Supreme Court sales-tax ruling could mean $200M for IL

US-POLITICS-SUPREME COURT

The Supreme Court upended the nation's Internet marketplace Thursday, ruling that states can collect sales taxes from most online retailers. The court overturned a longstanding rule that states can collect sales taxes only on transactions if the retailer has a "bricks and mortar" presence in that state.

In response, online sellers Wayfair, Overstock.com and Newegg, said online retailers could face some 12,000 local tax jurisdictions if the Supreme Court sided with the states. The decision could allow more states to impose sales taxes on companies that operate entirely online.

"Those kinds of businesses that are selling out of Montana, online, into other states, may lose a little bit of a competitive advantage that they might have had because they were not required to charge other state's sales taxes", Barrett says.

Gov. John Bel Edwards and House Democrats want to renew half an expiring 1 percent sales tax, a proposal previously backed by the Senate.

About 16 states already have laws similar to South Dakota's that could let them require tax collection by Internet retailers in the coming months, and more could follow quickly.

State director Mike Hickey of the National Federation of Independent Businesses said his members are split on the sales tax issue.

Still, the ruling was a central topic of discussion Thursday in the House, where lawmakers in a special session are haggling over sales tax measures aimed at lessening steep budget cuts that hit in July. He wrote that the test was "a judicially created tax shelter for businesses that limit their physical presence in a state but sell their goods and services to the state's consumers".

For example, Amazon collect sales tax on sales from its own inventory and on a portion of sales by third-party merchants who use its platform.

"We are talking about middle-market businesses that have a CFO and maybe no tax department and that rely on an accounting firm to be their tax department", RSM's Kirkell said.

Justice Anthony Kennedy wrote the 5-4 decision, joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch.

Kennedy didn't directly decide whether states could try to collect taxes retroactively, but he said that issue wasn't a reason to keep the physical-presence rule.

"The burden will fall disproportionately on small businesses". Justice Roberts penned the dissenting opinion and was joined by three other justices: Breyer, Sotomayor and Kagan. "People starting a business selling their embroidered pillowcases or carved decoys can offer their wares throughout the country - but probably not if they have to figure out the tax due on every sale". North Dakota (1992) - was both "unsound and incorrect". Amazon and Overstock are among the companies that say they support a nationwide law that would relieve retailers from dealing with a patchwork of state tax laws. More than 20 states define a seller's physical presence as including any affiliated website.

The case is South Dakota v. Wayfair, 17-494.

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