Supreme Court to Rule on Online Sales Tax - Tire Review Magazine

Supreme Court to Rule on Online Sales Tax

The U.S. Supreme Court has an opportunity to level the playing field between online retailers and brick-and-mortar businesses regarding state sales tax.

A decision will be coming soon regarding the laws on state sales tax and out-of-state online retailers. Earlier this week, the U.S. Supreme Court heard oral arguments in the case South Dakota v. Wayfair Inc. This case hopes to reverse a 1992 ruling known as Quill v. North Dakota, which sets the precedent regarding the collection of sales tax by online retailers only if they have a physical presence in that state. The most recent case presented says the 1992 ruling is obsolete. In addition, states are losing massive amounts of potential sales tax revenues and small businesses are hurt by what many see as an uneven playing field between brick-and-mortar versus online retailers.

Advocates of online merchants say that the collection of sales tax will be a detriment to small and medium-sized companies and entrepreneurs that sell online, while many large retailers have a strong in-state footprint and most likely already have to require sales tax.

Those in support of state taxes being required for online transactions say the current laws put them as a competitive disadvantage as a brick-and-mortar business.

After hearing testimony, the Supreme Court justices appeared to be divided on the issue, according to news reports. A decision is expected to be reached in July.

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