I-Team: U.S. Supreme Court case could impact how you shop online
PORTLAND (WGME) – Three Maine attorneys are getting ready for a trip to the United States Supreme Court.
They'll be part of a historic case that could change the rules for internet sales tax.
This is being called the most important sales tax case in decades.
At issue is whether states can require internet retailers to collect sales tax from customers and then send that money to the states.
The Supreme Court justices are set to hear arguments on both sides next Tuesday.
Right now when you shop online you may or may not be charged sales tax. Two decisions at the United States Supreme Court say unless a company has a physical location in a state, it doesn't have to collect sales tax.
"If the Court takes away the physical presence rule and requires all companies to collect sales taxes for all thousands of jurisdictions, it will be chaotic," said Lewiston attorney George Isaacson.
Isaacson, a partner at Brann & Isaacson, who also teaches law at Bowdoin College, is getting ready to go to Washington, D.C. to argue before the justices in the case of South Dakota v. Wayfair.
“South Dakota passed a law that says if you sell into the state, that is sufficient to require you to collect tax,” Isaacson said.
Maine passed a similar law that took effect last year. South Dakota Attorney General Marty Jackley said it's only fair since a lot has changed since the 1992 Supreme Court ruling.
“The internet didn't exist as it does today, so those justices would not have been able to consider what e-commerce has done, what technology has done,” Jackley said.
Isaacson and his partners, representing Wayfair, Overstock, and Newegg, believe the state laws are unconstitutional, by allowing state and local governments to tax outside their borders.
“That is a real potential barrier to interstate trade,” Isaacson said.
A win for South Dakota would mean all states could collect sales tax from internet retailers. Curtis Picard with the Retail Association of Maine hopes that happens.
“All we're asking for is a level playing field. It will put both brick and mortar and online retailers on a level playing field," Picard said.
But others like Etsy and eBay say a victory for South Dakota would actually hurt small businesses that sell online. Isaacson says the issue should be solved in Congress, not the Supreme Court.
“Congress can fashion legislation that is much more balanced,” Isaacson said.
Amazon is already collecting sales tax in all states.
It's important to note: If an online retailer doesn't collect sales tax from you, the tax is still due to the state, but it's up to you to actually pay it.
A ruling by the Supreme Court in the case is expected before the end of June.