U.S. Supreme Court Revisiting 1992 Ruling in order to Begin Collecting Internet Sales Tax

Multi State – The United States Supreme Court will revisit a 26 year-old ruling that has made the internet mostly a tax free zone in order to consider allowing state and local governments to collect billions of dollars in sales taxes from online retailers.

The original ruling was put into effect in 1992 but many are arguing that the ruling is now obsolete in the now e-commerce era.

According to the Government Accountability Office, if allowed to require sales tax from online and remote merchants, states and local governments could have collected up to an additional $13 Billion in sales taxes for 2017.

Online retailers, such as, Amazon.com Inc. will be affected by a new ruling.  Amazon is already currently charging sales taxes when selling its’ own merchandise, however, almost half of Amazon’s sales are from third party retailers.

In the 1992 case ruling of Quill vs. North Dakota, it was determined that a mail order company can only be forced to collect sales taxes in states where the company has a physical presence.

In 2016, South Dakota passed a law with the idea of overturning the Quill decision.  The law requires retailers with over $100,000 in annual sales to pay a 4.5% tax on purchases.

The court is expected to hear arguments in April with a ruling by the end of its’ nine month term in late June.

About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts (DDH LLC) specializes in sales/use tax audit consulting and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At DDH LLC we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

For sales/use tax compliance questions or audit-related concerns, we are here to help!

Contact us at Davis Davis & Harmon LLC or call 972-488-5000

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