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Sales tax ruling overturns decision in North Dakota case

26 June 2018
Sales tax ruling overturns decision in North Dakota case

In a case that could likely mean consumers paying more nationwide, the Supreme Court Thursday opened the door for states to collect sales taxes on purchases from online retailers even if that company doesn't have a physical presence in that state.

It's unclear how long it could take for such sales tax collections to begin, or how much money the treasury could collect. Disagreement also emerged about whether Louisiana has several key provisions on the books to match the requirements involved in the Supreme Court ruling for online sales tax collection.

In response, online sellers Wayfair, Overstock.com and Newegg, said online retailers could face some 12,000 local tax jurisdictions if the Supreme Court sided with the states.

South Dakota urged the court to let sales taxes be imposed on companies with an "economic presence" in a state - a test South Dakota said its law would pass. For states, the big win will come if they are ultimately able to collect the millions they say they've lost in sales tax dollars.

"From a mom-and-pop store on main street to Target and Best Buy, businesses in Minnesota can't compete if they don't have a level playing field against online retailers", U.S. Sen. A more recent analysis conducted by the United States Government Accountability Office found Missouri may miss out on between $180 - $275 million annually in state and local sales tax.

In its challenge, South Dakota noted that "times have changed", with online sales growing at four times the rate of total retail sales. President Donald Trump, who has bashed online retail powerhouse Amazon.com Inc and whose administration backed South Dakota, said on Twitter. Amazon collects sales tax for products that it sells directly, but third-party vendors that sell goods on the site may not collect sales tax. But after the court ruling, most others will be required to collect them.

"I don't have to travel anywhere and typically online prices are still lower than retail stores", Teisanu said.

Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch joined the majority opinion, which was written by Kennedy. But he said there were insufficient reasons to overrule the precedents and that Congress should have been left to address the matter.

"One vitalizing effect of the Internet has been connecting small, even "micro" businesses to potential buyers across the nation", he wrote. North Dakota (1992) - was both "unsound and incorrect".

And one of the biggest winners from that ruling, maybe ironically, could be Amazon, said Tom Forte, managing director at research firm D.A. Davidson. "While we believe the Court was not the ideal venue for creating this level playing field, we expect that today's decision will bring clarity and certainty to this issue", Wayfair spokeswoman Susan Frechette said in a statement.

Information for this article was contributed by Greg Stohr, Alexa Green, Molly Schuetz and Spencer Soper of Bloomberg News and by Adam Liptak of The New York Times.