Battle over sales taxes on online purchases heads to Supreme Court

Cedar Rapids Community School District buses at the Education Leadership Support Center in Cedar Rapids on Thursday

Cedar Rapids Community School District buses at the Education Leadership Support Center in Cedar Rapids on Thursday

Instead, online companies-including Amazon and Overstock-said they support a nationwide law that addresses internet sales taxes that would relieve retailers from dealing with a patchwork of state measures.

A decision on the case by the U.S. Supreme Court is expected to be announced in June. There are billions of dollars of tax revenue at stake here, as well as a huge potential burden on small businesses.

Small retailers are not collecting state taxes from online shoppers unless the store has a physical presence in the state where the buyer lives. "A retailer today can transact a significant amount of business in a state without ever being physically present in the state".

South Dakota says it is looking to start collecting taxes only for future online sales, but But Wayfair's attorneys argue in court filings that many other states and local governments could demand years of back sales taxes, forcing retailers to go through costly audits of past sales and make back payments that could bankrupt some companies. Something brick-and-mortar have argued will level the playing field.

However, in 2016, South Dakota passed a law requiring retailers with at least 200 transactions or $100,000 in sales per year in the state to collect state taxes.

On Tuesday, the justices will hear arguments in South Dakota v. Wayfair Inc.

"Things have changed a lot since 1992".

But numerous sales these small retailers get are through bigger sites like Amazon and Walmart.

"Today's online giants do not need or deserve the special tax treatment that the Court gave mail order catalog companies a half century ago", Deborah White, General Counsel for the Retail Industry Leaders Association, said in a statement last month.

"[It] provides the many small businesses that use the internet with a very clear and simple and stable legal environment in which to grow their business", according to Brian Bieron, eBay's senior director of government relations. A ruling in favor of South Dakota-which has the support of the Trump administration-would have major implications for thousands of other e-commerce businesses who often don't charge sales tax, including EBay Inc., Etsy Inc., and could even affect third-party retails who sell through Amazon Inc.

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