U.S. court backs states over web sales tax

Supreme Court rules states can force online retailers to collect sales tax

Supreme Court rules states can force online retailers to collect sales tax

The decision could lead to individual state sales tax laws, or Congress could step in to make more uniform regulations.

Last year, states could have collected as much as $13.4 billion in additional online sales taxes, according to the General Accountability Office.

North Dakota could collect $20 to $50 million from online retailers after Thursday's Supreme Court ruling. That ruling held that a state can not require an out-of-state seller with no physical presence in the state to collect and remit sales taxes on goods the seller ships to consumers there. For others, it also included the added bonus of not having to pay sales tax from select merchants.

While consumers may not like the increasing prices, the latest ruling will help level the playing field for smaller brick-and-mortar stores that have been closing shop around the country due to the difficulty of competing against Internet retailers. Expected to generate more than $24 billion for the state government in the current fiscal year, the sales tax is the single largest source of funding for the state.

South Dakota, which passed a law in 2016 taxing out-of-state online retailers, asked the court to overturn its earlier decision, an appeal supported by more than 40 states and the Trump administration. Otherwise, they didn't have to collect the state's sales tax.

The exact impact of the ruling on Florida's sales tax collections is unknown but it could be significant. However, third party sellers who use Amazon to sell their goods were not required to pay sales taxes for their online transactions until now.

Rauschenberger says the 1992 case allowed hundreds of millions of dollars in taxes to go uncollected, putting businesses in the state at a disadvantage.

The 5-4 ruling is widely seen as a victory for brick-and-mortar stores, who previously said that online retailers' ability to skirt sales tax collection gave them an advantage.

The retail trade association argued in a friend-of-the-court brief previous year that the court's 1992 Quill Corp. v. South Dakota does not collect income tax, and therefore relies heavily on sales taxes to keep its coffers full. This will create a new revenue stream from state and local governments.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.