SCOTUS ruling allows Nebraska to collect online sales tax
Jun 24 2018
"The Court's decision provides no hard-and-fast rules for states to follow", says Carl Davis, research director at the Institute on Taxation and Economic Policy, in Washington, D.C.
The decision in South Dakota vs. Wayfair is a victory for states who argued they were losing out on billions of dollars each year.
Legislation to begin collecting online sales tax beginning July 1 was blocked by a filibuster earlier this year. Otherwise, they didn't have to collect the state's sales tax. Instead, consumers themselves were expected to voluntarily submit the required taxes-and many did not. In the past, the person has been responsible for disclosing those online purchases on their tax forms but that rarely happens.
The former system was a competitive disadvantage to brick-and-mortar stores.
Previous rulings limited a state's ability to collect that revenue if the business didn't have a physical presence in the state. Still, almost half of Amazon's sales are through these other merchants, which could surely impact business. Amazon who was not mentioned in the case does charge sales tax in states that impose it but only on products sold from their own inventory. Experts say it won't really affect big stores like Amazon because they already collect a sales tax.
State officials - including in SC, with its 6 percent sales tax - have argued they were losing out on millions - if not, in some cases, billions - of dollars in revenue a year under the Supreme Court's previous 1992 decision. By contrast, people pay taxes on only about of a quarter of transactions handled by online marketplaces.
"(The prior decision) puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers", Kennedy wrote.
Higher online prices could push more consumers to shop in-store, but online shopping will still offer the convenience of not making a trip to the store, among other values, so e-commerce isn't likely to fade any time soon.
In response to the ruling, the stocks of several internet retailers, including Amazon, eBay and Wayfair, all dropped. Amazon slipped half a percentage point.
"A lot about our world and economy has changed in the 26 years since our nation's highest court last ruled on this issue", said Gov. Eric Holcomb.
Miller said this ruling could bring the two closer to being equal.