Supreme Court Rules That Online Sellers May Collect State Sales Taxes On Purchases

Jun 21, 2018
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DAVID GREENE, HOST:

Big decision from the Supreme Court this morning - and it will impact you if you are one of the millions of Americans who likes to do shopping online. The court has ruled that online retailers must collect state sales taxes on consumer purchases. And I want to bring in NPR legal affairs correspondent Nina Totenberg who's with us this morning.

Hi, Nina.

NINA TOTENBERG, BYLINE: Hi, there.

GREENE: Well, this sounds significant both for states who, I guess, are going to bring in a lot more money potentially and consumers who are going to be charged more. Is that how this is basically breaking down?

TOTENBERG: That is exactly how it's breaking down. Now, there was a state statute. South Dakota brought this case. And there are some exceptions in South Dakota that the court noted. You have to have a business of a certain size, I think 200 employees or something like that. But for any even remotely sizable employer-seller is going to have to collect sales taxes for the states. And until now - the Supreme Court said based on decisions that were rendered, you know, 50 years ago and then again 25 years ago - until now, they haven't had to do that. And the court said, essentially, we were wrong. We didn't see the online revolution coming. And in our modern economy, that creates an unfair advantage for online sellers and a kind of tax shelter for them. And it deprives the states of needed revenue.

GREENE: So interesting. So this is really at least a majority of the justices saying that this is a whole new world, and the law has to apply differently when they're dealing with an economy they never really imagined.

TOTENBERG: Exactly.

GREENE: Well, so I understand some major retailers are celebrating this. I understand why state governments might be celebrating. But why retailers?

TOTENBERG: Well, imagine that you're a retailer in South Dakota. And let's say you have five stores in South Dakota, just for the sake of argument, and maybe another five in Montana and somewhere else. But people keep coming into your showroom. They look at your stuff, then they walk out. They buy it online, and they don't have to pay taxes. And that can be a substantial amount of money.

And so they are celebrating because they think the playing field has been leveled. And I guess I should say here, you know, that Congress could have fixed this long ago. But anti-tax lobbyists, people who don't like taxes and want to limit them as much as possible, have pressured Congress. And Republicans in particular have bottled up any equalizing legislation.

GREENE: Oh, this is so interesting. So you're talking about stores that don't necessarily rely on online shopping might now say like, hey, this is going to help us compete with the Amazons of the world.

TOTENBERG: Exactly. Amazon, as it happens, for the last few years, has been collecting sales tax because it has so many warehouses in so many places that it was just ridiculous to keep trying to differentiate itself. But - and there are a lot of big retailers who do collect taxes like that. But a lot don't. And, you know, Wayfair, who was the lead plaintiff in this case, does not. L.L. Bean doesn't. And so now the playing field is going to be equalized.

GREENE: Just a few seconds that we have left - this was a 5-4 decision but did not fall at all along the normal conservative-liberal alignment of the court.

TOTENBERG: No. Justice Kennedy who, as you know, is something of a swing justice, wrote the opinion for the court joined by liberal Justice Ginsburg and conservative Justices Alito, Gorsuch and Thomas. And the chief justice, a conservative, dissented with three of the court's liberals. And if I had 15 more seconds, I'd explain it. But I don't.

GREENE: (Laughter) But we'll hear from your reporting later on, I'm sure.

TOTENBERG: Thank so much.

GREENE: NPR legal affairs correspondent Nina Totenberg. Nina, thanks.

TOTENBERG: Thank you. Transcript provided by NPR, Copyright NPR.