Supreme Court rules for states in online sales tax case

Yuri Gripas  Reuters

A Bicycle Retailer retailer survey earlier this year found that 40 percent of retailers who responded do some online sales.

A November 2017 report by the U.S. Government Accountability Office estimated that MA could gain an estimated $169 million to $279 million in additional tax revenue if it could tax all remote sellers.

According to the General Accountability Office, prohibitions against collecting sales taxes from online retailers cost states as much as $13.4 billion past year.

"There was a time when we wanted the United States, as a matter of policy, to protect nascent internet businesses by keeping down the tax burden, but that time is long gone", he said. That position was to target huge retailers, without hitting smaller shops who sell their wares through eBay and Amazon. Amazon generally doesn't collect taxes on behalf of third-party sellers that sell goods on Amazon, but it does collect taxes on third-party sales in Pennsylvania and Washington because of new laws in those states. Gov. Charlie Baker hailed the ruling as "a good day for states, and it's a good day for those in the retail space who have been for many years disadvantaged because of the two-tiered system".

Rob Karr, president and CEO of the Illinois Retail Merchants Association, praised the decision, saying it "levels the playing field for bricks-and-mortar stores".

While the ruling opens the door for states to collect taxes from online businesses, there're some significant outstanding questions now that the court has made its decision.

The law specifically protects small businesses from collecting sales taxes if they have less than $100,000 in sales or fewer than 200 transactions in the state.

It was inevitable that the law would eventually be overturned and in many respects the law that led to this Supreme Court decision was specifically created to bring about that change.

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The issue of no e-commerce states sales tax is particularly bad in states that do not have income tax and are not situated in economic hotspots or with great transportation options - like South Dakota. North Dakota. Both of those cases established that a retailer was only responsible for collecting state taxes if the retailer had a physical presence in the state.

The biggest e-tailer in America, Amazon, now collects sales tax in the 45 states that charge sales tax, though it does not collect taxes on items sold by third-party sellers.

In a post on its website Thursday, the company said it "urges Congress to step in and provide clear tax rules, with a strong small business exemption, to help small businesses take advantage of the Internet to grow and create local jobs". Three large online vendors, Wayfair, Newegg, and Overstock, challenged the law in court, and lost on Thursday. Collecting taxes makes it marginally more hard for them, and so, Roberts wants the Court to leave it alone.

South Dakota brought the lawsuit against major online retailers for failing to comply with its new sales tax law, in an effort to get the Supreme Court to revisit the Quill decision. Five states don't charge sales tax.

I'm not really a fan of stare decisis, so I'm not a fan of arguments defending it. Roberts says that Commerce Clause precedent deserved "heightened" stare decisis, which reminds me of JoAnn Galloway stating she "strenuously objects".

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

The Small Business & Entrepreneurship Council advocacy group said in a statement, "Small businesses and internet entrepreneurs are not well served at all by this decision".

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