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Supreme Court Weighs Internet Sales-Tax Case

Supreme Court Weighs Internet Sales-Tax Case

The U.S. Supreme Court will hear a case this week that will determine, to some degree, what you pay for things purchased online.

Some Supreme Court justices are sounding concerned about doing away with a rule that has meant consumers don't get charged sales tax on some online purchases. But the continued existence of the court's rule from decades past allows large, sophisticated online companies to shirk the tax collection responsibility that local stores face every day.

Isaacson argued before the Court that South Dakota's law would put too much burden on small- to mid-sized businesses and that it's too daunting and expensive for those merchants to keep up with thousands of different rules going state to state. It's time for the court to modernize our tax law for the 21 century by allowing states to collect the taxes they are owed and letting businesses compete on a level playing field.

The law was struck down previous year by South Dakota's highest court, which cited the Supreme Court's 1992 Quill Corp. v.

According to Warnke, the online retailers who do not tack on sales tax have an innate advantage over brick-and-mortar stores, thanks to a lower price. The law requires out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect and turn over sales tax to the state. The ruling, which is expected by the end of June, could give states more power to tax e-commerce sales, The Wall Street Journal reports.

Q: What is the case for businesses that don't now collect sales taxes nationwide? Justices brought up that issue Tuesday too.

Justices Sotomayor and Breyer asked probing questions of whether small businesses could keep up with the costs of additional regulations. In that era, the Court (perhaps not unreasonably) decided that requiring catalog companies to compute and assess the sales tax that each consumer owed was too hard. The court reaffirmed the rule in 1992.

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"States have been unable to collect numerous taxes due on these purchases ..."

Three justices - Neil Gorsuch, Clarence Thomas and Anthony Kennedy - have expressed a willingness in past writings to rethink the court's sales tax collection rule.

My organization, The Retail Industry Leaders Association, and the Retail Litigation Center, supports South Dakota's argument in this case, and led the retail industry's petitions to the Supreme Court during both the petition stage and merits stage of this case.

The case the court is hearing has to do with a law passed by South Dakota in 2016, a law created to challenge the Supreme Court's physical presence rule.

That covered most large retailers, like Macy's and Walmart, because they have stores in almost every state.

The state wanted out-of-state retailers to begin collecting the tax and sued Overstock.com, home goods company Wayfair and electronics retailer Newegg. More than 40 states want the Supreme Court to abandon the rule.


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