Tuesday, 24 April, 2018

South Dakota e-commerce sale tax fight reaches US Supreme Court

A mail room in an apartment building shows packages about to be delivered A mail room in an apartment building shows packages about to be delivered
Nellie Chapman | 17 April, 2018, 00:26

The state, appealing a lower court decision that favored Wayfair Inc, Overstock.com Inc and Newegg Inc, is being supported by President Donald Trump's administration.

Small retailers are not collecting state taxes from online shoppers unless the store has a physical presence in the state where the buyer lives. Instead, the state argues that a sales tax should be imposed on businesses who have an "economic presence" in a state.

In the case that will be argued in front of the Supreme Court justices on Tuesday, more than 40 states and traditional retailers will ask the court to overturn the 26-year-old Quill Corp. v. Something brick-and-mortar have argued will level the playing field.

Instead, online companies-including Amazon and Overstock-said they support a nationwide law that addresses internet sales taxes that would relieve retailers from dealing with a patchwork of state measures. Numerous sales on Amazon's and Walmart's sites are actually done by smaller retailers using those sites as their platform.

FILE PHOTO: The South Dakota state capitol building is seen in Pierre, South Dakota, U.S., February 7, 2018.

South Dakota depends more than most states on sales taxes because it is one of nine that do not have a state income tax.

Whatever ruling that the Supreme Court will issue would likely affect the national e-commerce and online shopping industry. North Dakota-established that states could only collect sales tax from a retailer with an established physical presence within their boundaries.

"South Dakota's choice to forego its remedy for back taxes in the event that the Court were to overrule [existing law] will not limit the retroactive application of such a ruling with respect to other state and local jurisdictions", said Wayfair's attorneys.

"Things have changed a lot since 1992".

"That rule doesn't make sense anymore in today's world of e-commerce", said Deborah White, general counsel of the Retail Litigation Center, told Bloomberg.

Brian Bieron, eBay's senior director of government relations, said in an interview the 1992 precedent "provides the many small businesses that use the internet with a very clear and simple and stable legal environment in which to grow their business". Amazon collects sales tax on its own products, but not on other businesses' products that are sold through its website.