Supreme Court to hear sales tax collection case

WASHINGTON — The Supreme Court agreed Friday to wade into the issue of sales tax collection on internet purchases in a case that could force consumers to pay more for certain purchases and allow states to recoup what they say is billions in lost revenue annually.

Under previous Supreme Court rulings, when internet retailers don't have a physical presence in a state, they can't be forced to collect sales tax on sales into that state. Consumers who purchase from out-of-state retailers are generally supposed to pay the state taxes themselves, but few do. A total of 36 states and the District of Columbia had asked the high court to revisit the issue.

Large brick-and-mortar retailers like Walmart and Target have long bemoaned the fact that they have to collect sales tax on online purchases because they have physical stores nationwide. Meanwhile, smaller online retailers, who don't have vast networks of stores, don't have to collect the tax where they don't have a physical presence.

Internet giant Amazon.com fought for years against collecting sales tax but now does so nationwide, though third-party sellers on its site make their own decisions. But the case before the Supreme Court does directly affect other online retailers, including Overstock.com, home goods company Wayfair and electronics retailer Newegg, who are part of the case the court accepted.

States say the court's previous rulings have also hurt them. According to one estimate cited by the states in a brief they filed with the high court, they'll lose out on nearly $34 billion in 2018 if the Supreme Court's previous rulings stand. The Government Accountability Office, which provides nonpartisan reports to Congress, wrote in a report last year that state and local governments would have been able to gain between $8.5 billion and $13 billion in 2017 if they could require out-of-state sellers to collect tax on sales into the state. All but five states charge a sales tax.

The Supreme Court first adopted its physical presence rule on sales tax collection in a case dealing with catalog retailers in 1967, a year that states pointed out in their brief was "two years before the moon landing and decades before" the first online retail transaction. The high court last considered the issue in 1992.

The National Retail Federation, which represents both internet and brick-and-mortar sellers, said Friday it welcomed the Supreme Court's decision to take the case.

"Unfortunately, antiquated sales tax collection rules have resulted in an uneven playing field that's making it harder for Main Street retailers to compete in today's digital economy. This is a basic question about fairness, which all of our members deserve whether they're selling in stores or online," federation president Matthew Shay said in a statement.

The case the Supreme Court agreed to hear Friday comes from South Dakota, which has no state income tax and relies on retail sales and use taxes for revenue. In 2016, South Dakota lawmakers passed a law requiring out-of-state sellers to collect and turn over sales tax to the state. The state's highest court struck down the law, citing previous Supreme Court decisions.

Overstock.com said in a statement Friday that it "looks forward to the opportunity to convince the Supreme Court to confirm its prior rulings protecting the free flow of interstate commerce from overreaching state tax laws."

The Supreme Court will probably hear arguments in the case in April.

___

AP Retail Writers Anne D'Innocenzio and Joseph Pisani contributed to this report from New York.

___

Follow Jessica Gresko on Twitter at http://twitter.com/jessicagresko

Related News

Studies shine light on mysterious placenta, how...

Aug 12, 2016

Placenta is most mysterious organ: Scientists don't know how this tissue that nourishes a fetus...

No evidence Trump provided child care services...

Aug 12, 2016

No evidence is turning up to support Donald Trump's claim to have provided child care services to...

Southern California having smoggiest summer since...

Aug 12, 2016

Southern California sunshine means sparkling beach weather but this summer it's contributing to a...

Junk food fight: Science tests how birds compete...

Aug 12, 2016

It's the early bird that gets the Cheetos but it's the bigger bird that steals it away, scientists...

Kansas water park operates under limited state...

Aug 13, 2016

The huge Kansas City, Kansas, waterslide on which a 10-year-old boy recently died was built in a...

Video proves Clinton suffering seizures? Not so,...

Aug 13, 2016

Video purporting to show Clinton suffering a seizure is latest in unfounded speculation

Must Read

Pew report shows divide in social media exposure...

Aug 15, 2016

The Pew Research Center found that black social media users are nearly twice as likely to see posts...

Obama keeps unusually late hours on Vineyard...

Aug 16, 2016

Obama did something unusual during his Martha's Vineyard vacation: He went out on the town four...

BACK TO SCHOOL: Enrollment up a bit as kids...

Aug 16, 2016

The lazy days of summer are ending for millions of children as they grab their backpacks, pencils...

Navy names ship after gay rights advocate Harvey...

Aug 17, 2016

The Navy is naming a ship in honor of the late gay rights leader Harvey Milk

Target cuts outlook as it sees fewer customers in...

Aug 17, 2016

Target cut its profit forecast and a key sales outlook amid stiffer competition and its own...

About Us

Travel Leisure Mag is New York City’s travel and lifestyle online magazine with the vision of creating a unique blend of valuable and quality travel experience to the readers. We trust that you will enjoy this experience.

Contact us: sales@travelleisuremag.com