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Sales tax bill voted down by Louisiana House
29 June 2018, 12:38 | Jodi Jackson
Supreme Court ruling allows Louisiana, other states to collect sales tax from online shoppers
By a narrow 5-4 margin, the nation's highest court voted to overturn a 1992 decision that required internet retailers to pay sales tax only in states where they had a physical presence.
This week's decision provides a way to clean up the patchwork: States may now require sellers to collect and remit sales tax, regardless of physical presence, so long as the states take certain steps to minimize the burden of compliance on out-of-state sellers.
After Justice Anthony M. Kennedy, who wrote Thursday's majority decision, had said the court should reconsider the decision, South Dakota took up the challenge. North Dakota, which declared that the Constitution prohibited states from requiring businesses collect sales taxes unless they have a substantial connection to the state they operate in.
It's unclear exactly how the ruling is going to affect online retailers, but states and local governments could start collecting billions in sales tax dollars every year.
Wayfair stock was down 2.5 percent in morning trading, while shares of online craft marketplace Etsy dropped more than 3 percent. Under the agreement, retailers can use a sales tax compliance service of their choice without charge for transactions in the participating states, according to Craig Johnson, executive director of the Streamlined Sales Tax Governing Board.
NRF argued in a friend-of-the-court brief past year that the court's 1992 Quill Corp. v. The Government Accountability Office estimates that states were already collecting approximately 75 percent of the potential sales tax revenue already, suggesting this may not have been as large of an issue as it is often portrayed.
Subjecting all online retailers to the same rules as brick-and-mortar, though, may not ultimately help the mom-and-pop shops that have struggled most in the shift to online, Forte said, "unless they're a mom-and-pop focused on big ticket items".
Amazon then added Pennsylvania to that list after a similar law there went into effect April 1.
It's the third special session this year, called by Gov. John Bel Edwards in the hopes of renewing some expiring sales taxes to fill state coffers and avoid deep reductions across college campuses and state programs only days away.
The cost can be reduced for retailers who sell to customers in the 24 states that participate in the Streamlined Sales Tax Agreement, a plan aimed at simplifying tax collection. Such e-commerce businesses generally have not been required to collect sales taxes since the 1992 Supreme Court case, Quill v.
He also said it hurts the states' ability to raise revenues. Still, almost half of Amazon's sales are through these other merchants, which could surely impact business.
Sales tax is pretty interesting in the United States as it's done on a state-by-state basis. "The Internet's prevalence and power have changed the dynamics of the national economy", the court said in its decision in the case, South Dakota v. Wayfair.
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