A major showdown is happening at SCOTUS that could dramatically affect how we do business online. Will the Supreme Court expand the power of states to extend their online tax collecting reach beyond their borders? If they decide in favor of South Dakota, that’s just what will happen, and soon ecommerce will face the same type of taxation that exists in brick and mortar stores.
I know what you’re saying, ecommerce has an unfair advantage over brick and mortar stores by not being taxed like they are. To that, I say, maybe it’s unfair the brick and mortar stores are taxed as well. Rather than adding to the list of victims on the other end of the government leash, maybe we could work, instead, on reducing the number?
|Supreme Court set to tackle Internet Sales Tax Question|
One of the most closely watched Supreme Court cases in April could affect the shopping habits of millions of Americans, as the Justices consider taxes paid on Internet product sales in South Dakota v. Wayfair, Inc.
Last year, the Commerce Department said Americans spent $456 billion in ecommerce retail purchases, an amount equal to 13 percent of all retails sales in the United States. But not all states require consumers to pay taxes on Internet sales. Big online retailers, like Amazon, do charge sales taxes, even though they don’t own a physical building in some states. But others don’t.
State and local governments claim they are missing out on $13 billion annually in sales tax revenues from Internet businesses. Those Internet businesses believe a 1992 Supreme Court decision, Quill Corp. v. Heitkamp, supports an argument that states can’t force sales or use taxes on businesses that lack a physical presence in a state, and Congress is the best place to decide such taxing disputes.
The Quill decision has its roots in an older Court case. In National Bellas Hess v. Illinois (1967), the Court said states could collect sales tax from retailers who had stores, warehouses or another “physical presence” in a state, but not catalog sales. “The very purpose of the Commerce Clause was to ensure a national economy free from such unjustifiable local entanglements. Under the Constitution, this is a domain where Congress alone has the power of regulation and control,” said Justice Potter Stewart.