Supreme Court Sales Tax Ruling

[A26B]

Good discussion.

The Supreme Court ruling has the potential to make the sales tax issue much more difficult than it needs to be to accomplish the same end result. South Dakota is now entitled to perfect the judgement by collecting any monies owed, and/or enforce future collections. The ruling does not mean that South Dakota or any other State must assess & collect future sales taxes in the same manner.

The problem:
South Dakota & other states want the tax revenue from sale of goods purchased by its residents. Fair enough, but requiring internet businesses to collect & remit that tax has two major problems; (1) Is the law feasibly enforceable? Big targets, like Amazon, eBay, etc are easy enough to find & economically justifiable to litigate, but what about the hundreds of thousands of little guys that make a living selling on the internet? How does a state collect a judgement from a resident of another state? (2)Assuming the little guys follow each states tax collection laws, its going to drive up the cost or drive the businesses out of their state, or even out of existence.

So, bad solution.

The better solution:
The simpler method for states that decide to pursue some form of sales tax occurring from internet sales into their respective state, is to create a "use tax". Pass a state law requiring residents to pay state sales tax on all goods purchased out of state that were shipped to them. Failure to report & pay state "use tax" is collectable by existing state tax agencies, just like sales tax, property tax, income tax, etc & they have the means to collect without all the litigation.

"Use tax could also contain provisions for chain stores like Wal Mart. Buy from Wal Mart on the internet & IF they have a store in the customers state, applicable sales tax is charged by Wal Mart just as if you went to Wal Mart to make the purchase.

In summary, the Supreme Court only upheld South Dakota v MayFair, but did create the case law for other states to follow at their own prerogative. What needs to occur is for states to adopt a form of tax collection that is practical, enforceable & has the least impact on internet economy. Arguably, sales tax (or "use tax") in some form, is valid to make up the loss in revenue to the states and equalization with brick & mortar businesses. The internet is an evolution of business. Businesses must adapt to survive.