Newspaper article Sarasota Herald Tribune

Fairness on Sales Taxes

Newspaper article Sarasota Herald Tribune

Fairness on Sales Taxes

Article excerpt

Court decision paves way for Florida to enforce online collections

The U.S. Supreme Court has given Florida another reason -- in addition to fairness -- to require virtually all Internet-based companies to collect the state's sales tax.

The court on Monday let stand a New York law that requires online sellers to charge and remit the state's sales tax -- even if the retailer does not have a traditional "physical presence," such as a factory or warehouse, in New York.

The law had been challenged by both and

New York's Court of Appeals ruled in March against the challengers, who then asked the Supreme Court to consider their appeal. The high court's justices declined this week to hear the case, offering no explanation -- as usual.

In some ways, it would have been helpful if the court had taken the case and provided a fresh perspective on state laws affecting interstate commerce.

A 1992 ruling by the Supreme Court limited the ability of states to require out-of-state retailers to collect sales taxes. The court said then, in effect, that only companies with a "physical presence" or some other strong connection to the state could be forced to collect.

Since 1992, however, technology and purchasing habits have changed dramatically. Online purchases now grow at a faster rate than sales at conventional "brick-and-mortar" stores. Amazon, the largest Internet retailer, had $61 billion in sales in 2012, compared with $5.3 billion a decade ago.

Lost revenue

The National Council on State Legislatures estimated that $23 billion in sales taxes went uncollected nationwide in 2012. Economists estimate that Florida failed to receive $454 million last year alone; that amount is expected to rise as online sales escalate.

The situation has been complicated by other recent developments. In New York, for instance, Amazon and Overstock hired local "affiliates" to promote their products and direct consumers to their websites -- in exchange for commissions. Plus, as Amazon expanded its distribution outlets, it agreed to collect sales taxes in the 16 states where those facilities are located. …

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