States have broad authority to force online retailers to collect potentially billions of dollars worth of sales taxes, the U.S. Supreme Court ruled on Thursday, siding against e-commerce companies in their high-profile fight with South Dakota.

The justices, in a 5-4 ruling against Wayfair Inc, Overstock.com Inc and Newegg Inc, overturned a 1992 Supreme Court precedent that had barred states from requiring businesses with no “physical presence” in that state, like out-of-state online retailers, to collect sales taxes.

Continue reading:  U.S. top court lets states force online retailers to collect sales tax

10 thoughts on “U.S. top court lets states force online retailers to collect sales tax

    • The article didn’t specify how the other 8 justices voted. I’m a little conflicted on the decision, though. Here are my thoughts:

      1) I don’t like sales taxes because they are regressive forms of taxation.
      2) If brick-and-mortar businesses must collect sales taxes, then online businesses should too.
      3) State governments have been subjected to severe budget shortfalls in recent decades from conservative tax cutting measures. In order to run essential services, they have to find new revenue sources.

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  1. Online businesses not being subject to the same taxes as bricks and mortar businesses is not just an issue within the US. It has serious implications internationally. For example here in Aotearoa New Zealand everythng is subject to GST (Goods and Services Tax) currently rated at 15%. This puts local businesses, both online, and bricks and mortar, at a distinct disadvantage when competing with the likes of Amazon. I understand Amazon has looked at establishing a warehouse here to reduce distribution costs even further, but as payments will still be made to the parent organisation, Amazon will still be able to avoid GST.

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      • They are not.

        The problem is that GST is added into the selling price of goods and services and is collected by the seller when the goods or services are sold. It is the seller who must collect the GST. Any enterprise in the supply chain collects GST. Each month they subtract the GST they have paid from the GST they have collected and forward the balance on to the IRD (Inland Revenue Department).

        Here’s the rub: Imports aren’t taxed. An enterprise pays GST on imports when they on-sell the goods or service. But if a consumer imports an item no GST can be collected as the item isn’t being on-sold. This means that all overseas sellers have an advantage over NZ based businesses when selling to consumers as local businesses must collect the 15% GST.

        Short of holding every item at the border until it’s been confirmed whether or not the purchaser is a GST registered enterprise, and then levying a 15% tax if it is not, or the banks imposing a 15% levy on overseas purchases made by consumers, but not on-sellers, or some other equally difficult to administer system, there is no way to enforce the collection of GST onto offshore businesses.

        The beauty of the system as it is, is that the rules are very simple and applies to all goods and services, so rorting the system is next to impossible. It’s equally fair to every consumer and it’s also very cheap to administer from an accounting perspective.

        Well it was fair until the arrival of online offshore retailers. The advantage to offshore businesses is considerable. Local retailers have noticed negligible decline in foot traffic but significant decline in sales. What’s happening is that consumers are visiting local shops to see and check out an item “in the flesh”, then going online to purchase it from Amazon or similar offshore retailers. It’s become so bad, that many clothing shops now charge a fitting fee, refundable if the shopper purchases the article of clothing.

        If anyone can come up with a simple to administer, fair and universal system that won’t impede free trade, then I’m sure they would make a fortune selling it to tax authorities.

        Currently the IRD must rely on the goodwill of offshore enterprises to collect GST, and most are not willing to cooperate as by doing so, they are at a disadvantage compared to an enterprise that does not cooperate.

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        • I see. It appears the practical realities of evolving technology and globalization have eclipsed New Zealand law. Your nation is facing a dilemma. If local businesses continue to lose market share to online retailers, then they might fail. If the government attempts to legislate cooperation from offshore businesses, then powerful corporations like Amazon might play hardball and retaliate. Either way looks problematic and contentious.

          I understand the appeal of globalization. However, if free trade cannot be fair trade, then the potential benefits to all parties is lost. Furthermore, as a staunch supporter of democracy, I oppose the usurping of national sovereignty by corporate power. Therefore, I consider Amazon’s behavior in this case to be unethical and possibly illegal.

          Thanks, Barry.

          Liked by 1 person

  2. I’m OK with state sales tax, especially considering the austerity economic plans of the federal government and GOP state governments.

    What we NEED to address is corporate welfare like tax subsidies to fossil fuel corporations who were given these breaks over 100 years ago when finding oil deposits was a difficult procedure. That need disappeared decades ago, but wealthy executives who are destroying the planet and contributing to severe illness all over the world still receive BILLIONS of dollars in TAXPAYER money. Think about it.

    And evil corporations like Walmart receive invisible welfare money at TAXPAYER expense. They get away with paying such low salaries thanks to (mostly GOP) corporate-owned politicians who keep minimum wage below a living wage. Then, millions of FAMILIES need to receive SNAP, WIC, TANF or other social assistance. This is a federal subsidy for these predatory corporations. It MUST end.

    Sermon over.

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