WASHINGTON -- The U.S. Supreme Court has ruled to allow states to require online sellers to collect sales tax just as local stores do. The ruling is part of the long-fought court case of South Dakota v. Wayfair.
“Retailers have been waiting for this day for more than two decades. The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it’s time for outdated sales-tax policies to change as well. This ruling clears the way for a fair and level playing field, where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both,” said Matthew Shay, president and CEO of the National Retail Federation (NRF).
“While today’s decision is a major victory, there’s still work to be done," Shay said. "Congress must now follow the court’s lead and pass legislation implementing uniform national rules that provide consistency and clarity for retailers across the country.”
The court this morning upheld a 2016 South Dakota law that requires online merchants with more than $100,000 in annual sales to state residents or 200 transactions with state residents to collect sales tax.
NRF argued in a friend-of-the-court brief last year that the court’s 1992 Quill Corp. v. North Dakota decision was outdated and that sales-tax collection is no longer the burden it might once have been due to changes in technology. In the brief, NRF cited a wide variety of software available to automatically collect the sales tax owed, much of its available free or at a low cost.
NRF and other retail groups said in a second brief filed this year that lack of uniform collection is “inflicting extreme harm and unfairness” on local retailers by “distorting the retail market in favor of absentee e-commerce.”
Even with the favorable ruling, NRF’s position is that federal legislation is still necessary to spell out details on how sales-tax collection will take place, rather than leaving it to each of the states to interpret the court’s decision. NRF has been a voice for equal sales-tax rules for years, saying that Quill gave online sellers an unfair price advantage over local merchants.
The National Retail Federation, based in Washington, D.C., is the world’s largest retail trade association.
Photo courtesy of 401(K) 2012.
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