Supreme Court’s sales-tax ruling could mean $200 million for IL

Isaac Cain
June 22, 2018

"Each year, it becomes further removed from economic reality and results in significant revenue losses to the States". The NTUF is now calling on Congress to take action and limit states power to apply sales taxes. In upholding the ruling the Supreme Court overturned a 1992 ruling that required a "physical presence" in a state in order to mandate collection of sales tax. The court said at the time the requirements would be too much of a strain on businesses. This ruling is likely to lead other states to start requiring sales tax from online retailers, which in turn will be required from the consumer at checkout.

Governor Pete Ricketts reacted to the ruling. "Whatever salience the adage "third time's a charm" has in daily life, it is a poor guide to Supreme Court decision-making". It's likely to negate some of the price advantages that come from buying online, as you might guess, but there's also the possibility of creating headaches for smaller e-commerce outfits that might lose a price advantage over heavyweights already paying state sales taxes. The S.D. law is also not retroactive.

"That has meant about $300 million in lost revenue every year, including $160 million for the state, $112 million for cities and $24 million for counties", Neal said.

That lawsuit has yet to materialize.

With this ruling look for more states and local governments to push for taxes on online physical and digital sales. Some states have a base sales tax set at 2.9% while others have set theirs as high as 7.25% and even 10.5%.

Smaller online companies are anxious about calculating taxes for literally thousands of jurisdictions.

South Carolinians soon could pay more to shop online after the U.S. The 1992 decision, the court found, was "unsound and incorrect", and unfairly penalized traditional brick-and-mortar retail outlets.

The ruling comes against a backdrop of Trump's criticism of Amazon, the leading player in online retail, on the issue of taxes and other matters. Forty-five of the 50 states impose sales taxes.

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"It effectively penalizes "brick-and-mortar" businesses that choose to locate, hire employees and invest in the State of Maryland", Franchot said.

"The burden will fall disproportionately on small businesses", he wrote.

The ruling "definitely goes out of its way to suggest there may have to be future litigation to decide ultimately where things will shake out", said lawyer Paul Clement, who filed a brief backing Wayfair.

Under the ruling Thursday, states can pass laws requiring out-of-state sellers to collect the state's sales tax from customers and send it to the state.

Since Amazon has a local presence in most states, in fact, it has been collecting sales taxes for customers located in the 45 states that actually collect them since April 2017.

MA law was similar to laws in several other states.

"If physical nexus is no longer required for sales taxes, then it is no longer required for personal or corporate income taxes", he said.

What money that could bring is unclear, he said. "This decision finally levels that playing field, and I think that's all any business owner wants". Rolfes is the top budget writer for Senate Democrats, who hold a majority in the chamber.

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