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Struggling Retailers Call on High Court to "Level Playing Field" with Online Sellers

April 23, 2018, 08:00 AM
Filed Under: Retail

With many brick-and-mortar retailers struggling to stay afloat, industry representatives say the time has come for the U.S. Supreme Court to update the court’s landmark 1992 ruling on the issue and require online sellers to collect sales tax the same as local stores.

Last week the court heard oral arguments on a 2016 South Dakota law that requires online merchants with more than $100,000 in sales to state residents or 200 transactions with state residents to collect sales tax.

The law was struck down last year by South Dakota’s highest court, which cited the Supreme Court’s 1992 Quill Corp. v. North Dakota decision. In that case, the justices said online sellers can only be required to collect sales tax in states where they have a physical presence such as a store, office or warehouse. Part of their reasoning was that there were more than 6,000 state and local sales tax jurisdictions across the country and that the regulations were too complex for a seller to know how much to collect unless they were doing business locally.

“This case is largely about whether collecting sales tax is an undue burden on interstate commerce,” the National Retail Federation President and CEO Matthew Shay said. “That might have been the case in 1992 but technology has eliminated that concern just as it has transformed the retail business and so much of the rest of our world. Today, there’s an app for that.”“

Representing retailers both large and small, NRF has been working with policymakers to rectify this disparity for nearly two decades,” Shay said. “We are very hopeful that the reason the justices have agreed to hear this case is that they want to update a ruling that has become antiquated in the light of developments over the past quarter-century. It’s time for the Supreme Court to clear the way for modern sales tax policy that will finally put all channels of retail – from stores to online – on a level playing field where everyone competes under the same rules. Online sellers who don’t have to collect sales tax have held an unfair price advantage over local retailers for far too long.”

NRF argued in a friend-of-the-court brief that technology has made the court’s concern obsolete, citing a wide variety of software available to automatically collect the sales tax owed, much of its available free or at low cost. Many online sellers today already collect sales tax from customers in multiple states, either voluntarily or because they have the physical presence that requires them to do so, NRF said. But other online sellers do not collect, and NRF said in a second brief filed with other retail groups last month that lack of uniform collection is “inflicting extreme harm and unfairness” on local retailers by “distorting the retail market in favor of absentee ecommerce.”







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