Governor, Finance chair don't support internet sales tax

Nichole VegaJun 26, 2018

North Dakota - that had blocked states from compelling retailers with no "physical presence" in that state to collect sales taxes.

Shares of online retailers Wayfair, Overstock, eBay, and Etsy all tumbled Thursday after a landmark decision by the Supreme Court took away one of the key advantages some e-commerce companies had over traditional retailers. Today, the retail giant collects taxes in every state that has a sales tax. If the sales tax is now being collected, it will be important for states either to drop the use tax or to make sure that there is no double taxation in some other way.

In a close decision, five out of nine US Supreme Court justices sided with South Dakota state in its case against Wayfair, paving the way for other states to begin collecting taxes from online purchases.

Chief Justice John Roberts offered the dissenting opinion, along with Justices Stephen Breyer, Elena Kagan, and Sonia Sotomayor.

It is also unclear, according to Montana Department of Revenue Officials, if the court's ruling could mean that Montana's resort communities which have adopted a local option sales tax will have to start imposing those taxes on their online sales.

"The physical presence rule has always been criticized as giving out-of-state sellers an advantage", the ruling says.

South Dakota Attorney General Marty Jackley argued the case before the high court. "We have long fought the battle to defend Main Street businesses and now with today's ruling, all businesses will compete on a level playing field", South Dakota Republican Governor Dennis Daugaard said.

But NetChoice, a trade association for e-commerce firms, warned small businesses would have trouble complying with the different tax requirements in each state. A study conducted by economist Arthur Laffer estimates that requiring online sellers to collect state sales tax could increase gross domestic product by more than $500 billion and create 1.5 million new jobs by 2022.

The group described the decision as a "body blow" to customers and small online businesses.

Amazon.com and some other online retailers began collecting the 6 percent sales tax from MI in October 2015 under the state's Main Street Fairness Act. "Remote sellers can avoid the regulatory burdens of tax collection and can offer de facto lower prices caused by the widespread failure of consumers to pay the tax on their own".

Internet companies opposed to the South Dakota law appealed.

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