Sunday, 21 October, 2018

U.S. court backs states over web sales tax

The Supreme Court rules against Wayfair and other online retailers and overturns ban on the collection of online sales taxes. Jenny Kane  AP The Supreme Court rules against Wayfair and other online retailers and overturns ban on the collection of online sales taxes. Jenny Kane AP
Olivia Ford | 21 June, 2018, 20:37

This went against a 1967 Supreme Court ruling, but to be fair, that ruling was based on mail-order retailers, and the basis of the court's ruling was essentially "Look, it's not like people are buying everything through the mail!" One federal report estimated the shortfall in the aggregate to about $13 billion a year.

The ruling overturned a 1992 Supreme Court precedent and potentially paves the way for consumers to pay more for their online purchases.

This overturned two Supreme Court rulings: 1967's National Bellas Hess, Inc. v. Department of Revenue of IL and 1991's Quill Corporation v. The company maintains that it has been collecting tax in all 45 states which require it.

"This is a victory for common sense and the economic realities of this century", said Jerry Storch, former vice chairman of Target and former CEO of Toys R Us.

The ruling puts an end to a legal regime that "distorts free markets and puts local brick-and-mortar stores at a competitive disadvantage with their online-only counterparts", said Deborah White, general counsel of the Retail Industry Leaders' Association. The court said that law effectively incentivized businesses to "avoid physical presence" in states and led to "a judicially created tax shelter" Ultimately, the justices said the current laws are outdated.

But the high court said it was time to overturn those cases.

Most states would need to pass legislation before seeking to collect the additional taxes, although some have already enacted laws or regulations similar to South Dakota's. Customers were generally supposed to pay the tax to the state themselves if they were not charged by the merchant, but the vast majority of consumers did not.

It's a huge win for vendors with physical storefronts which have long argued that their online counterparts enjoyed an unfair advantage since they didn't have to charge customers local sales tax.

Stock prices for major online retailers fell after the decision was announced. Still, almost half of Amazon's sales are through these other merchants, which could surely impact business.

Forty-five states rely on sales taxes for revenue, and for those states that have no income tax, sales taxes are very important. They've negotiated on a state by state basis as they've built distribution centers around the country. "Over 10,000 jurisdictions levy sales taxes".

- New Hampshire online retailers could be on the hook to collect sales tax from dozens of states and thousands of localities after the U.S. Supreme Court Thursday upheld South Dakota's online sales tax law.

The case is South Dakota v. Wayfair, 17-494.

"Wayfair offers to sell a vast selection of furnishings".

States lost out on $17.2 billion in sales tax in 2016 because of these loopholes, reported the National Conference of State Legislatures.

Taxes on TV services is not new.

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