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Supreme Court sides with online sales tax

22 June, 2018, 18:27 | Author: Janis Wilson
  • Yuri Gripas  Reuters

In Thursday's 5-4 decision, South Dakota v. Wayfair, the court overturned the requirement that an online seller have a physical presence in the state.

Supreme Court hears challenge to union fees and reviews latest travel order. "And that's what has frustrated the state for years". Recently that has been expanding with States pushing to get sales taxes on sales even when the company does not have a physical presence in that area. "It's exciting to have it overturned, but it's disappointing to not have a law in place". The ruling could easily improve revenue in states that have taken a hit from online sales.

Gov. Pete Ricketts was among those opponents, although he had been seeking a compromise at the time the bill failed.

More than 40 states had submitted testimony in favor of upholding the South Dakota law. The Supreme Court decision clears the way for states to unwind that competitive advantage.

"There are nuances to every opinion", he said.

South Dakota is leading the legal charge, passing a law requiring the collection of sales tax on Internet vendors with at least 200 yearly transactions or $100,000 in sales to its residents.

Jeffrey LeSage, Americas vice chairman for tax at accounting firm KPMG, said the ruling "could turn out to be nearly as significant for American businesses as the recent rewrite of the US federal tax code". Customers bore the responsibility for paying those taxes, but many were unaware of the responsibility, and states felt they were losing out on potentially billions in lost revenue. Writing for the majority, Justice Anthony Kennedy wrote that the old rule is increasingly "removed from economic reality and results in significant revenue losses to the States".

More news: UK government defeats pro-EU lawmakers on Brexit, for now

"It levels the playing field for those who invest in brick-and-mortar facilities in our communities, pay property taxes and employ our citizens", she said. A "physical presence" could count as a store or headquarters, or other facility.

President Donald Trump has also criticized Amazon, whose founder Jeff Bezos also owns the Washington Post, saying that it does not collect any sales tax.

Now that Amazon's distribution network spans the country, it collects sales tax nationwide, though it doesn't collect on behalf of third-party sellers.

South Dakota concluded in 2016 that the explosion in online sales changed the market dramatically.

On Thursday the Supreme Court reversed more than half of a century of precedent.

Roberts, in dissent, said e-commerce has exploded in the United States in part because there have been uniform rules. "States are already confronting the complexities of defining physical presence in the Cyber Age", he wrote. First, the Act applies a safe harbor to those who transact only limited business in South Dakota.

The report includes material from the Associated Press.

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