NATIONWIDE – The United States Supreme Court is hearing arguments in a case that could give states new power to collect sales tax when you buy something online.
- Online purchases would collect sales tax
- Supreme Court divided over a decision
- Decision expected this summer
In a Supreme Court showdown over shopping, justices heard arguments on Tuesday about whether internet merchants should collect sales tax regardless of where they are located.
“All we’re asking the Supreme Court is to make it a level playing field and we are asking to treat everybody the same,” said South Dakota Attorney General Marty Jackley.
The state of South Dakota is asking the justices to overturn a 1992 ruling that found businesses can only be forced to collect sales taxes in states that have a physical presence.
For small online business owners like Kathy Terrill, the online tax could mean a major headache.
“It will make my life and my days longer, it will make my life more expensive,” said Terrill.
Terrill sells women’s clothing and Broadway collectables on Ebay, Etsy and on her own website. Currently she only collects sales tax in the state of New York where she lives, but a decision in this case could change that.
“I am then mandated to collect sales tax for 46 states and it’s not just 46 states, it’s thousands of sales tax jurisdictions, they are not just one but there are multiple in each state. That’s a mind boggling prospect,” said Terrill.
In Tuesday’s arguments, Justices Anthony Kennedy, Neil Gorsuch and Ruth Bader Ginsburg appeared open to overturning the 1992 ruling.
However, Justices Sonia Sotomayor and Samuel Alito indicated that they would like to leave the issue up to Congress.
“The right solution is for Congress to look at this issue, with close scrutiny and the kind of care and balance that can go into legislation,” said George Isaacson, Attorney for Wayfair Inc.
No matter what the court decides, Congress will get the final word. Lawmakers at the federal level have not acted, which is why opponents of the physical presence rule said the court needs to step in.
What I told the court is Congress has had 26 to fix this problem. I just simply ask this court to not leave it up to Congress, it’s too important,” said Jackley.
A decision is expected to come this summer.