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The case for online sales tax: SCOTUS to begin hearing arguments

On April 17, the U.S. Supreme Court is scheduled to begin hearing arguments in a case that could change the landscape of online retailing.

The case of South Dakota vs. Wayfair Inc. 17-494 requests that online retailers be subject to sales tax the way their brick-and-mortar counterparts are, which would overturn a 1992 case that states retailers are not required to collect sales tax if they do not have a physical presence in the locality of the purchase.

The speculation is if the Supreme Court rules in favor of South Dakota, the other 44 states that collect sales tax will push to change their laws as well. In 38 states, there are local governments that have additional sales tax of their own.  

While Amazon is not part of the lawsuit, most people assume sales tax enforcement would affect the online giant the most. Amazon announced last year it would start collecting sales tax where applicable, although some, like Bloomberg Tech, have questioned the extent of which it does so.

Only Alaska, Delaware, Montana, New Hampshire and Oregon do not have state sales tax laws, although some Alaska localities collect sales tax.

Among the 45 states that have sales tax laws, rates range from 2.9 percent (Colorado) to as much as 8.25 percent (California). Many municipalities tack on their own sales taxes, however.

Averaged Total Sales Tax (Combined State and Local)

Highest

1. Tennessee   9.45%

2. Arkansas     9.26%

T3. Alabama   8.91%

T3. Louisiana  8.91%

5. Washington 8.89%

6. Oklahoma  8.77%

7. New York   8.48%

Lowest

40. South Dakota  5.83%

41. Virginia     5.63%

42. Maine        5.5%

43. Wyoming  5.47%

44. Wisconsin 5.43%

45. Hawaii       4.35%

46. Alaska       1.76% (no statewide law)

— Source: TaxFoundation.org.

Originally posted Monday, Apr. 16, 2018

Tags: taxes