Supreme Court Rules In Internet Sales Tax Case

Pool  Getty Images

Pool Getty Images

The North Dakota Legislature past year passed a law requiring the collection of sales tax from online retailers, effective whenever the U.S. Supreme Court acted to overturn the Quill decision or made a similar ruling, according to Attorney General Wayne Stenehjem, who joined with South Dakota in pushing to overturn the Supreme Court's 1992 decision.

It has been developed with almost two decades of input from cities, counties, states and retailers, and it answers numerous questions around how taxes from online sales should be collected, including how local option rates are collected and remitted.

"The judgment of the Supreme Court of South Dakota is vacated, and the case is remanded for further proceedings not inconsistent with this opinion", the opinion stated. Before that, retailers didn't have to collect state sales taxes if it was shipping items to someone in a state where the business didn't have a physical presence.

"It's not going to result in immediate income to the state", said Republican Rep. Jay Morris, a Monroe lawyer.

Chief Justice John Roberts, writing in dissent with Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan, said the decision disregards the costs a sales tax would impose on online retailers - a process that could be "baffling" for Internet sellers.

U.S. Sen. Heidi Heitkamp was North Dakota's tax commissioner when the state lost the Quill case, which dealt with catalog retailers.

The proposal was sponsored by Baton Rouge Republican Rep. Paula Davis. The court found the standard doesn't jibe with current-day online retailing. Manager Ginger Mitchell says over the years, technology forced the business to change and adapt.

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The Louisiana House has rejected a sales tax proposal that would have fully financed next year's budget and kept agencies from steep cuts. Republican House Speaker Taylor Barras declared his chamber was at "an extreme deadlock", and he urged continued talks as the House left for the night. He told lawmakers: "What we need is movement from the two corners". "No one has budged in the last three days".

Illinois Department of Revenue Director Connie Beard says in a statement, "To be clear, this is not a new tax".

"From a mom-and-pop store on main street to Target and Best Buy, businesses in Minnesota can't compete if they don't have a level playing field against online retailers", U.S. Sen.

A sales tax renewal will require a mix of Republican and Democratic votes to reach the two-thirds vote for passage.

Tax negotiations continue. The special session must end June 27.

Montana is one of five states without a general sales tax, and this ruling will only impact businesses that sell online with out-of-state customers. Amazon has long lobbied for a federal law that streamlines online sales-tax collection nationwide, but none has ever gained traction.

"Being put at an nearly 10 percent disadvantage when you're selling a hardware item is significant pretty significant for a small business", said Mitchell. The 0.4 percent would raise more than $420 million.

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