NRF argued in a friend-of-the-court brief that technology has made the court's concern obsolete, citing a wide variety of software available to automatically collect the sales tax owed, much of its available free or at low cost. The answer right now is: It depends. But a case before the Supreme Court could change that.
The case centers on whether or not online retailers, without a physical presence in a state, should need to collect a sales tax from buyers.
Q: Where does the physical presence rule come from? But the continued existence of the court's rule from decades past allows large, sophisticated online companies to shirk the tax collection responsibility that local stores face every day. At issue is whether all retailers should have to comply with the same basic tax collection rules that every brick-and-mortar store follows every day. Sellers on eBay and Etsy, which provide platforms for smaller sellers, also don't collect tax nationwide. The ruling, which is expected by the end of June, could give states more power to tax e-commerce sales, The Wall Street Journal reports.
Q: How does this affect states? States say their losses mean cuts to critical government programs and that those losses compound as online shopping grows.More news: Taylor Swift - "September" (Earth, Wind & Fire Cover)
While the issue could eventually be addressed through legislation, 40 states are asking the high court to settle the issue once and for all.
Q: What is the case for businesses that don't now collect sales taxes nationwide? This, in turn, hurts marketplaces like Amazon, because even though it already collects state sales taxes on its own goods, it does not on behalf of its third-party sellers, and their prices would likely rise rise. In 1992, after the court's legal doctrines had shifted and mail order had continued to grow, the court revisited the issue, but narrowly decided that the burden might still be too great and so left the old rule in place, while observing that Congress could always fix future problems. Can the state of South Dakota tax a business in Florida? "There's older caselaw that, in essence, predates the Internet and in that older caselaw the Supreme Court said, states, no you can't tax a business not in your state".
Republished with the permission of the Associated Press.