Supreme Court rules in internet sales tax case

Joanna Estrada
June 21, 2018

Do you agree or disagree with how the Supreme Court ruled in this case?

The US Supreme Court on Thursday gave states the ability to require online and out-of-state retailers to collect and send them state sales taxes. The cases the court overturned said that if a business was shipping a product to a state where it didn't have a physical presence such as a warehouse or office, the business didn't have to collect the state's sales tax.

The 5-4 decision defied the usual conservative-liberal lineup with Kennedy joined by liberal Justice Ruth Bader Ginsberg, and conservatives Samuel Alito, Neil Gorsuch and Clarence Thomas. Instead, consumers were responsible for send states the necessary taxes - something that most people never do.

It passed a law requiring retailers with more than $100,000 in annual sales or 200 transactions in the state to pay a 4.5 percent tax. B&H doesn't require that buyers pay sales tax if they place orders outside of NY or New Jersey, and while you're supposed to later pay those uncollected funds when tax time comes around, the vast majority of people don't.

Forty-one states back the effort, saying the problem is growing worse as e-commerce continues to grow nationwide. Amazon.com, with its network of warehouses, also collects sales tax in every state that charges it, though third party sellers who use the site to sell goods don't have to. They argue tax-collection software makes it easier for retailers big and small to comply with their tax obligations, which vary widely from state to state, and product to product.

As an example, lawyers for the online retailers told the high court that in IL, a Snickers bar costs more in taxes than a Twix bar, since food items containing flour are not treated as candy for tax purposes. Customers were generally supposed to pay the tax to the state themselves if they don't get charged it, but the vast majority didn't.

Even so, during oral arguments, several justices had seemed lukewarm on the idea of overturning the old precedent.

Some on the bench said Congress' refusal over the years to act on its own was a sign the status quo should be preserved.

Online retailers have long enjoyed an advantage over brick-and-mortar stores because of a 1992 Supreme Court ruling in Quill v.

Other reports by Click Lancashire

Discuss This Article

FOLLOW OUR NEWSPAPER