US retailers have welcomed the US Supreme Court’s decision to take up a South Dakota case on whether online sellers can be required to collect sales tax the same as local stores, but urged Congress to address the issue through federal legislation.
The decision to revisit the “antiquated” online sales tax ruling was made on Friday (12 January), with the National Retail Federation (NRF) hailing the move as “encouraging”.
NRF president and CEO Matthew Shay said: “Retail is a dynamic industry that’s rapidly transforming. Unfortunately, antiquated sales tax collection rules have resulted in an uneven playing field that’s making it harder for Main Street retailers to compete in today’s digital economy. This is a basic question about fairness, which all of our members deserve whether they’re selling in stores or online.”
He added the group is hopeful the ruling will lead to a positive outcome that reflects the realities of 21st century commerce. “Congress should not sit on the sidelines as the Supreme Court considers this case,” he said. “It’s time to pass legislation to settle this critical issue once and for all. Even if the court rules in favour of a modern sales tax policy, legislation will still be needed to spell out how that would work.”
In November, NRF filed a friend-of-the-court brief urging the Supreme Court to take up an appeal brought by the state of South Dakota, saying the 1992 Quill Corp. v. North Dakota decision is outdated. In Quill, the court said sales tax laws across the country were too complicated for retailers to know how much tax to collect unless they were physically present in the customer’s state. NRF argued in November’s brief that computer software has made that concern obsolete today.
In addition to the case before the Supreme Court, NRF says it is continuing to support the Remote Transactions Parity Act, which would allow states to require out-of-state sellers to collect sales tax. Even if the Supreme Court were to allow that, NRF believes federal legislation is necessary to resolve details on how collection would take place rather than leaving it to each of the states to interpret the court’s ruling.
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