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States Hope to Force Online Retailers to Collect Billions in Sales Tax

by | Apr 17, 2018 | North America, Sales Tax

 

 

 

 

 

 

  • The case is South Dakota v. Wayfair, 17-494
  • The 1992 decision says retailers can be forced to collect the tax only if they have a physical presence in a state, such as a store or a warehouse.
  • Forty-five states have a statewide sales tax.
  • Three current justices — Clarence Thomas, Anthony Kennedy, and Neil Gorsuch — have already expressed doubts about the precedent.
  • Under a 2016 law, South Dakota requires retailers with more than $100,000 in annual sales in the state to pay a 4.5 percent tax on purchases.
  • Retailers fighting the states say they would be hit with heavy costs of complying with rules for thousands of products in thousands of cities, counties and even airports that serve as their own taxing jurisdictions.
  • Broader taxing power would let state and local governments collect an extra $8 billion to $23 billion a year, according to various estimates.
  • About half of Amazon’s sales involve goods owned by third-party merchants, many of which don’t collect tax.
  • Although South Dakota’s tax law applies only prospectively, critics say overruling Quill could open retailers to years of retroactive liability in other states.

 

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