Internet sales tax ruling a win for brick-and-mortar retailers

Angelica Greene
June 22, 2018

A new CT law goes into effect at the end of this year to collect taxes from some online retailers. So you might have to start paying sales tax alongside those non-Prime shipping charges.

Justice Anthony Kennedy wrote that the previous decisions were flawed. The decision overturns a 1992 ruling that prevented the practice. North Dakota decision, which ruled that companies need to have at least some physical connection with a state for that state can require that company to pay taxes. 106, §5. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement.

State laws adjusting gas taxes over the last five years included triggers that would have limited gas tax increases in each state if Congress passed a law giving states the authority to collect these online sales taxes.

The South Dakota statute limits sales tax collection to online retailers that ship $100,000 of goods or services to South Dakota in a year, or 200 annual transactions.

Already, South Carolina expects to collect about $346 million in sales taxes from online sales in 2017-18, according to an October analysis by the state's Revenue and Fiscal Affairs Office.

The court decision could also be important in Florida because of the state's heavy reliance on sales-tax revenue. Most brick-and-mortar retailers are familiar with "customers" who come in with their smartphones to look at goods they have no intention of buying from the local business. "Nobody does it, but they actually technically do owe it", said Howard Gleckman of the Tax Policy Institute.

Here's a helpful tip from Justice Kennedy: "Eventually, software that is available at a reasonable cost may make it easier for small businesses to cope with these problems".

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"Startups and small businesses may benefit from the physical presence rule, but here South Dakota affords small merchants a reasonable degree of protection", the ruling says. At issue is the case Quill Corp. v.

"Ecommerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule". Chief Justice John Roberts wrote a dissenting opinion.

The Supreme Court's division on this case didn't fall along the usual liberal-conservative fault line. Because many e-commerce companies do not collect state sales taxes on purchases, they have had an advantage over brick-and-mortar businesses that do collect it. He continued to write "the rule produces an incentive to avoid physical presence in multiple states".

The decision enables states to require large internet retailers such as Wayfair, Overstock.com and Newegg to collect and remit sales taxes just as small-business owners like Cohen have been doing for years. Shares in large chains with more stores traded higher.

Three identical bills were filed during the special session to match Louisiana's law with South Dakota's in case the U.S. Supreme Court allows... While the Supreme Court spoke approvingly of the law, it sent it back to South Dakota's highest court to be revisited in light of the court's decision.

President Trump called the decision a "big victory for fairness" in a tweet posted Thursday afternoon. The Retailers Association of MA called the ruling a big win for businesses.

Other reports by GizPress

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