Sales Tax Revenue Isn't Collapsing

Marty Jackley

Marty Jackley

Technically, shoppers are supposed to record such purchases and pay the sales tax when they file state income taxes, but compliance rates are minuscule and enforcement nonexistent.

A 2009 study conducted by the University of Tennessee estimated the total loss of revenue from e-commerce transactions in Wyoming would amount to $28.6 million between 2009 and 2012.

In 1992 - two years before Amazon was founded - the court ruled that states could only require mail-order sellers to collect sales tax if those sellers had a physical presence in the state. North Dakota decision. (AP) Those arguments have landed at the court via South Dakota v. Wayfair, in which South Dakota hopes to topple.

The case sprung up when South Dakota passed a similar tax to Wyoming's, levying a 4.5 percent sales tax for retailers that made $100,000 in annual sales or more than 200 individual transactions in the state. Amazon - despite ongoing criticism from President Donald Trump - began collecting sales taxes from customers in all 45 states that levy them a year ago.

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"'Our states are losing massive sales-tax revenues that we need for education, health care, and infrastructure", South Dakota's Attorney General Marty Jackley told the U.S. Supreme Court Tuesday.

South Dakota is arguing that it is missing out on millions of dollars of sales taxes and that the 1992 decision provides an unfair advantage for online retailers over small, brick-and-mortar businesses. I believe South Dakota took the lead, put together a strong case to support our local businesses.

Some Supreme Court justices are sounding concerned about doing away with a rule that has meant consumers don't get charged sales tax on some online purchases. "Why should this court favor a particular business model?" he asked. Right now, if a business is shipping a product to a state where it doesn't have an office, warehouse or other physical presence, it doesn't have to collect the state's sales tax.

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