Supreme Court To Rule On Sales Tax Of Online Purchases

A mail room in an apartment building shows packages about to be delivered

According to the Government Accountability Office, online marketplaces could have collected between $3.9 billion and $6.2 billion in state sales tax. It's an issue that brick-and-mortar retailers insist will provide a level playing field with online competitors, and help to provide state and local governments with the tax revenue they deserve.

It passed a law requiring retailers with more than $100,000 in annual sales or more than 200 transactions in the state to pay a 4.5 percent tax on purchases. If they have to start complying with the complexities of collecting and remitting sales taxes nationwide, many could be forced to abandon that part of their business.

Online retailers said reversing the 1992 precedent is a negative move in terms of e-commerce.

The Valley's biggest cities all posted strong year-over-year gains in sales tax allocations from the State Comptroller's Office, with Harlingen again leading the way for taxes collected in February.

States would capture more of that tax if out-of-state sellers had to collect it, and states say software has made sales tax collection simple. "The entire nature of interstate commerce has changed", says Stephanie Martz, general counsel of the National Retail Federation, which has members such as Walmart Inc., Target Corp., and Amazon. North Dakota, when the court ruled that companies can not be forced to collect sales tax from customers in a state where they don't have a physical presence like a store or distribution center.

The case now before the Supreme Court involves South Dakota, which has no income tax and relies heavily on sales tax for revenue. The court reaffirmed that ruling in 1992.

At BookPeople, an independent bookstore in Austin, chief executive Steve Bercu says it has become increasingly hard to compete.

President Donald Trump has claimed Amazon doesn't collect sales taxes, even though the company does.

"There is no conceivable, believable excuse for not collecting sales tax", he said.

Retailers that have brick-and-mortar stores and are already collecting taxes are backing South Dakota.

BookPeople has been collecting sales tax on online orders for several years.

"Imposing the disparate requirements of 12,000 tax jurisdictions. would effectively be a barricade across the Internet superhighway for thousands of companies, who would need to curtail their ambitions and limit their prospective markets", lawyer George S. Isaacson of Lewiston, Maine, wrote in the company's brief.

Jones said he suspects online sales will continue to grow exponentially.

But other online sellers, from 1-800 Contacts to home goods site Wayfair, can often sidestep charging the tax.

"It doesn't seem fair to me to have to pay taxes in an area I've never even visited before", said Brocato, who also sells through eBay. But as Amazon has grown, dotting the country with warehouses, it has had to charge sales tax in more and more places. Rather, the types of businesses in question include major ecommerce-only businesses like Wayfair, Newegg (#16 on our Top 101 Consumer Electronics Retailers list), and Overstock.com-all of which are cited in South Dakota's suit.

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