Supreme Court to hear SD online tax dispute

Shelby Knowles for The Texas Tribune

Shelby Knowles for The Texas Tribune

The Supreme Court agreed Friday to reconsider one of the most contentious issues in the business world: whether online retailers must collect sales taxes.

With elections looming, the U.S. Supreme Court announced Friday that it will review two lower-court rulings that ordered Texas to redraw 11 political districts found to be discriminatory. A "use" is supposedly imposed directly on a consumer who buys from a seller that has no duty to collect a sales tax; some out-of-state retailers do agree to collect such a tax from South Dakota buyers, but that can't be enforced so it is not done universally. Ultimately, the high court said retailers can be forced to collect taxes only in states where the company has a "physical presence".

Critics of the 1992 decision say it no longer fits a world where much of our commerce happens, at least in part, online.

In addition to this appeal, NRF is continuing to support the Remote Transactions Parity Act, which would allow states to require out-of-state sellers to collect sales tax.

Skepticism of Quill grew with internet sales, even among members of the Court.

Kennedy questioned the 1992 precedent, set in a case called Quill Corp v. Unfortunately, antiquated sales tax collection rules have resulted in an uneven playing field that's making it harder for Main Street retailers to compete in today's digital economy. Texas Attorney General Ken Paxton "applauded" the Supreme Court's decision, adding that the state is "eager for the chance to present our case before the Supreme Court" in a statement.

Kennedy's comments prompted South Dakota to launch a new attack on the physical presence rule. Systemax agreed to collect the tax, while the other companies contested the state law. The state needs its tax revenues because its state constitution requires that the state government budget be balanced. The state then sued three online retailers that refused to obey: Wayfair Inc., Overstock.com, Inc., and Newegg, Inc.

They said that the number of taxing jurisdictions in the United States is estimated at between 10,000 and 16,000.

The Supreme Court will hear arguments on whether Texas must redraw its congressional maps because of gerrymanders, in a case that could have major implications for this year's elections in the Lone Star State. The justices are also expected to weigh in on a lower court ruling that struck down North Carolina's congressional map as a partisan gerrymander, ordering a new map for the 2018 elections.

The court is likely to decide the case by the end of June, when its current term ends.

Texas officials appealed the August rulings, which invalidated two congressional districts and nine Texas House districts, saying they were intentionally formed by Republicans in the Legislature to discriminate against minority voters, who tend to favor Democrats.

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