Online Purchase Sales Tax Fight Heads to SCOTUS

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

The Supreme Court will hear a case Tuesday on whether to tax online orders delivered to states where the business has no brick and mortar shop or warehouse.

The South Dakota state capitol building is seen in Pierre, South Dakota, U.S., February 7, 2018. Large retailers such as Apple, Macy's, Target and Walmart, which have a physical presence nationwide, generally collect sales tax from customers who buy from them online.

The Supreme Court is expected to issue a decision in June.

The counter argument is that it is very hard for retailers to maintain sales tax accounts in all states they ship to.

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A reversal could mean that all online retailers must collect sales tax everywhere.

President Donald Trump has argued Amazon doesn't collect sales taxes; even though the company does.

Online shoppers could pay more upon checkout if the U.S. Supreme Court overturns a 26-year-old rule on sales taxes. Wayfair argues more than 16,000 different taxing units could demand sales tax collections. There are billions of dollars of tax revenue at stake here, as well as a huge potential burden on small businesses. Even retail companies without a physical store in South Dakota were required to follow the state law.

But numerous sales these small retailers get are through bigger sites like Amazon and Walmart. "The entire nature of interstate commerce has changed", Martz said.

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Online retailers said reversing the 1992 precedent is a negative move in terms of e-commerce.

"Win or lose at the Supreme Court, we will continue to advocate for a legislative solution and a level playing field where all retailers collect and remit sales tax on the same basis", Way fair spokeswoman Jane Carpenter said in a statement.

"[It] 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", according to Brian Bieron, eBay's senior director of government relations.

In fact, chances are pretty good that you already pay sales tax on at least some of your online purchases if you live in a state that has sales tax. State legislators knew the measure was unlawful under the 1992 precedent.

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