US Supreme Court Will Revisit Ruling On Collecting Internet Sales Tax (theverge.com)

An anonymous reader quotes a report from Bloomberg: The U.S. Supreme Court will consider freeing state and local governments to collect billions of dollars in sales taxes from online retailers, agreeing to revisit a 26-year-old ruling that has made much of the internet a tax-free zone. Heeding calls from traditional retailers and dozens of states, the justices said they'll hear South Dakota's contention that the 1992 ruling is obsolete in the e-commerce era and should be overturned. State and local governments could have collected up to $13 billion more in 2017 if they'd been allowed to require sales tax payments from online merchants and other remote sellers, according to a report from the Government Accountability Office, Congress's non-partisan audit and research agency. Other estimates are even higher. All but five states impose sales taxes.

The high court's 1992 Quill v. North Dakota ruling, which involved a mail-order company, said retailers can be forced to collect taxes only in states where the company has a "physical presence." The court invoked the so-called dormant commerce clause, a judge-created legal doctrine that bars states from interfering with interstate commerce unless authorized by Congress. South Dakota passed its law in 2016 with an eye toward overturning the Quill decision. It requires retailers with more than $100,000 in annual sales in the state to pay a 4.5 percent tax on purchases. Soon after enacting the law, the state filed suit and asked the courts to declare the measure constitutional.

Comments

Correct but legally dumb

[Scareduck]

Quill invoked the Commerce Clause because the United States is set up as a free trade zone. If the states could regulate interstate commerce, they would start engaging in tariff wars -- as they did under the Articles of Confederation. To say this is "judge-created" is to express some rather deep ignorance about the Founders' intentions.

Re:huh?

[saloomy]

Not so. The states have a right to collect taxes on things you buy if you buy them in the state. Where you receive them is where you "buy" them. What is up for debate here is whether or not they collect the taxes from the merchant or the purchaser.

Merchants contend that they have no filing requirements for states they do not have presence in, but the consumers do. Individuals are supposed to report and pay Sales Tax on things they bought and didn't pay sales tax.

This is where enforcement should happen. Otherwise, e-tailers in Canada or other overseas places will have an edge over US e-tailers who will have to collect the tax. Also, once you pay sales tax, you cant deduct it. If your tax liability hits "0" on your income tax and you have deductions which are not refundable, then you lost out because of where the collection and reporting happens. If you report your purchases and pay the sales taxes yourselves, you may deduct more taxes since the number reported will be higher, and non-refundable deductions will lower your liability.

Besides, do we really want a system where every e-tailer has to collect, report, and pay taxes to every jurisdiction in every country? The US alone has thousands of jurisdictions for sales tax at the state, county, and even city level. This is one of the effects of globalization. Sales tax should be collected from purchasers, not from retailers.

Re:Court invoked so-called dormant commerce clause

[uncqual]

The term "Dormant Commerce Clause" refers to a rather specific doctrine that the courts have imposed on the states. The "Dormant Commerce Clause" doesn't exist in the text of the Constitution and it is a limit on the power of states rather than an additional power of Congress "found" in the penumbras of the Constitution by the courts.

This doctrine holds that since Congress has the power to regulate interstate commerce (a power given to them by the "Commerce Clause" in Article I, Section 8 of the US Constitution: "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"), it has that right exclusively and individual states are prohibited from doing so. For example, California can't impose a tariff on oranges imported from Florida - although they could put a tax on all oranges sold regardless of their origin.

(Hmm... In spite of the Dormant Commerce Clause, as of a week or so ago, California has made it illegal to import ammunition purchased in another state without going through a California dealer. Sounds like it's time to invoke the Dormant Commerce Clause!)