NRF hails US Supreme Court sales tax ruling

NRF hails US Supreme Court sales tax ruling

For example, a business with one salesperson in each state must collect sales taxes in every jurisdiction in which goods are delivered; but a business with 500 salespersons in one central location and a website accessible in every state need not collect sales taxes on otherwise identical nationwide sales. The Supreme Court's 5-4 ruling in favor of the changes has now been equalized. In recent years, as internet sales have become an increasingly large part of commerce, states have become both creative and aggressive in defining what constitutes a "physical presence" for this goal.

The U.S. decision comes after continued battles between bricks and mortar retailers and online retail giants, which have turned the consumer retail market upside down in recent years. The ruling opens the door for MA and other states to collect sales taxes from on-line retailers.

Online retailers will have to deal with a hodgepodge system until Congress enacts a federal standard, which is unlikely this year given the midterm elections in November. "Current law in IL essentially says the tax collections are passed on to municipalities based on population" instead of being based on where a buyer lives, Moore said.

Second, the Court's decision now compels one party (the seller) to enforce a law the state claims another party (the buyer) is violating. Not only do most states impose some form of sales tax, but a number of local governments do, as well. Yet there are many instances in which web merchants don't collect the tax.

Until now, many sellers that have a physical presence in only a single state or a few states have been able to avoid charging sales taxes when they ship to addresses outside those states. In many states, they actually then placed that burden on the consumer.

South Dakota was anxious about lost sales tax revenue.

IL consumers can expect to pay more when shopping online after the U.S. Supreme Court ruled that states have the authority to require out-of-state online retailers to collect sales taxes.

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"This simplifies life for retailers and for consumers and it levels the playing field for retailers and their internet competitors", Karr said. Justice Anthony M. Kennedy said the Quill decision could be causing states to lose tax revenue of up to $33 billion annually. It also said that it is no longer possible to defend the physical presence requirement from the point of view that its removal would create undue administrative burdens on out-of-state vendors and disrupt inter-state commerce, given the technology that makes remote online sales possible. When Wayfair, Overstock.com, and Newegg balked, the state sued them, leading to Thursday's ruling in the case that became known as South Dakota vs. Wayfair.

Kennedy didn't directly decide whether states could try to collect taxes retroactively, but he said the issue wasn't a reason to keep the physical-presence rule.

The Supreme Court judges agreed that the South Dakota sales tax law is lawful and discussed whether an out-of-state seller can be held responsible for the payment of sales tax under the Commerce Clause of the United States Constitution, which was created to prevent states from engaging in economic discrimination.

In writing for the minority, Chief Justice John Roberts ruled that the issue should be decided by Congress rather than the courts.

As for the argument about the impact on smaller online merchants, Shearman said mom-and-pop stores are the ones that have been disadvantaged in the 26 years since Quill. Now, rivals will be charging sales tax where they hadn't before. The law was a direct challenge to the Court's 1992 decision in Quill, requiring a physical presence.

The Trump administration had urged the justices to side with South Dakota.

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