The U.S. Supreme Court will consider freeing state and local governments to collect billions of dollars in sales taxes from online retailers, agreeing to revisit a 26-year-old ruling that has made much of the internet a tax-free zone. Heeding calls from traditional retailers and dozens of states, the justices said they will hear South Dakota’s contention that the 1992 ruling is obsolete in the e-commerce era and should be overturned. The court probably will hear arguments in April with a ruling by the end of its nine-month term in late June.
Total Retail's Take: A resolution to this hot-button issue is eagerly anticipated by retailers — traditional as well as online-only — on both sides of the debate. Your position on the internet sales tax law likely depends on the type of business you operate. For traditional brick-and-mortar retailers, the feeling is online retailers have had an unfair advantage in not being required to collect sales tax in the states in which they do not have a physical presence, and want to see the law overturned. For online and catalog retailers, particular SMBs, their argument is that the software and processing capability required to collect and remit sales taxes for 13,000 jurisdictions would cripple their businesses.
Furthermore, trade associations for the different retail groups have voiced their opinion of the Supreme Court's decision to review the internet sales tax law. The National Retail Federation, with a strong contingent of brick-and-mortar retail members, welcomed the Supreme Court's decision to review the law. On the opposite side of the aisle is the American Catalog Mailers Association, noting that "with more than 13,000 different jurisdictions and the addition of sales tax holidays the situation is even more complex, despite the maturation of the internet."