State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.
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SCOTUS to consider a case that could net states sales revenue

Written by Katie Meyer, Capitol Bureau Chief | Jan 17, 2018 3:55 AM
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As online shopping has supplanted brick-and-mortar stores, it has become more difficult for states to collect sales taxes. (Photo by AP)

 

(Washington DC) -- The US Supreme Court is slated to hear a case that could change how online sales are taxed.

It's an issue that might sound a little familiar to Pennsylvanians--lawmakers tried to improve online sales tax collections in last year's budget, as the state struggled to find enough revenue balance its books.

The case is likely to come before the high court in April.

Justices will decide whether to uphold a South Dakota decision maintaining a long-held standard: if a seller doesn't have a physical location in a state, they don't have to charge sales taxes there.

It's an issue that may have lost state and local governments around $13 billion last year, according to the Congressional Government Accountability Office.

When states--like Pennsylvania--have tried to fix the tax loophole themselves, they've had mixed success.

The commonwealth updated state law to require online sellers like Amazon to either collect state sales taxes, or send tax notices with purchases.

But such laws are susceptible to legal action and don't always give states enough power to get the money they're due. 

The Department of Revenue said a favorable Supreme Court Decision would increase the state's power to get that money, and could "create a situation where brick and mortar stores have the opportunity to compete on an even playing field with online sellers."

Some free-market proponents oppose the expansion--arguing that among other things, it's not fair to hold online marketplaces liable for sales they only facilitate. 

Published in News, State House Sound Bites

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