How the Supreme Court just rocked the internet

In Category United States News Posted by err0r On 03/25/19 Comments 0
In a decision with potentially enormous consequences, the US Supreme Court ruled Thursday that states have the right to charge sales tax on online transactions by out-of-state companies with no physical presence in their territory.

For those who buy do all their online buying on Amazon -- which, after its acquisition of Whole Foods, has a "physical presence" in pretty much every state, and which already collects sales tax in all 45 states that have such a tax -- this may have a limited impact. But for everyone else, this means paying more out of pocket.

And if you are one of the millions of Americans who sell goods via platforms like eBay and Etsy, it means having to collect and remit sales taxes in a mind-bending array of seller-buyer combinations. As the ruling points out, there are well over 10,000 state, city and local sales-tax jurisdictions in the country, and the responsibility for figuring out how much tax to collect and where to send it ultimately will rest on sellers.
That could put a significant chill on the peer-to-peer e-commerce economy, although the plaintiff in the case, South Dakota, exempts sellers who earn less than $100,000 or conduct fewer than 200 transactions a year. But each state will likely have its own unique set of exemptions, and it's hard to imagine even dedicated crafters and mom and pop e-tailers grinding their way through that menacing regulatory jungle to stay on the right side of the law.

The states argue that they're losing big bucks due to the unique tax break provided to online vendors -- as much as $33 billion a year, according to their estimates. And bricks-and-mortar stores, who are subject to taxes every time they ring up a charge on the register, have also lobbied for a level tax playing field.
But the original argument for exempting out of state online vendors from taxation, as decided by the Supreme Court 26 years ago in the case of Quill Corp v. North Dakota, was something known as the "Dormant Commerce Clause" -- which holds that without a federal law holding otherwise, state laws that encourage in-state transactions over cross-state ones should be struck down, because they inhibit free and open interstate commerce.

That's even truer today, as the number of tax jurisdictions and unique local regulations have continued to multiply. And while the plaintiffs in this case have argued that sophisticated software can manage the tracking and remittance of taxes on behalf of small vendors, that software is likely to be easily accessible only to the major online platforms -- that is to say, the likes of Amazon (which has already begun gearing up to provide "taxation as a service" to its Marketplace sellers) and eBay, companies valued at $150 billion and $67 billion.

But individual vendors who'd prefer to not be dependent on the whims and tyrannies of bigger enterprises are out of luck.

The court's concurring and dissenting lineups reflect the weird tensions and conflicting priorities inherent in the case: The majority included Justices Anthony Kennedy and Ruth Bader Ginsburg — consistently the most progressive member of the court — alongside hard-conservative Justices Samuel Alito, Clarence Thomas and Neil Gorsuch. Meanwhile, Chief Justice John Roberts dissented, in tandem with liberal jurists Stephen Breyer, Sonia Sotomayor and Elena Kagan. According to the always essential SCOTUSblog, this is a lineup that hasn't yet been seen in the history of this court.

Read full article @
View Forum Post & Comments