Page 25 - ARUBA TODAY

BUSINESS Monday 16 april 2018
A25

Clicking 'checkout' could cost more after Supreme Court case

By JESSICA GRESKO lenging the Supreme Court
Associated Press precedents. The state, con-
WASHINGTON (AP) — Sales ceding it could win only if
Tax: $0. the Supreme Court revers-
Online shoppers have got- es course, has lost in lower
ten used to seeing that line courts.
on checkout screens be- South Dakota says the high
fore they click "purchase." court's previous decisions
But a case before the Su- don't reflect today's world.
preme Court could change The court first adopted
that. its physical presence rule
At issue is a rule stemming on sales tax collection in
from two, decades-old a 1967 case dealing with
Supreme Court cases: If a catalog retailer. At the
a business is shipping to a time, the court was con-
state where it doesn't have cerned in part about the
an office, warehouse or burden collecting sales tax
other physical presence, it would place on the cata-
doesn't have to collect the log company. The court re-
state's sales tax. affirmed that ruling in 1992.
That means large retail- It's unclear how the justices
ers such as Apple, Macy's, might align on the question
Target and Walmart, which this time. But three justices
have brick-and-mortar — Neil Gorsuch, Clarence
stores nationwide, general- Thomas and Anthony Ken-
ly collect sales tax from cus- nedy — have suggested a
tomers who buy from them willingness to rethink those
online. But other online sell- decisions. Kennedy has
ers, from 1-800 Contacts to written that the 1992 case
home goods site Wayfair, was "questionable even
can often sidestep charg- when decided" and "now
ing the tax. In this April 13, 2018, photo, packages from Internet retailers are delivered with the U.S. Mail in a harms states to a degree
More than 40 states are apartment building mail room in Washington. far greater than could have
asking the Supreme Court Associated Press been anticipated earlier."
to reconsider that rule in a "Although online businesses
case being argued Tues- ny, accusing it of paying of that tax if out-of-state "For small businesses on may not have a physical
day. They say they're losing "little or no taxes" to state sellers had to collect it, tight margins, these costs presence in some states,
out on "billions of dollars in and local governments. and states say software has are going to be fatal in the Web has, in many
tax revenue each year, re- But since 2017, Amazon has made sales tax collection many cases," said Andy ways, brought the average
quiring cuts to critical gov- been collecting sales tax in simple. Pincus, who filed a brief on American closer to most
ernment programs" and every state that charges it. Out-of-state sellers dis- behalf of eBay and small major retailers," he wrote in
that their losses compound Third-party sellers that use agree, calling it costly and businesses that use its plat- suggesting the days of in-
as online shopping grows. Amazon to sell products extraordinarily complex, form. consistent sales tax collec-
But small businesses that make their own tax collec- with tax rates and rules that The case now before the tion may be numbered. "A
sell online say the complex- tion decisions, however. vary not only by state but Supreme Court involves connection to a shopper's
ity and expense of collect- The case now before the also by city and county. For South Dakota, which has favorite store is a click away
ing taxes nationwide could Supreme Court could af- example, in Illinois, Snick- no income tax and relies regardless of how close or
drive them out of business. fect those third-party Ama- ers are taxed at a higher heavily on sales tax for rev- far the nearest storefront."
Large retailers want all busi- zon sellers and many other rate than Twix because enue. South Dakota's gov- q
nesses to "be playing by the sellers that don't collect foods containing flour don't ernor has said the state los-
same set of rules," said Deb- taxes in all states — sell- count as candy. Sellers say es out on an estimated $50
orah White, the president ers such as jewelry website free or inexpensive soft- million a year in sales tax
of the litigation arm of the Blue Nile, pet products site ware isn't accurate, more that doesn't get collected
Retail Industry Leaders As- Chewy.com, clothing re- sophisticated software is by out-of-state sellers.
sociation, which represents tailer L.L. Bean, electronics expensive and that collect- In 2016 the state passed a
more than 70 of America's retailer Newegg and inter- ing tax nationwide would law requiring those sellers
largest retailers. net retailer Overstock.com. also subject them to poten- to collect taxes on sales
For years, the issue of Sellers on eBay and Etsy, tially costly audits. into the state, a law chal-
whether out-of-state sell- which provide platforms
ers should collect sales tax for smaller sellers, also don't
had to do mostly with one collect sales tax nation-
company: Amazon.com. wide.
The online giant is said to States generally require
account for more than 40 consumers who weren't
percent of U.S. online retail charged sales tax on a pur-
sales. But as Amazon has chase to pay it themselves,
grown, dotting the country often through self-reporting
with warehouses, it has had on their income tax returns.
to charge sales tax in more But states have found that
and more places. only about 1 percent to 2
President Donald Trump percent actually pay.
has slammed the compa- States would capture more