Online Purchase Sales Tax Fight Heads to SCOTUS

Paying Sales Tax on Out of State Purchases

In this April 13, 2018, photo, packages from Internet retailers are delivered with the U.S. Mail in a apartment building mail room in Washington. Justice Anthony Kennedy in 2015 said the "legal system should find an appropriate case" for the court to reexamine the decision, which he said is "inflicting extreme harm and unfairness on the states". It's an issue that brick-and-mortar retailers insist will provide a level playing field with online competitors, and help to provide state and local governments with the tax revenue they deserve.

Wayfair, a Boston-based website that sells furnishings, opened two ME call centers in 2016, one in Bangor and one at Brunswick Landing, planning to hire close to 1,000 people. Walmart also collects sales tax on all online purchases.

Amazon chose to start doing so in ME in April 2017.

He says it is often easier to sell higher-end products - $11,900 Viking refrigerators, say, or a $10,400 General Electric oven range - in other states because the lack of sales tax often offsets freight charges, which can add several hundred dollars to each order.

The prevailing law is centered around a 1992 decision, Quill v.

Many small retailers depend on online sales.

The sales tax allocations from the state are based on sales made in February by businesses which report tax monthly. But as Amazon has grown, dotting the country with warehouses, it has had to charge sales tax in more and more places. Of the 45 states that levy sales taxes, 37 have laws on the books that allow additional local sales taxes that support county and municipal governments and school systems.

The case is especially timely since President Donald Trump has publicly blasted Amazon for not collecting sales taxes, even though it does so on its own sales.

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Retailers like Amazon, Walmart, Target, Apple and other major companies do now collect sales tax via their ecommerce channels, so that's not what this case is after.

Susan Horton, co-owner of The Stitchery, 9 Central Plaza in Rome, said her shop does offer internet sales but suspects that less than 1 percent of the company's business is generated online.

Those opposed to a re-write of the law warn that the cost to small businesses could be too much to bear. South Dakota's governor has said the state loses out on an estimated $50 million a year in sales tax that doesn't get collected by out-of-state sellers. The court will also rule whether states have the authority to tax all online purchases.

But many other smaller retailers don't collect sales tax unless they have a physical presence in the state where the buyer lives, relying on a 26-year old Supreme Court decision that was related to catalog retailers. At the time, the court was concerned in part about the burden collecting sales tax would place on the catalog company.

Represented at the court by Bethesda, Maryland, lawyer Eric Citron, the state said the modern economy requires a recognition that the court's 1992 ruling is obsolete.

It's unclear how the justices might align on the question this time. 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.

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