Question of sales tax on online purchases goes to high court

Law Journals

Online shoppers have gotten used to seeing that line on checkout screens before they click "purchase." But a case before the Supreme Court could change that.

At issue is a rule stemming from two, decades-old Supreme Court cases: If a business is shipping to a state where it doesn't have an office, warehouse or other physical presence, it doesn't have to collect the state's sales tax.

That means large retailers such as Apple, Macy's, Target and Walmart, which have brick-and-mortar stores nationwide, generally collect sales tax from customers who buy from them online. But other online sellers, from 1-800 Contacts to home goods site Wayfair, can often sidestep charging the tax.

More than 40 states are asking the Supreme Court to reconsider that rule in a case being argued Tuesday. They say they're losing out on "billions of dollars in tax revenue each year, requiring cuts to critical government programs" and that their losses compound as online shopping grows. But small businesses that sell online say the complexity and expense of collecting taxes nationwide could drive them out of business.

Large retailers want all businesses to "be playing by the same set of rules," said Deborah White, the president of the litigation arm of the Retail Industry Leaders Association, which represents more than 70 of America's largest retailers.

For years, the issue of whether out-of-state sellers should collect sales tax had to do mostly with one company: Amazon.com. The online giant is said to account for more than 40 percent of U.S. online retail sales. But as Amazon has grown, dotting the country with warehouses, it has had to charge sales tax in more and more places.

President Donald Trump has slammed the company, accusing it of paying "little or no taxes" to state and local governments. But since 2017, Amazon has been collecting sales tax in every state that charges it. Third-party sellers that use Amazon to sell products make their own tax collection decisions, however.

The case now before the Supreme Court could affect those third-party Amazon sellers and many other sellers that don't collect taxes in all states — sellers such as jewelry website Blue Nile, pet products site Chewy.com, clothing retailer L.L. Bean, electronics retailer Newegg and internet retailer Overstock.com. Sellers on eBay and Etsy, which provide platforms for smaller sellers, also don't collect sales tax nationwide.

States generally require consumers who weren't charged sales tax on a purchase to pay it themselves, often through self-reporting on their income tax returns. But states have found that only about 1 percent to 2 percent actually pay.

Related listings

  • Supreme Court strikes down Minnesota's voter clothing law

    Supreme Court strikes down Minnesota's voter clothing law

    Law Journals 06/15/2018

    The Supreme Court on Thursday struck down a Minnesota law that barred voters in the state from wearing a wide range of political hats, T-shirts and pins to the polls.Minnesota had defended its law as a reasonable restriction that keeps order at polli...

  • Woman accused of dismembering roommate appears in court

    Woman accused of dismembering roommate appears in court

    Law Journals 06/11/2018

    A San Francisco woman looked composed and lucid as she made her first court appearance on Friday on a murder charge accusing her of killing and dismembering her roommate, whose body parts prosecutors say were discovered in plastic bags at their home....

  • Detroit-area couple in court over control of frozen embryos

    Detroit-area couple in court over control of frozen embryos

    Law Journals 06/03/2018

    A Detroit-area woman seeking custody of as many as 10 frozen embryos is asking a judge to appoint a guardian over them while she clashes with her former partner for control.Gloria Karungi and Ronaldlee Ejalu have a daughter who has sickle cell diseas...

New York Adoption, Foster Care Litigation and Family Law

Rosin Steinhagen Mendel is a law firm dedicated to serving our clients in New York City, the surrounding counties in southern New York State, and in New Jersey, in the areas of adoption, foster care litigation, and family law.

We represent our clients in all types of proceedings that include termination of parental rights, permanency hearings, custody hearings, guardianship, administrative proceedings, and adoption. Our goal is to provide each of our clients with the best possible representation in all aspects of their cases, and clients appreciate our careful analysis of individual cases, through preparation and attention to detail. For over 35 years, our attorneys have represented adoptive parents, birth parents, foster parents, children, foster care agencies, and adoption agencies. We represent our clients in all types of proceedings that include termination of parental rights, permanency hearings, custody hearings, guardianship, administrative proceedings, and adoption.

Our goal for our lawyers is to provide each of our clients with the best possible representation in all aspects of their cases, and clients appreciate our careful analysis of individual cases, through our preparation and attention to detail.