Published
Nov 2, 2017
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NRF asks US Supreme Court to fix loophole in e-comm sales tax collection

Published
Nov 2, 2017

The National Retail Federation (NRF) has asked the US Supreme Court to hear the online sales tax case, claiming the current law is outdated and favors Amazon and Walmart over local South Dakota merchants.



Presently, the law requires South Dakota retailers who have a brick and mortar physical presence, as well as $100,000 of sales or 200 transactions with residents, to collect online sales tax. However, e-commerce retailers, including Amazon, Walmart and Target, can operate without doing so, thus driving business out of state.

NRF Senior Vice President and General Counsel Stephanie Martz said the organization has filed its brief with the Supreme Court to ensure all retailer members are treated fairly with respect to tax collection, noting that "because of ecommerce’s dramatic expansion, this discrepancy in tax treatment has become an issue of vital importance for all retailers.” Martz explained, "The current playing field is uneven and dependent on antiquated ideas about in-state and out-of-state commerce, and even the technology involved."

The US Supreme Court last ruled on the issue of state sales tax in 1992 in a landmark decision in Quill Corp. v. North Dakota. At that time, the mail order catalog business was the driving trend in retail, rather than e-commerce, and the court decided that state sales tax applied only to companies that actually were based in South Dakota.

Two years ago, when the court last interpreted Quill, it relied heavily on the physical presence factor, ignoring the progression of e-commerce. The current appeal by the NRF is a timely case that could help rewrite online sales tax collection in the age of e-commerce.

Outside of this case, NRF is supporting the Remote Transactions Parity Act which is a House bill that would grant states online sales tax collection authority while also protecting small businesses from potential compliance burdens.

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