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Supreme Court Declines Case On Making Online Retailers Collect Sales Taxes
thomst writes "Robert Barnes of the Washington Post reports that the US Supreme Court has declined to hear petitions from Amazon.com and Overstock.com requesting that a decision by the New York State Supreme Court permitting that state's 2008 law requiring sales taxes be collected on Internet sales, even if the seller has no 'business presence' in New York. The New York Court of Appeals ruled that Amazon's relationship with third-party affiliates in the state that receive commissions for sending Web traffic its way satisfied the 'substantial nexus' necessary to force the company to collect taxes, and New York's Supreme Court had affirmed the ruling. The Federal high court's refusal to hear the petitions leaves the state law in effect, even though it appears to conflict with the Court's 1993 decision in Quill v. North Dakota."
Except that big players like Amazon actually want online sales tax. The infrastructure to collect state and local taxes for all 50 states is beyond small retailers, thus either driving them out of business or forcing small retailers to sign up as an Amazon affiliate so they can have someone else deal with the minefield of state and local laws.
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I think this will drive omnichannel commerce and remove the 10% price advantage that companies like Amazon and Overstock enjoyed with respect to Brick and mortar stores. Competition will increase - and it can only be better for consumers.
Bull. Flat out bull.
People don't pick Amazon or Overstock to save on sales tax... they do it because the prices are cheaper. When I head to BestBuy and find a SATA cable listed for 25 bucks, and Amazon has it for 4.50... I don't pick Amazon because I "save" 7.25% in sales tax.
Plus those Brick & Mortar stores don't charge shipping... Shipping is almost always higher than sales tax. Now I know you are going to say "But Amazon offers free shipping for orders of $35 or more!"... So does UPS ship for free on those orders? No. Amazon eats the cost to encourage people to buy more. So why doesn't the Brick & Mortar stores offer "We pay the sales tax for all orders over $X!"??? They can reduce the price by what ever the local tax rate is (7.25%) easily enough. They don't because they know that isn't the reason why people are shopping online.
There is a good reason why the SCOTUS refused to hear this: It would be struck down. Article 1, section 9 of the US Constitution states: "No Tax or Duty shall be laid on Articles exported from any State." To put it simply: If I own a store in New Mexico, and I sell to somebody who lives in a different state... I don't collect any taxes or duties on that item. If I have a store in that state, I will have to collect taxes.
Sears & Roebuck had the same sales model as Amazon back in the late 1800's. They didn't collect sales tax either.
Sears sold things by a mail-order catalog.
Customers would read the mail-order catalog, and use a mail-in order form for items, with payment.
After receiving the order and payment, Sears would deliver the requested item.
Amazon does the same thing, just replace "Mail-order/mail-in" with "Online". Changing the way one reads a catalog, or orders items doesn't affect the law. If somebody uses a telephone, it didn't change it, neither should a computer.
Stores in town lost customers due to this, not because of "They don't collect sales tax" but because they offered so much more, at a cheaper price. The brick & mortars did have a "You get it now" features instead of having to wait 2 weeks... but for many, the savings was well worth the wait.
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