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Thread: U.S. Supreme Court to Review Bid to Collect Internet Sales Tax

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    U.S. Supreme Court to Review Bid to Collect Internet Sales Tax

    U.S. Supreme Court to Review Bid to Collect Internet Sales Tax

    Online retailers are challenging a South Dakota law that allows for the collection of sales taxes on Internet sales. This law conflicts with the 1992 SCOTUS case, Quill v. North Dakota, which said a retailer that didn't have a physical presence in a state could not be forced to pay local taxes on sales.

    The U.S. Supreme Court will consider freeing state and local governments to collect billions of dollars in sales taxes from online retailers, agreeing to revisit a 26-year-old ruling that has made much of the internet a tax-free zone.



    Heeding calls from traditional retailers and dozens of states, the justices said theyíll hear South Dakotaís contention that the 1992 ruling is obsolete in the e-commerce era and should be overturned.





    State and local governments could have collected up to $13 billion more in 2017 if theyíd been allowed to require sales tax payments from online merchants and other remote sellers, according to a report from the Government Accountability Office, Congressís nonpartisan audit and research agency. Other estimates are even higher. All but five states impose sales taxes.









    Online retailers Wayfair Inc., Overstock.com Inc. and Newegg Inc. are opposing South Dakota in the court fight. Each collects sales taxes from customers in only some states.





    The case will also affect Amazon.com Inc., though the biggest online retailer isnít directly involved. When selling its own inventory, Amazon charges sales tax in every state that imposes one, but about half of its sales involve goods owned by third-party merchants. For those items, the company says itís up to the sellers to collect any taxes, and many donít.


    The court probably will hear arguments in April with a ruling by the end of its nine-month term in late June.
    I think SCOTUS will overturn Quill.
    Alea iacta est

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    Why do you think that SCOTUS will overturn Quill? https://www.law.cornell.edu/supct/html/91-0194.ZO.html

    Quill was a constitutional issue. Is this conservative court going to ignore the constitution? Or reinterpret it in light of changing economic times?
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    Amazon isn't responsible for collecting taxes for third party sellers but are on their own sales. All sellers should be responsible for collecting the tax since they are selling the product. Don't see what the problem is. It's an added cost but doing business has costs.

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    Quote Originally Posted by DGUtley View Post
    Why do you think that SCOTUS will overturn Quill? https://www.law.cornell.edu/supct/html/91-0194.ZO.html

    Quill was a constitutional issue. Is this conservative court going to ignore the constitution? Or reinterpret it in light of changing economic times?
    The latter. From the OP:


    Three current justices -- Clarence Thomas, Neil Gorsuch and Anthony Kennedy -- have expressed doubts about Quill. Kennedy said in 2015 that Quill had produced a “startling revenue shortfall” in many states, as well as “unfairness” to local retailers and their customers.

    ***

    Gorsuch, the newest Supreme Court justice, suggested skepticism about Quill as an appeals court judge. And Thomas has said he would jettison the entire dormant commerce clause, saying “it has no basis in the Constitution and has proved unworkable in practice.”
    Alea iacta est

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    Quote Originally Posted by Captdon View Post
    Amazon isn't responsible for collecting taxes for third party sellers but are on their own sales. All sellers should be responsible for collecting the tax since they are selling the product. Don't see what the problem is. It's an added cost but doing business has costs.
    Current law disagrees with you. See Quill v. North Dakota. The holding of the case said that state and local governments could tax sales of businesses that have a physical presence in the state.

    If overturned, I can see how many small internet businesses will not be able to sell nationwide- unless some reasonably prices accounting software is made that has all local and sales taxes - updated as they change.
    Alea iacta est

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    Quote Originally Posted by Peter1469 View Post
    Current law disagrees with you. See Quill v. North Dakota. The holding of the case said that state and local governments could tax sales of businesses that have a physical presence in the state.

    If overturned, I can see how many small internet businesses will not be able to sell nationwide- unless some reasonably prices accounting software is made that has all local and sales taxes - updated as they change.
    Disagrees with what? I think sellers should collect the taxes. Amazon does collect the taxes. How hard is it to get a program to determine sales tax due? This is a simple computer program.It's only a simple app.

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    Quote Originally Posted by Captdon View Post
    Disagrees with what? I think sellers should collect the taxes. Amazon does collect the taxes. How hard is it to get a program to determine sales tax due? This is a simple computer program.It's only a simple app.
    If a seller doesn't have a physical presence in Virginia, and I order something online from them, Virginia cannot force the seller to collect sales taxes to be paid to Virginia.

    South Dakota changed its state law in order to challenge Quill v. North Dakota- and now they will get their chance since SCOTUS agreed to hear the case. If they win, most if not all other states will make similar laws and Quill would be old law.

    Regarding the burden on small businesses, I am only going on what the OP states is one of the defendant's arguments to keep Quill in place.
    Alea iacta est

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    Quote Originally Posted by Peter1469 View Post
    If a seller doesn't have a physical presence in Virginia, and I order something online from them, Virginia cannot force the seller to collect sales taxes to be paid to Virginia.

    South Dakota changed its state law in order to challenge Quill v. North Dakota- and now they will get their chance since SCOTUS agreed to hear the case. If they win, most if not all other states will make similar laws and Quill would be old law.

    Regarding the burden on small businesses, I am only going on what the OP states is one of the defendant's arguments to keep Quill in place.
    They should be made to collect it. This is an end around tactic at best.If the seller doesn't collect it then the state has to go through hell getting the buyer to pay. How is that right? This would be federalism out of control.

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    Quote Originally Posted by Captdon View Post
    They should be made to collect it. This is an end around tactic at best.If the seller doesn't collect it then the state has to go through hell getting the buyer to pay. How is that right? This would be federalism out of control.
    That is what the case is about. Under current SCOTUS law, they do not have to collect the tax. Quill v. North Dakota.
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    Quote Originally Posted by Peter1469 View Post
    If a seller doesn't have a physical presence in Virginia, and I order something online from them, Virginia cannot force the seller to collect sales taxes to be paid to Virginia.
    That may not always be true. Virginia uses physical presence but it also uses nexus to the state as a second route to collect sales tax. Any time "Virginia" and "the internet" appear in the same sentence, you need to look more closely than just general rules of thumb. With so many ISP's/telcoms etc in Virginia, it is a little more complex. Almost anything most people do on the internet could put them within Virginia's jurisdiction because of its very broad use/interpretation of "nexus".

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