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CCM Applauds Supreme Court Decision On Internet Sales Taxation; Urges State To Authorize Fair Sales Tax Treatment For All CT Retailers

CCM Applauds Supreme Court Decision On Internet Sales Taxation;  Urges State To Authorize Fair Sales Tax Treatment For All CT Retailers

Wednesday, June 27, 2018
Kevin Maloney, (203) 710-3486

The Connecticut Conference of Municipalities (CCM) today (Wednesday, June 27, 2018) applauded the U.S. Supreme Court for its recent decision on internet sales taxation in South Dakota v. Wayfair.

In this case, the Supreme Court ruled that states and local governments can require vendors with no physical presence in the state to collect sales tax. According to the Court, in a 5-4 decision, "economic and virtual contacts" are enough to create a "substantial nexus" with the state allowing the state to require collection. CCM’s national association, the National League of Cities, joined in the amicus brief of the State and Local Legal Center in support of South Dakota's tax system which requires that sales taxes be on internet based purchasers.

“CCM is calling on the Governor and General Assembly to enact legislation authorizing the fair sales tax treatment of all retailers in Connecticut, whether they operate remotely or in our towns and cities,” said Joe DeLong, CCM Executive Director. “Doing so will level the playing field for local retailers, create the opportunity for new economic development and foster property tax relief in towns and cities.”

The Court acknowledges back to top

Customers buying from remote sellers still owe sale tax, but they rarely pay it when the remote seller does not collect it.

To require a vendor to collect sales tax the vendor must still have a "substantial nexus" with the state. The Supreme Court found a "substantial nexus" in this case based on the "economic and virtual contacts" Wayfair has with the state. A business could not do $100,000 worth of business or 200 separate transactions in South Dakota "unless the seller availed itself of the substantial privilege of carrying on business in South Dakota."

Finally, the Court also acknowledged that questions remain whether "some other principle in the Court's Commerce Clause doctrine might invalidate the Act." But the Court cited three features of South Dakota's tax system that "appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement."