Indiana’s governor believes the Supreme Court’s June 21 ruling, which opened the door for states to collect sales tax from online retailers may give brick and mortar businesses a better chance to compete against web-based companies.
“A lot about our world and economy has changed in the 26 years since our nation’s highest court last ruled on this issue,” Gov. Eric Holcomb said in a statement. “With the incredible evolution of technologies and the growth of internet sales, this Supreme Court ruling will help level the playing field between our Hoosier-based companies that operate retail stores and out-of-state companies that sell products and services online in our state.”
Holcomb said the state still is examining the impact of the ruling “to better understand its implications for Indiana.”
The Supreme Court’s 5-4 decision, which upheld a 2016 South Dakota law, opens the door for states to require retailers to collect sales tax even if they do not have a physical location in the state. South Dakota’s two-year-old law requires online merchants with more than $100,000 in annual sales to state residents or 200 transactions with state residents to collect sales tax.
The June 21 ruling overturns a 1992 Supreme Court determination that prevented states from collecting sales taxes from online purchases.
The National Retail Federation in statement supported the Supreme Court decision.
“Retailers have been waiting for this day for more than two decades,” said Matthew Shay, CEO of the National Retail Federation. “The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it’s time for outdated sales tax policies to change as well. This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.”
Online retailer Wayfair in a statement said it appreciated the clarity the court’s ruling placed on the issue.
“Wayfair already collects and remits sales tax on approximately 80 percent of our orders in the United States, a number that continues to grow as we expand our logistics footprint,” the company said. “As a result, we do not expect (the June 21) decision to have any noticeable impact on our business, as it may on other retailers who do not currently collect and remit sales tax.”
Wayfair said it has supported a legislative solution to “level (the) playing field for brick-and-mortar and online retailers by permitting states to collect sales tax on online sales.”
“While we believe the court was not the ideal venue for creating this level playing field, we expect that (the June 21) decision will bring clarity and certainty to this issue,” Wayfair said.
The Information Technology and Innovation Foundation, a science and technology policy think tank, in a statement said there has been a need to reform the existing system for collecting taxes from online and out-of-state retailers so it’s fair and simple for businesses and consumers to comply.
“The ruling is the right step forward for the digital economy. E-commerce has grown up,” said Daniel Castro, vice president of the Information Technology and Innovation Foundation.
He said not all states have participated in efforts to streamline its sales taxes systems.
“Moreover, states have a history of enacting laws and regulations that discriminate against online businesses to boost local businesses,” Castro said. “Congress should continue to monitor and resist any attempts by states to place undue burdens on e-commerce, and policymakers should encourage states to streamline their sales tax systems before requiring out-of-state sellers to collect sales taxes so as to minimize compliance costs, which will ultimately be passed on to consumers.”
The justices’ opinion is available on the Supreme Court’s website.