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Supreme Court Won
Supreme Court Won't Hear Internet Sales Tax Case

By Seth Fitzgerald
December 2, 2013 2:21PM

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For five years, Amazon and Overstock have been battling New York state over the online sales tax issue. By refusing to hear Amazon's argument, the U.S. Supreme Court has allowed states to introduce laws requiring online retailers to collect sales taxes without any trouble.
 

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Various state governments have been trying to put regulations in place to require online retailers, such as Amazon, to collect sales taxes. Even though the companies and states have been arguing about these requirements, Amazon and other retailers have reluctantly started to include sales taxes in their purchases.

The last hope for online stores was to have the issue discussed in front of the U.S. Supreme Court but as of today, the Court has declined to hear the case and therefore, any state that wants to require online retailers to collect sales taxes will be able to do so.

An End To The Battle?

For five years, Amazon and Overstock have been battling New York state over the sales tax issue and now that the Supreme Court has refused to hear the case, online retailers appear to be out of luck. Most recently, Amazon lost its case in an appeals court after it was trying to make the argument that sales taxes should not be imposed on some of its products since Amazon itself has no presence within the state of New York.

The justices who decided not to hear the case have all but agreed with the New York court's ruling, forcing Amazon, Overstock, and others, to collect sales taxes on most of their products. Amazon and its competitors had claimed that the Supreme Court needed to see the case since they had received mixed rulings from various courts around the country and the regulations in place simply were not clear enough on the issue.

“There are billions of dollars of commerce for which we need guidance that we can rely upon,” said David C. Blum, a Chicago tax lawyer who has represented online retail stores including Amazon. He added: “We have evolved into an Internet world, and we need to know what’s taxable and what’s not.”

An Unfair Advantage

Traditional brick-and-mortar stores have long complained about online retailers not having to collect sales taxes. As states began to look at how they could require online stores to collect taxes, physical retailers stated that by not collecting sales taxes, online stores had the advantage.

Since 2008, New York State has had a law in place requiring online stores to collect sales taxes but as more states began to introduce similar laws, the issue became increasingly prominent.

By refusing to hear Amazon's argument, the Supreme Court has allowed the states to introduce these laws without any trouble. There are still a handful of states that have no sales tax, but these rulings will affect the vast majority of Americans.

Now that more states are requiring Amazon to collect sales taxes, physical stores will surely benefit. However, Amazon is looking to make its services even better by offering Sunday delivery and faster shipping times to keep customers from becoming angry because they have to pay sales taxes on their purchases.
 

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