The US Supreme Court could change the e-commerce landscape

Marcus Newton
April 18, 2018

South Dakota Attorney General Marty Jackley speaks outside the Supreme Court after the court hears oral arguments on a case involving a rule stemming from two, decades-old Supreme Court cases on state's sales tax collection, Tuesday, April 17, 2018, in Washington.

The 9 US Supreme Court justices seem hesitant and split when it comes to the US state sales tax case they are required to rule on in the next few months.

Small, independent online retailers have protested that requiring them to collect and pay sales tax for all states presents a hardship that could drive many of them out of business, but the National Retail Federation (NRF) supports a uniform collection of sales tax by all retailers, saying states are losing out on much needed tax revenue. The companies argue that the administrative burden would be too onerous.

"There are hundreds of companies that have not signed on." said Rep. Steve Clouse, R-Ozark.

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South Dakota wants the justices to overturn a 1992 Supreme Court decision that means individual states can not require retailers to collect state sales taxes unless the businesses have a "physical presence" in the state.

Q: Why is the Supreme Court taking up this issue now? Treasury Secretary Steve Mnuchin told a Congressional hearing in February that Trump believes sales tax should be paid on all purchases, whether they are made in a brick-and-mortar store or online. The court reaffirmed the rule in 1992.

Early indications show numerous judges seem against changing precedent and that it should be congress, not the courts, to change the law. Justice Elena Kagan called the issue a "very prominent" one that Congress is aware of, and she suggested a high bar for those who want the court to overrule its past decisions.

My organization, The Retail Industry Leaders Association, and the Retail Litigation Center, supports South Dakota's argument in this case, and led the retail industry's petitions to the Supreme Court during both the petition stage and merits stage of this case. The time has come for the U.S. Supreme Court to do just that. As a result, out-of-state competitors gain perceived price advantage over local law-abiding businesses and the taxes that consumers indisputably (but often unknowingly) owe go uncollected, which in turn, reduces funding for state services like education and police. More than 40 states are asking the Supreme Court to abandon its current rule.

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