing a sales tax on out-of-state retailers that do not have a physical presence in the state, such as a store, warehouse or sales representative. Based on the physical-presence rule, many e-commerce sites never collected sales tax, giving them a price advantage over brick and mortar stores.
Three years ago, in a related case, Justice Anthony Kennedy wrote: ???There is a powerful case to be made that a retailer doing extensive business within a state has a sufficiently ???substantial nexus??? to justify imposing some minor tax-collection duty, even if that business is done through mail or the internet.???
In 2016, South Dakota passing a law which says a retailer with more than $100,000 in sales or more than 200 transactions in the state must collect sales taxes. The state sued four web-based retailers under the new law, including home d??cor site Wayfair. The taxes would not be retroactive. South Dakota claims states are losing a total of $33.9 billion in lost sales-tax revenue.
The state says the physical presence rule gives online retailers ???a further advantage???on a playing-field already tipped against small, local businesses.???
The e-commerce who are fighting the sales tax warn that if the physical-presence requirement were removed, the states would no longer have the incentive to participate in a political solution. ???It is only Congress, and not the states or the courts, that has the institutional expertise to weigh the national implications of expanded state taxing authority and to craft legislation that will ensure state tax obligations do not unduly burden interstate commerce,??? the retailers argue.
For further background, go to:
http://www.scotusblog.com/2018/04/argument-preview-justices-to-reconsider-sales-tax-collection-in-internet-era/
SUPREME COURT HEARS HUGE SALES TAX CASE AFFECTING ONLINE SALES
