Online Taxation Without Representation

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The US Supreme Court is now considering a case that will reach all that sell goods and even services online.

In 2016, South Dakota (SD) passed a law that directed any business that had more than 200 separate transactions to customers in the state of SD to collect and pay sales tax.

This flew in the face of a ruling from decades ago called the Quill ruling. In that earlier case, the Supreme Court ruled that a state could only collect sales tax from a company if they had some physical presence inside the state in the form of employees, building, inventory or some other similar physical tie.

South Dakota, and now 41 other states waiting in the wings, are trying to find a way to pull online merchants into the sales tax system even if there is no physical presence.

The Supreme Court heard arguments on April 17th and has said that they will have an answer mid June 2018. Rumor so far is that the justices are split on the decision. Will it create an unfair burden on the small online merchant? Or does today’s technology make that concern moot? We’ll know more in a month.

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