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.
The justices announced Friday that they will take a challenge to a 1992 precedent which allows states to collect sales taxes only from those companies with a physical presence in their jurisdiction. As such, many states cannot collect sales taxes off of e-commerce behemoths like Amazon.
The 1992 case, Quill v. North Dakota, was occasioned when North Dakota attempted to collect a state use tax from the Quill Corporation, a mail-order office equipment company. In an 8-1 opinion, the Court concluded the state was interfering with interstate commerce, in violation of the so-called dormant commerce clause.
South Dakota, seeking new sources of revenue, set off a challenge to the Quill precedent in 2016 by adopting a 4.5 percent tax on all sales. Internet commerce platforms Wayfair, Overstock, and Newegg challenged the new tax in short order.
Skepticism of Quill grew with internet sales, even among members of the Court. Justice Anthony Kennedy wrote a concurring opinion in a 2015 case urging his colleagues to reconsider the ruling at an appropriate time in the future.
“When the Court decided Quill, mailorder sales in the United States totaled $180 billion,” Kennedy wrote. “But in 1992, the Internet was in its infancy. By 2008, e-commerce sales alone totaled $3.16 trillion per year in the United States.”
“Given these changes in technology and consumer sophistication, it is unwise to delay any longer a reconsideration of the Court’s holding in Quill,” he added.
Justices Clarence Thomas and Neil Gorsuch have also criticized the decision, according to South Dakota’s petition.
Thirty-five states filed a brief supporting South Dakota’s position, a startling number given that the states often divide over contentious questions at the court.
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Good. It's about time. People are supposed to be paying it anyways as "use tax", but never do.
A few do, but I would like to see more doing.
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This will help the local shops too since the tax disadvantage would be gone. Something the retail industry has been screaming for.
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I also agree it's about time. Though most have enjoyed the idea saving money with no-tax online purchases, there are no free lunches. Each of our states is losing sales tax revenue at an ever increasing rate, so they will find a way to make it up elsewhere. Even offshore companies are beating import tariffs for parcels which come directly from overseas, thus undercutting US based sellers.
Not a fan of big government, or especially excusing the big tax states. To me this topic represents an issue which is creating a growing imbalance for all of us that don't own a website commerce company.
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Sorry, but yhis is billshit. What part of "interstate commerce" do they not understand? Those decisions were made for a reason.
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The tax has always been owed. Nothing will change aside from the fact that somebody will actually be collecting it.
On average, my online competition can "beat my price" by $150.00 because they don't collect tax and I have to. That $150.00 is still due to the state of Missouri. It's called "sales tax" when I collect it, and "use tax" when you itemize your out of state purchases and file that along with the tax due.
You do file use tax, don't you?
All that will happen with more taxes collected, is that the government will have more money to piss away on their ideas of how it should be spent, which we all know how that goes. I can understand the point of mom and pop shops being competitive now. I am sure we all file "use tax".
Seriously, people are advocating taxes that the Supreme court previously ruled uncollectible?
Let's set a precedent of Supreme court reversal and then watch Heller and other 2nd amendment decisions get re-decided in a different direction.
The issue is jurisdiction. Which state collects their tax, the one where the seller resides or the one where where the buyer resides? Should both collect their tax? Or should each collect half?
Since the Federal government has the constitutional power to regulate interstate commerce and Congress has the power to make laws, Congress needs to draft a law defining the jurisdiction of states participating in interstate commerce. This is not something the courts should legislate from the bench.
I would be ok of they took all that tax revenue and paid down some debt. States are in just as bad shape as the feds. Fact is it has been unfair to local businesses. I agree that it really is a states rights issue but don't see any other way to accomplish a level playing field.
Hell we just had a 40% income tax hike to ONLY pay for unfunded pensions
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You guys are happy about new taxes? Fuck that, I pay WAY too much in taxes already. They need to get rid of some taxes, not add new ones.
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I don’t think a reversal of Quill will bring an end to stare decisis. There have been plenty of other BIG decisions that have been overturned, and it hasn’t brought chaos to precedent. Off the top of my head, Dredd Scott and Plessy were significant reversals without killing stare decisis.
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No new taxes. Same taxes that have always been due, but that those who buy off of the internet illegally don't pay.
Here's your state's version: https://incometax.utah.gov/paying/use-tax
But a state has no authority to force a retailer in another state collect sales tax for them, unless congress authorizes it (which congress hasn't.) This was pretty clearly settled.
You sell bulky, heavy, expensive-to-ship things, yes?
If you're losing sales to online competitors, even with the added freight expense for the buyers, and despite the tanginble/intangibles that come with face-to-face service that they'll lose with online commerce: It's NOT because of $150 in sales tax.
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I don't care who collects it, so long as it is collected. That's the current problem. People buy online, believe it's "tax free", and don't pay the taxes owed.
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The freight expense is the same regardless of who it comes from. I have to ship it here to me the same as a buyer here has to have it shipped to them if they buy it online.
It's certainly due to the sales tax. I have this conversation with customers 5 or 6 times every week. My prices are generally the same or less than the online retailers.
I don't remember the last internet purchase I made where I DIDN'T pay state tax. Amazon started doing this years ago and most places followed suit.
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The only problem I have with internet sales or use taxes is that it feels like a jurisdiction is collecting taxes without providing any corresponding service. The state isn’t providing police or fire protection for the out of state warehouse, but wants all the taxes, while the local jurisdiction to the wharehouse must provide the local services.
Before someone responds with “roads and bridges for the UPS truck,” keep in mind that transportation is funded through fuel and registration taxes, along with heavy Federal grants.
I suppose I do have one more concern. There are so many taxing jurisdictions that internet sales will be nearly impossible for little startups. If there is going to be internet sales taxation, there needs to be a clearing house to manage it all, with small sellers having a single point of contact. Otherwise, internet sales tax will kill the little Etsy sellers to the benefit of those with the resources to manage the complexity, like Amazon.
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