Supreme Court rules 5-4 for allowing states to tax internet sales

Legal InsurrectionThe Supreme Court in a 5-4 ruling that did not split on traditional ideological lines, upheld South Dakota’s ability to require that out-of-state internet sellers collect state sales tax on goods sold into South Dakota. The case involved the internet retailer Wayfair and South Dakota.

The case is being misrepresented in many media reports as involving whether states can tax internet sales. They can, and that was not in issue. The issue was whether states can force internet retailers to collect the sales tax and turn those proceeds over to the state.

The Court overruled prior holdings that required a physical presence, ruling that such a physical requirement rule was developed prior to the internet as we know it today. the Kennedy opinion is joined by Thomas, Alito, Ginsburg, and Gorsuch. Thomas and Gorsuch have concurring opinions. Roberts dissented, joined by Breyer, Sotomayor, and Kagan.

In practical terms, this means businesses will be required to remain up to date on tax laws in 50 states (and what about cities, counties, and localities that have their own sales taxes)? That's going to be impossible for small businesses to keep up with, but large businesses will be able to handle it without any problems. And what about infamous targeted taxes, like those Seattle has placed on firearms? Yet another point of complexity.

This change strikes me as very bad policy.

Legally, I vaguely remember when Congress used the commerce clause to place a moratorium on sales taxes over the internet. Congress, of course, is the right entity to make those calls on interstate commerce, while sales taxes are appropriate for intrastate commerce. Did that get changed when I wasn't looking? I suppose it must have.

This entry was published Sun Jun 24 12:22:16 CDT 2018 by TriggerFinger and last updated 2018-06-22 09:24:43.0. [Tweet]

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