US Supreme Court holds hearing on online sales tax

The US Supreme Court heard oral arguments in South Dakota v. Wayfair, a case dealing with the state’s attempt to force out-of-state retailers to collect sales taxes when its residents make a purchase online. Internet retailers are only legally required to charge sales tax in states where they have a physical presence, an understanding that the Supreme Court adopted in Quill Corp. v. North Dakota, a 1992 ruling. When selling into states where they do not have a physical presence, the onus for paying the state sales tax is actually on the purchaser of goods who is supposed to keep of track of these purchases and pay the state taxes on them when they file their taxes each year. Few consumers ever do this, however, which means upward of $17.2 billion in sales taxes go uncollected each year. During the hearing, some issues were discussed, such as the whether the responsibility to change the current state of affairs belongs to the judiciary or to congress, which could enact a law on the issue. In addition to that, the impact that taxation could have on small business was also discussed.