Internet Sales Tax Probably Coming Thanks To The Supreme Court

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Internet Sales Tax Probably Coming Thanks To The Supreme Court

With elections looming, the U.S. Supreme Court announced Friday that it will review two lower-court rulings that ordered Texas to redraw 11 political districts found to be discriminatory.

For cash-strapped state and local governments, though, the power to impose online sales taxes on remote sellers might have helped them raise as much as $13 billion previous year, according to one federal estimate.

The Supreme Court will decide whether to expand the power of the states to collect sales tax from online sales, which could precipitate a vast increase in internet sales tax.

Critics of the 1992 decision say it no longer fits a world where much of our commerce happens, at least in part, online.

These different rules and regulations only serve to highlight the quagmire online sellers face if they have to collect, track, and remit sales tax to 50 states and countless municipalities.

South Dakota's law was passed partly in response to a concurring opinion written by Justice Anthony Kennedy in a unanimous 2015 Supreme Court ruling that allowed a challenge to a Colorado law encouraging retailers to collect the taxes to go forward.

"I hope this means the Court is open to revisiting the important issue of taxation of online sales", Republican South Dakota Gov. Dennis Daugaard said in a statement. "Unfortunately, antiquated sales tax collection rules have resulted in an uneven playing field that's making it harder for Main Street retailers to compete in today's digital economy", said Matthew Shay, president of the National Retail Federation trade group.

"That said, there is still an opportunity for a legislative solution". That case, along with the one from Texas, is likely to be heard this spring and decided by June.

But in a brief presented to the court in December, George Isaacson - lead attorney for Wayfair, Overstock.com and Newegg - argued forcefully against the state's depiction of the Quill decision. And the company, which has warehouses scattered around the country, pays sales taxes in those localities.

"Sales tax collection has become more complex as the number of tax jurisdictions has more than doubled since 1992", they argued in court papers.

The U.S. Supreme Court agreed Friday to take up the state of Washington's challenge to a Ninth Circuit decision ordering the state to replace hundreds of culverts to protect tribal salmon fishing rights.

Steve DelBianco, president of NetChoice, an association of online businesses and consumers, said the justices "will learn how new state laws are imposing unreasonable tax burdens on out-of-state businesses".

"Retail is a dynamic industry that's rapidly transforming". According to one estimate cited by the states in a brief they filed with the high court, they'll lose out on almost $34 billion in 2018 if the Supreme Court's previous rulings stand. The state needs its tax revenues because its state constitution requires that the state government budget be balanced. Systemax agreed to collect the tax, while the other companies contested the state law.

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