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Should Congress Act Before SCOTUS

Should Congress Act Before SCOTUS

Should Congress Act Before SCOTUS On Online Sales Taxes?

Source: Tax Foundation

Report: https://files.taxfoundation.org/20180313170453/Tax-Foundation-FF579.pdf

Key Findings

  • On April 17, 2018, the U.S. Supreme Court will hear arguments in South Dakota v. Wayfair, Inc., on the constitutionality of a South Dakota law requiring collection of the state’s sales tax by internet vendors with at least 200 transactions or $100,000 in sales to South Dakota residents.
  • The appellants in the case seek to overturn the Quill decision of 1992, which holds that states cannot force sales tax collection by vendors who do not have personnel or property in the state (the “physical presence” standard).
  • Contrary to claims that physical presence is the status quo standard, 31 of the 45 states with a sales tax have already expanded their state tax collection authority to sellers with no physical presence in the state.
  • Some of these laws are well-crafted, but many are not and are imposing significant and disparate compliance burdens on out-of-state sellers. To date, federal and state courts have upheld these laws, and there is strong likelihood that the U.S. Supreme Court will do so as well.
  • Congress may act before the Court does. The proposed Remote Transactions Parity Act (RTPA), sponsored by Rep. Kristi Noem (R-SD), would authorize states to collect sales taxes on internet purchases made by their residents, so long as the state adopts meaningful simplifications to their sales tax system. RTPA incorporates more taxpayer protections than earlier federal proposals and would ultimately make sales tax collection simpler and easier than payroll and income tax withholding or unemployment tax payments in states that choose to adhere to it.

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