U.S. Supreme Court declines to hear online retailers tax case

“The U.S. Supreme Court declined on Monday to tackle the long-standing question of whether Internet retailers like Amazon.com Inc should be required to collect sales taxes in states where they have no physical presence,” Lawrence Hurley and Patrick Temple-West report for Reuters.

“In a case brought by Amazon and Overstock.com Inc, the Supreme Court was asked to decide whether a New York state law that requires online retailers to collect taxes is valid under the U.S. Constitution,” Hurley and Temple-West report. “Because the court declined to hear the case, the retailers’ challenge to the law has failed.”

“The U.S. government has no national sales tax and Congress has not moved ahead with proposed legislation that would give all states the power to enforce their sales tax laws on Internet retailers. For years, Congress has debated legislation to grant states the power to tax online purchases. In May, the Senate approved a bill, but it has stalled in the House of Representatives,” Hurley and Temple-West report. “Amazon supports federal legislation for nationwide state sales tax enforcement, but other online retailers, including eBay Inc and Overstock, have fought it.”

Read more in the full article here.

16 Comments

  1. And just what else is so much more pressing on the Supreme Courts time? Funny how they want to pull profit from Apple and the publishers but God forbid they deny themselves forced tax renumeration & compliance (that won’t make much of a difference anyway).

    1. You call yourself a computer professiopnal?

      Regardless of your polkitical leanings, adding the mechanism to pull tax based on zip code is trivial. Remanding that tax to the individual state is also a trivial matter.

      In other words, you don’t want the feds taxing you because of your philosophy, and now you don’t want the state to tax you because you think you are entitled to a free ride. Geeez!

      We call that unpatriotic.

      1. I’m not anti-sales tax, but as one with developer experience on this very specific subject (at multiple companies), I have to disagree with you on this point:

        “Regardless of your polkitical leanings, adding the mechanism to pull tax based on zip code is trivial.”

        It’s not trivial, and it’s not as simple as a two-field database one with the zip code and a second for the rate. Tax jurisdictions aren’t entirely related to zip codes, not even the zip code +4.

        It’s not that hard to look up the rate and the rules and apply them manually, but it’s definitely an added cost to either build the system or manually use a 3rd party system each time.

        Of course if you’re Amazon, the cost is trivial relative to your overall business, but for small online retailers, especially those doing low dollar amount transactions, the cost can be prohibitive and the chance of doing it incorrectly is extremely high.

        This is why you see so many online retailers stating that “taxes will be applied in your final order” as opposed to automatically displaying it on the web page. What’s happening is that some person is manually figuring out the tax for your order and adding it to the processing.

        It’s all very inefficient and adds incentive to those who would cheat.

        The other problem I have with this is who exactly is getting the tax revenue. With a brick and mortar store, it makes sense. That store pays local taxes for all of the local services it’s receiving (fire dept, police, etc…).

        However, if I buy something from another state, and the sales tax is applied locally, the revenue is going to a place that may have provided few if any services relative to the location of where I bought the item from.

        That’s why I’d rather see a national sales tax for online goods equal to the average of all state sales taxes. One rate, one set of rules, one payee (currently, there are 11,000 in the US).

        As for what is done with the money, that’s a separate debate, and there’s no reason why that money couldn’t then be handed back to state and local governments or kept for federal use.

      2. Read history and get informed, or bend over so that the government rulers can sodomize you. Irrational government is the greatest man-made danger to rational individuals.

      3. @rico you must be a moron to think that collecting taxes from thousands of different jurisdictions and tax code combinations is a trivial matter. Plus, tax rates are constantly changes across the nation. PLUS tax CODES change too (a bottle of water in one district is considered a grocery item and taxed as such, another it’s not and taxed differently). Stop being such a simpleton.

        And from what I see in the posts – those of us who oppose this agree that a federal retail tax is stupid (unless it replaces the income tax) and states should not be able to burden business OUTSIDE their state boundaries with tax collection.

    2. I guess the 30-40 million people that will get insurance that couldn’t before would take insult by your statement. Fortunately for yourself, you don’t care. Fortunately for the millions, many other people do.

    3. Obamacare? Grow up already.
      This case is being brought forth by private corporations against individual states. “The U.S. government has no national sales tax…”
      The proposed bill for national sales tax is truly how America should work by creating dialogue between corporations and individual states to create a national standard that would benefit all. Yet, Congress can’t seem to do anything to progress, and like everything else, this movement stalls.

      1. “a national standard that would benefit all.”

        All but the consumer. You dream if you think states, certainly the populous ones, with a sales tax that reverts 100% to (and is entirely fixed by) them are either going to give it up in favor of a shared national tax, or in the event of a dual tax (Federal and State) vote for something that would favor online commerce in states that have no separate sales tax of their own.

  2. This is a fairly obvious fight. The online retailers don’t want to have to collect and remit sales taxes in multiple jurisdictions. It’s not that they can’t, they just don’t want to. Plus, collecting sales taxes negates a big selling point for online retailers, an important point that makes their products significantly less expensive than locally-purchased items. And they don’t want to lose that advantage.

  3. I still find it odd that in what is supposed to be the bastion of market-based efficiency that the USA is still supporting close to 50 different state sales tax beauracracies and countless county/city ones.

  4. Given the Constitutional power granting Congress the power to control “Interstate” commerce (Under the so-called Interstate Commerce Clause: “The Congress shall have Power… To regulate Commerce with foreign Nations, and among the several States…;”), anything short of a congressional mandate can be summarily ignored by online vendors.

    Massachusetts, for one, has subverted this federal authority by masking its imposition of a sales tax as a “use tax”, following the French example, that falls not on the vendor but the Massachusetts resident consumer as part of his income tax filing.

    1. All state sales taxes are “sales & use taxes.

      It is your responsibility tow report this as such. The only reason you don’t is because enforcement is too difficult.

  5. Sorry for the slightly oversimplified point of view but: Apple charges state tax and I really wish all online retailers would because I get tired of having to handle it at income tax time.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.