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Supreme Court to Hear Online Sales Tax Argument

13 January 2018

The U.S. Supreme Court on Friday agreed to decide whether to let states require online retailers to collect billions of dollars in sales tax, taking up South Dakota's dispute with three e-commerce companies.

The high court could hear oral arguments in the case as soon as April.

The justices on Friday took up that call, explicitly agreeing to consider whether the earlier high-court precedent should be overruled.

In ruling against the maps a year ago, a three-judge panel in San Antonio sided with the voting and minority rights groups who accused Republican lawmakers of discriminating against voters of color, who tend to vote for Democrats, in drawing the maps. By contrast, the Wisconsin and Maryland cases allege excessive political gerrymandering - designing districts to benefit one party over the other.

The state has been operating under temporary court-ordered maps drawn for the 2012 elections and adopted by the Legislature in 2013. Lawyers for the state on Friday asked the justices to block the ruling for the 2018 election cycle.

The court agreed on a 5-to-4 vote, with the court's four liberals objecting. The case is Abbott vs. Perez.

The sales-tax case represents a consolidated effort by states to overturn a 1992 Supreme Court decision upholding a constitutional rule that barred requiring vendors to collect sales tax on mail-order sales unless the business had a "physical presence" in the state.

But the explosion of internet sales has put pressure on Congress and the court to reconsider the issue.

Also joining the push for Supreme Court review were brick-and-mortar retailers that say it undermines fair competition that they have to collect sales taxes but their online rivals don't. Various trade groups and 35 states had urged the high court to take up South Dakota's appeal.

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Companies now "can instantly tailor their marketing and overnight delivery of hundreds of thousands of products to individual customers based on their IP addresses; these companies can surely calculate sales tax from a zip code". The state estimates that in the current fiscal year it would fail to collect around $50 million in revenue that it would be able to obtain if it could force online retailers to collect sales tax.

They said that the number of taxing jurisdictions in the United States is estimated at between 10,000 and 16,000.

They added that the court "should not allow the government to use its institutions as a tool to persecute its political enemies when there is not any plausible justification for the lawsuit".

State Sen. Kel Seliger, an Amarillo Republican who chaired the Senate redistricting committee following the 2010 U.S. Census, said in August that he was puzzled by a federal court ruling to invalidate two congressional districts.

But Congress has struggled for years to come up with a plan, even though some online retailers have said that they would welcome a national remedy rather than deal with individual states.

The Supreme Court granted cert in South Dakota v. Wayfair, Inc. today, paving the way for a possible overturn of Quill Corp. v.

Such officers must be appointed by the president, the head of a federal agency or by a court.

South Dakota passed legislation in 2016 requiring merchants to collect and remit the taxes, then sued a handful of large online retailers to set its test case in motion.

Supreme Court to Hear Online Sales Tax Argument