Amazon Sales Tax: States Issues To Reach The Supreme Court?

The Amazon sales tax is being implemented in Tennessee, Indiana, and Nevada. But will this states issue go all the way to the Supreme Court?

As previously reported by The Inquisitr, the Amazon sales tax is perfectly fine with the company since they also supported the Marketplace Fairness Act:

“Amazon.com has long supported a simplified nationwide approach that is evenhandedly applied and applicable to all but the smallest volume sellers. [The Marketplace Fairness Act bill] will allow states with simplified rules to require sales tax collection by out-of-state sellers who choose to make sales to in-state buyers.”

Yep, they wanted a nationwide internet sales tax. Since Amazon has a “physical presence” in many states due to affiliates and warehouses, many online-only customers are already suffering from the Amazon sales tax. But having to juggle all the different rules just increases their overhead, so Amazon executives would prefer it be streamlined at the Federal level instead of being a patchwork of varying legislation.

An internet sales tax is also considered a major state revenue increase, more commonly known as a tax hike. In 2012, the US Department of Commerce reported $225.5 billion in online sales, which is only expected to increase over time, perhaps doubling within six years.

Congress estimates states would collect at least another $23 billion in taxes from an internet sales tax. For example, just the Tennessee the Amazon sales tax alone is expected to bring in about “$17 million in recurring state revenue,” and they also agreed to set up two distribution centers, which will create 3,500 jobs.

The only reason an Internet sales tax has not been implemented yearly is because of a 1992 Supreme Court ruling that decided states don’t have the legal authority to tax sales from vendors that don’t have a “physical presence” within their borders. Some argue this gives online retailers an unfair advantage against brick-and-mortar retailers and local mom and pop shops. But others point out that in addition to the Amazon sales tax, the online-only company always has to deal with shipping costs, which makes it difficult to compete with brick-and-mortar retailers.

Despite any bickering over the issue, by 2016 the number of online sales tax states will reach 20. In New York, the state’s high court ruled that Amazon and Overstock.com could be ordered to collect tax from online sales. After the ruling, Amazon and Overstock appealed to the US Supreme Court.

David C. Blum, a Chicago tax lawyer, says the United States Supreme Court should hear the case and settle the issue:

“The failure of the court to take and decide this case will create an additional burden on interstate commerce since the line between a physical and virtual presence will only continue to blur. We can only hope that the court will take other similar cases in the near future.”

Do you think internet sales taxes such as the Amazon sales tax should be implemented at all?