Fairness cited in support of online sales tax decisionJune 25, 2018
By CANDY NEAL
The U.S. Supreme Court’s ruling last week that allows states to require out-of-state sellers to collect state sales taxes from customers is only fair, some local business owners say.
Fairness is the main word used by many when referring to the court’s opinion that was delivered Thursday.
“This does level the playing field, by 7 percent in our case,” said Jim Siebert, owner of Siebert’s in Jasper. “Every little bit helps.”
Thursday’s ruling reversed decisions that states said cost them billions of dollars in lost revenue annually. The 1992 decisions made it more difficult for states to collect sales tax on certain online purchases, and more than 40 states had asked the high court for action.
The cases the court overturned said that if a business was shipping a customer’s purchase to a state where the business didn’t have a physical presence — such as a warehouse or office — the business didn’t have to collect sales tax for the state. Customers were generally responsible for paying the sales tax to the state themselves if they weren’t charged it, but most didn’t realize they owed it and few paid.
In Thursday’s ruling on South Dakota v. Wayfair, Justice Anthony Kennedy wrote that the previous decisions were flawed.
“Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States,” he wrote in an opinion, joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch. Kennedy wrote that the rule “limited States’ ability to seek long-term prosperity and has prevented market participants from competing on an even playing field.”
Chief Justice John Roberts and three of his colleagues would have kept the court’s previous decisions in place.
“E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule,” Roberts wrote in a dissent, joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor. “Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress.”
Kathy Welp, owner of Ferdinand House of Flowers, agreed that all companies that sell goods in a state should have to collect that state’s sales tax.
“I know it is extra money for the consumer,” she acknowledged. “But we have to pay sales tax. It’s about being fair.”
While Welp’s company does most of its business in this state, Siebert’s does ship goods to other states.
“When people find things in our store that they can’t find in their own market, they order from us, and they pay the Indiana sales tax,” Siebert said. “And from my knowledge no one has complained.”
He said this ruling from the Supreme Court should not affect their customers much, if any.
“Granted, no one likes to pay sales taxes, or any taxes for that matter,” Siebert said. “But out out-of-state folks are already paying Indiana sales taxes. And I don’t think that is slowing them in purchasing from us.”
Indiana Gov. Eric Holcomb showed his approval of the ruling in a statement he released last week, adding that state officials are reviewing this ruling and its implications for Indiana.
“A lot about our world and economy has changed in the 26 years since our nation’s highest court last ruled on this issue,” Holcomb said. “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.”
The Associated Press contributed to this report.
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