Published: Sat, June 23, 2018
IT | By Lester Massey

Avalara stock soars following Supreme Court e-commerce sales tax decision


This ruling signals how much the internet has matured.

For those who tend to patronize the biggest retailers, the ruling may not make much of a difference.

"For the consumer, this means an increasing array of options both in-store and online, with competition for their business based on price, service, selection and value - not special tax treatment", she added. "If you're buying online from Walmart or Target, you're still paying sales taxes".

The Illinois provision mirrors the South Dakota law at the center of the Supreme Court case, and is scheduled to go into effect on October 1.

Soon after the law went into effect, South Dakota sued online retailers Wayfair, Newegg and Overstock for allegedly failing to comply.

Businesses that sell through marketplace websites, such as third-party sellers on Amazon, and store inventory in the state at the time of the sale are also required to collect sales tax, according to the Illinois Department of Revenue.

He said the ruling was "good news, but it's not a windfall".

That's what eBay has long advocated.

On June 4, the last day of the special second session, Louisiana legislators rushed through a bill that used the same wording as a South Dakota law that was the subject to the constitutional challenge in the high court.


Now, as internet sales grow - they reached $123.7 billion in the first quarter of 2018, up nearly 4 percent over the previous quarter, according to the U.S. Department of Commerce - the court has made a different decision, citing studies that suggest states lose out on up to $33.9 billion a year in uncollected online sales taxes.

The Trump administration and more than 40 states participated in oral arguments in the case, South Dakota v. Wayfair, asking the court to support South Dakota's law that requires online retailers with a significant amount of business in the state to collect sales taxes.

"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", Justice Anthony Kennedy wrote in an opinion Thursday, saying the court's earlier decisions had been incorrect.

"So there's already a lot of sales tax collected online. Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", Roberts wrote in a dissent joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor.

"Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", Roberts wrote.

The Supreme Court's ruling was praised by a number of retail groups, organizations representing state and local governments, right-leaning think tanks such as the Tax Foundation and American Enterprise Institute, and a bipartisan group of lawmakers. "The current tax law was out of step with how commerce is conducted today".

In anticipation of the ruling, IL lawmakers included language in budget bills passed last month to allow the state to begin collecting sales tax from a broader swath of online purchases. "Twenty-three percent of Etsy sellers surveyed stated that they would stop selling to places in which they would incur such an obligation; five percent of sellers said they would close their businesses altogether".

In 2016, South Dakota passed a law requiring any retailer that conducts at least 200 transactions or has at least $100,000 in annual sales within its borders to collect sales tax, regardless of whether the business has a location in the state.

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