Can states collect sales taxes on all purchases?

Can states collect sales taxes on all purchases?

When Sen. Heidi Heitkamp, D-N.D., got the news that the U.S. Supreme Court would be taking up a case on state's rights to collect sales tax on online sales, she just started smiling.

The top of U.S. Supreme Court building is lit at dusk in Washington, U.S., December 18, 2017.

The 1992 ruling, from Quill v. North Dakota, established a lasting precedent that states could tax only sales by businesses that reside within the state's borders. Ultimately, the high court said retailers can be forced to collect taxes only in states where the company has a "physical presence". Forty-five of the 50 states have a statewide sales tax.

The minority rights groups suing the state had formally asked the high court to dismiss the state's appeal.

"Retail is a dynamic industry that's rapidly transforming".

Congress still has a role to play, said Matthew Shay, president of the National Retail Federation: "Even if the court rules in favor of a modern sales tax policy, legislation will still be needed to spell out how that would work".

South Dakota's law places the burden of collecting and remitting sales taxes on companies that do at least $100,000 in sales or handle at least 200 transactions in the state.

States and counties told the court they lose between $13 billion and $34 billion each year because they can not collect sales taxes on all online purchases.

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After years of refusing states' pleas for help, the Court granted review of an appeal by the state of South Dakota, in a case that the state's legislature explicitly created in order to set up a test of the long-standing restriction.

The Associated Press contributed to this article. Texas voters will choose candidates in the March 6 primaries according to the current districts, but the Supreme Court's ruling is not expected until summer, when primary winners will be campaigning in advance of the November general elections. Two years ago, however, Justice Anthony M. Kennedy said in an somewhat-related case that the Court should find "an appropriate case" to reconsider the Quill decision and its constitutional reasoning.

The online retailers challenging the law - Wayfair, Overstock and Newegg - argued the issue should be left to Congress, which has tried for years to find a compromise.

"When the Court decided Quill, mailorder sales in the United States totaled $180 billion", Kennedy wrote.

Both sides have said they relish an opportunity to argue their case in front of the Supreme Court.

Companies now "can instantly tailor their marketing and overnight delivery of hundreds of thousands of products to individual customers based on their IP addresses; these companies can surely calculate sales tax from a zip code".

The court probably will hear arguments in April and decide the case by late June.

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