In a move that puts the Trump administration of the side of traditional retailers, the White House on Monday urged the U.S. Supreme Court to let state and local governments collect sales tax from online retailers—no matter where they’re physically located.
Earlier this year, Dealerscope detailed the case between the state of South Dakota and several online retailers in which South Dakota is seeking to collect the same sales tax from online retailers that local brick and mortar stores are required to. As it currently stands, based on a 1992 Supreme Court ruling, online retailers are only required to collect state sales tax in states in which they have a physical presence in the form of a store, warehouse, distribution center, etc.
"In light of Internet retailers’ pervasive and continuous virtual presence in the states where their websites are accessible, the states have ample authority to require those retailers to collect state sales taxes owed by their customers,” Solicitor General Noel Francisco wrote in a court brief.
The Trump administration’s stance is similar to that of the National Retail Federation, which called the 1992 ruling “antiquated” and said a new precedent should be set.
“Retail is a dynamic industry that’s rapidly transforming,” NRF President and CEO Matthew Shay said earlier this year. “Unfortunately, antiquated sales tax collection rules have resulted in an uneven playing field that’s making it harder for Main Street retailers to compete in today’s digital economy. This is a basic question about fairness, which all of our members deserve whether they’re selling in stores or online.”
Online retailers in the case, which include Overstock, Wayfiar, and CE ecommerce site Newegg, have leaned on the 1992 ruling as being “clear and fair.”
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