Trump Administration Backs States’ Bid to Collect Online Sales Taxes

The Trump administration on Monday said states should be able to require online retailers to collect sales taxes, backing an appeal by South Dakota at the U.S. Supreme Court that could mean billions of dollars in revenue for state coffers. South Dakota is asking the justices to overturn a 1992 Supreme Court ruling that companies with no physical presence in a state are not required to collect state sales tax on purchases. A lower court decision favored internet retailers Wayfair, Overstock.com and Newegg in the dispute. In a legal brief filed on Monday with the Supreme Court, the U.S. Department of Justice said the 1992 ruling may have to be overruled because it no longer fits with the rise of modern-day e-commerce in which online retailers can replicate the shopping experience of a physical store even where it has no physical property.

Total Retail's Take: This fiercely debated issue appears that it will soon have a resolution. On the one side of the aisle you have traditional brick-and-mortar retailers, from enterprise brands to mom-and-pop shops, who have argued for years that online retailers have an unfair pricing advantage since they weren't required to collect state sales tax. On the other side of the debate is online and catalog sellers, and primarily SMBs, which argue that forcing them to collect state sales tax will necessitate them to invest in costly software to properly collect and remit state sales tax. The Supreme Court will hear arguments in the case in April and make a decision by the end of June, when its current term ends. Until then, expect intense lobbying from trade groups on both sides of the debate, from the National Retail Federation on the side of states, to the American Catalog Mailers Association on the side of internet retailers.