Published: Sat, January 13, 2018
People | By Leon Thompson

Supreme Court agrees to hear online sale tax case

Supreme Court agrees to hear online sale tax case

South Dakota, appealing a lower court decision that favored Wayfair Inc, Inc and Newegg Inc, is asking the justices to overturn a 1992 Supreme Court ruling that companies with no physical presence in a state are not required to collect a state sales tax on purchases.

By taking on a law passed by South Dakota's legislature for the express objective of testing its legality, the court will return to an issue it addressed 25 and 50 years ago, before consumers did almost 10% of their shopping on the internet.

When Sen. Heidi Heitkamp, D-N.D., got the news that the U.S. Supreme Court would be taking up a case on state's rights to collect sales tax on online sales, she just started smiling.

The rule has always been seen as controversial, and the explosion of Internet sales means state and local governments have lost billions of dollars in tax revenue. The Government Accountability Office, which provides nonpartisan reports to Congress, wrote in a report past year that state and local governments would have been able to gain between $8.5 billion and $13 billion in 2017 if they could require out-of-state sellers to collect tax on sales into the state.

North Dakota. "States' inability to effectively collect sales tax from internet sellers imposes crushing harm on state treasuries and brick-and-mortar retailers alike", South Dakota argued in its appeal to the Supreme Court, which this week agreed to take up the case. The Supreme Court wiped clean that list in 2013, but it left open the possibility that future, intentional discrimination could lead to a return to preclearance.

Wisconsin Democrats are challenging the entire statewide map of state Assembly districts based in part on the Constitution's equal protection clause.

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"This is an encouraging step toward fairness in how sales taxes are collected by all retailers, whether or not they have a physical store", NSGA president and CEO Matt Carlson said in a statement Friday.

Sen. Heidi Heitkamp, D-N.D., who brought that case to the high court when she was North Dakota's tax commissioner, called the decision to hear the new case "welcome news for the small businesses that create jobs and are the lifeblood of our communities".

"They [the state Supreme Court] made us eligible for the October 2017 Supreme Court docket", he said. And the company, which has warehouses scattered around the country, pays sales taxes in those localities.

Even so, Gilberto Hinojosa, chairman of the state Democratic Party, praised the Supreme Court's action, saying it shined a light on a Republican "pattern of discriminating against Texans of color".

The White House may also be stepping into the sales tax fray. "Moreover, the integration of tax collection software is extraordinarily expensive".

"Retail is a dynamic industry that's rapidly transforming", NRF President and CEO Matthew Shay said. Systemax agreed to collect the tax, while the other companies contested the state law. They are even more important in seven states that have no income tax, including Florida and Texas.

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