Supreme Court Refuses to Hear Online Tax Challenge

The Supreme Court will not weigh in on the online sales tax debate; this week it refused to hear the constitutional challenge by Amazon and, instead leaving it to the states to decide. Residents in New York, California, and 15 other states will continue to pay sales tax on online purchases, and lawmakers in D.C. want to cement a permanent solution to the perceived advantage that online businesses have over traditional retail companies when it comes to collecting state taxes.

Though Amazon and filed a constitutional challenge to states collecting sales tax on online purchases, for now it looks as if the battle will be waged state-by-state. Earlier this year a bill passed in the Senate that made it easier for states to collect online sales tax, but the legislation was halted in the House due to pressure from online retailers and disapproval from conservatives.

No doubt lawmakers will revisit this topic again, and states will continue to find ways to collect sales taxes from consumers in their states.

Source: CSM

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  1. 0
    Scott1701c says:

    I can agree with not charging sales tax for each city, and instead a tax for each state. I do not like how much power the federal govenment holds right now, as they do not always listen to local (at the state level) concerns, when writting laws.

    The only problem I see with the "Wearhouse location" tax I have is that a company would try to limit distribution centers further, costing jobs and added time for shipping.

  2. 0
    E. Zachary Knight says:

    The problem is not the sales tax itself but the insane hodgepodge of tax laws that the state's want online businesses to deal with. If the online sales tax was a single value across the board or at least a single value per state, it probably wouldn't be a problem.

    Here is the actual problem:

    Current law requires an online business to charge sales tax to a customer in a certain state, if that business has a physical presence, eg a warehouse or office, in that state. However, many states require online businesses to charge sales tax based on the location of the purchaser rather than the location of the business. Brick and mortar businesses don't have that same requirement.

    If you drive to Walmart in the next town over, you pay that town's sales tax and not the sales tax of your home town. If you buy from Amazon, which for this example has a warehouse in your state, you pay sales tax based on the location of your home. This means that Walmart only has to deal with sales tax in areas where it has a presence, yet Amazon would have to deal with sales tax for every city and town in the state. It is a huge burden on online businesses.

    My preferred solution would be that the federal government passes a law that requires online retailers to charge sales taxes on all purchases, but only charges the sales tax for the location of their home office. So if a business is based in Wichita, Kansas, everyone in the US get's charged the sales tax for Wichita, Kansas. Further, the law can still respect the physical nexus requirement in that if that business also has a warehouse or some other physical location in say Des Moines, Iowa, all buyers from Iowa are charged the Des Moines sales tax rather than the Wichita, Kansas sales tax. This way, sales taxes are respected and states can compete for business from online retailers.

    Another slightly less acceptable law would still have to be passed by the Federal government. This law would require state governments to set a single online sales tax for the entirety of the state. No more confusion on what sales tax to charge based on whatever confusing location requirements the states currently have.

    Unfortunately, my preferred solution is fought by state's that charge a sales tax and would be welcome by states that don't. The second solution is fought by cities who think they will get less money, which is still more money than they would get under the current situation.

    E. Zachary Knight
    Divine Knight Gaming
    Oklahoma Game Development
    Rusty Outlook
    Random Tower
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  3. 0
    Scott1701c says:

    I am in favor of online sales tax. With more and more people shopping online, that means less tax revenue from "brick and mortar" establishments.  I have no problem paying taxes there because I need state services (police, fire, roads, schools, ect).

    I honestly do not understand the argument against online sales tax. I am willing to debate this with anyone. (give me a day too respond as I work strange hours)

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