Online shopping could cost more after Supreme Court case
A high-stakes showdown at the U.S. Supreme Court on Tuesday will determine whether states can force out-of-state online retailers to collect sales taxes in a fight between South Dakota and e-commerce businesses. North Dakota-established that states could only collect sales tax from a retailer with an established physical presence within their boundaries. South Dakota and other state and local governments say they've been cheated out of billions of dollars because of this rule.
New Hampshire is one of the states that has no sales tax.
The court is due to hear a case against retailers that have not been collecting sales tax from customers.
Amazon, which is not involved in the Supreme Court case, collects sales taxes on direct purchases on its site but does not collect taxes for items sold on its platform by third-party venders, constituting around half of total sales.
The counter argument is that it is very hard for retailers to maintain sales tax accounts in all states they ship to. State and local sales tax is already collected by between 87 and 96 percent of the top 100 online retailers, according to the agency.
President Donald Trump has claimed Amazon doesn't collect sales taxes, even though the company does.
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"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".
But numerous sales these small retailers get are through bigger sites like Amazon and Walmart.
"The current tax system favors online retailers over brick-and-mortar businesses, and undermines fair and open competition in the marketplace", the National Retail Federation argues in a brief it filed in the case.
Online retailers said reversing the 1992 precedent is a negative move in terms of e-commerce.
Whatever ruling that the Supreme Court will issue would likely affect the national e-commerce and online shopping industry. Software does exist that would allow online retailers to easily automate the state and local sales tax collections process.
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