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The U.S. Supreme Court has overturned a tax-related ruling from 1992, freeing state and local governments to collect billions in internet sales tax, according to a report from Bloomberg.
The 1992 ruling from Quill v. North Dakota, focused on mail-order and catalog purchases, requiring that a business must have a physical presence within a state in order for the state to collect sales tax.
Writing for the court, Justice Anthony Kennedy said the 1992 decision was “unsound” and obsolete in the e-commerce era. As a result of this new ruling, internet retailers can be requited to collect sales tax in states where they have no physical presence. Estimates say that this broader taxing power will now let state and local governments reap an additional $8 billion to $23 billion a year in revenue.
WIBC host Tony Katz spoke with Katie McAuliffe from Americans for Tax Reform, who told Tony the potential costs to small businesses could be enormous.
“This sets precedent for states to reach across their borders. And that lays the groundwork for politicians to say, ‘okay, you’ve travelled into my state, I should be able to tax all of your income’ or ‘your business has done some kind of a transaction with someone in my state, so therefore, not only do I get to collect sales taxes, but I also get to go after your business income too.’”
Click below to hear Tony’s full interview with Katie McAuliffe:
