Why the Online Sales-Tax Ruling May Have Limited Impact


The Supreme Court ruled on Thursday that states can force retailers to collect sales tax even if they don't have a physical presence in that state. A bipartisan group of senators filed a brief in the case supporting South Dakota's effort to overturn the online sales tax ban, essentially acknowledging that the legislative body was too dysfunctional to fix the problem. Investors in the online retail sector must be fearing a backlash from customers who will now be forced to pay more for their online goods.

E-commerce now makes up about 10 percent of US retail sales, according to the Commerce Department.

States also still must announce dates by which retailers must be in compliance, says Scott Peterson, a vice president at Avalara, a manufacturer of tax collection software.

But some fear this decision will hurt small online businesses. "Technology has also allowed for compliance with state tax laws to become a lot easier too", said Tax Commissioner Ryan Rauschenberger. We would be the ideal state to develop a court case in order to do a direct challenge to the U.S. Supreme Court.

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"We are reviewing it", Gov. Rick Scott's office said.

Supreme Court Justice Anthony Kennedy had seemed sympathetic to the states' plight, and he essentially invited the South Dakota case in 2015 in Direct Marketing Association v. Brohl. But others have resisted, making Thursday's decision significant.

The state Department of Finance could not say how much NY was losing under the old ruling - or when it would enact new regulations to take advantage of the new ruling. But the opposition, including the well-funded online retailers and some members of Congress who believe it is their purview to create this type of legislation, could be just as potent in a legislative fight.

"This is a long time coming, and a necessary step". It would require out-of-state merchants to collect sales tax if they do $100,000 in business or 200 transactions a year in North Carolina.

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In the digital era, the costs of complying with different tax regimes "are largely unrelated to whether a company happens to have a physical presence in a state", Kennedy wrote.

South Dakota's congressional delegation said this ruling is a big step in addressing the changing retail market. "This decision finally levels that playing field, and I think that's all any business owner wants".

Quill is a precedent that traditional retailers have sought to overturn for 20 years - because they believe it gives e-commerce sellers an unfair price advantage.

"This is an important step, but I've always believed that regardless of where the court came down on this, there will be pressure for Congress to act to provide long-term clarity to states, retailers, & consumers", U.S. Senator John Thune said.

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