Revisiting an ‘antiquated’ online sales tax rule
The National Retail Federation welcomed the U.S. Supreme Court’s decision to take up a South Dakota case on whether online sellers can be required to collect sales tax the same as local stores, but it also urged Congress to address the issue through federal legislation.
“Retail is a dynamic industry that’s rapidly transforming,” NRF president and CEO Matthew Shay said. “Unfortunately, antiquated sales tax collection rules have resulted in an uneven playing field that’s making it harder for Main Street retailers to compete in today’s digital economy. This is a basic question about fairness, which all of our members deserve whether they’re selling in stores or online.”
“The fact that the Supreme Court has decided to reconsider its outdated ruling is encouraging, and we are hopeful it will lead to a positive outcome that reflects the realities of 21st century commerce,” Shay said. “Congress should not sit on the sidelines as the Supreme Court considers this case. It’s time to pass legislation to settle this critical issue once and for all. Even if the court rules in favor of a modern sales tax policy, legislation will still be needed to spell out how that would work.”
In November, the NRF filed a friend-of-the-court brief urging the Supreme Court to take up an appeal brought by the state of South Dakota, saying the Quill Corp. v. North Dakota (1992) decision is outdated. In Quill, the court said sales tax laws across the country were too complicated for retailers to know how much tax to collect unless they were physically present in the customer’s state. NRF argued in November’s brief that computer software has made that concern obsolete today.
In addition to the case before the Supreme Court, NRF is continuing to support the Remote Transactions Parity Act, which would allow states to require out-of-state sellers to collect sales tax. Even if the Supreme Court were to allow that, NRF believes federal legislation is necessary to resolve details on how collection would take place rather than leaving it to each of the states to interpret the court’s ruling.