Friday, April 20, 2018

How Will the Supreme Court Rule on Across the State Border Online Sales Tax Pain?

Will the Supreme Court rule that online retailers have to collect sales taxes in states where they have no physical presence? In other words, if you live in New York and buy something online from a seller in  Alaska are the Supremes going to force the Alaska seller to collect an online tax from you and pay it to New York?

South Dakota v Wayfair is before the court and it will determine the outcome.

According to The Economist, going into the South Dakota v Wayfair hearing, conservative Justices Neil Gorsuch, Clarence Thomas and Kennedy all seemed inclined to rule in a way that would result in cross-state border online taxes. Conservative?

But the oral argument in the case added a surprise fourth justice to that list: Ruth Bader Ginsburg, the court's fiercest liberal. In her questioning of George Isaacson, the lawyer for several online stores including Wayfair, a homewares company, she repeatedly called an earlier SC case  Quill v North Dakota “obsolete”. Requiring an “out-of-state seller to collect tax on goods shipped in-state” is “equalizing sellers”, she said. Yes, equalizing consumer tax pain by requiring more pain for consumers is her apparent perspective on balancing things out.

It would take five justices to overrule Quill and require states to force out-of-state retailers to step up and collect taxes on online sales. It appears at least four are set to vote that way

 Justice Stephen Breyer may hold the key vote but get a load of the comment he made.
“When I read your briefs, I thought absolutely right”, he told the lawyer for South Dakota. “And then I read through the other briefs, and I thought, absolutely right. And you cannot both be absolutely right.” 
With a comment like this, there is no way to know how he will vote.

 The Supreme Court will hand down its tax pain decision in May or June.

-Robert Wenzel  


  1. Keep in mind that if the out-of-state seller presently has no duty to collect and pay over the sales tax to the customer's home state, the customer then has the obligation to pay the same amount of tax to his state taxing authorities as a use tax. Those are the people who voted for the home state sales/use tax in the first place but then don't pay it. My prediction is that the court will overturn the old rule arguing that computers have relieved the burden of calculating the tax and that the out-of-state seller is getting a benefit from the wonders of civilization in the customer's state provided by the government and therefore has an obligation to pay for that government.

    1. All good outcomes are due to the Govt. All bad outcomes are due to the faults of the private sector.

      How about reimbursing the private sector in the customer's state for its contribution ? No! That's impossibly illogical and stupid.