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Senator Ridley says Supreme Court’s decision is good for Kentucky

Senator Ridley says Supreme Court’s decision is good for Kentucky

WMSK Staff

June 22nd, 2018

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Court Ruled that states may require online retailers to collect taxes

FRANKFORT – Today is a big day for Senator Dorsey Ridley, D-Henderson. A decision by the U.S. Supreme Court will allow states to require online retailers to collect tax revenue owed to them.
Senator Ridley has been working through the Kentucky General Assembly, its leaders and past governors to get to this stage, which will result in added revenue for the commonwealth.
“This is a big deal for Kentucky,” said Senator Ridley. “According to the Kentucky Bankers Association, if we move quickly, we will be able to collect approximately $400 million in added revenue for Kentucky during the first year following this decision.”
He added that this number is growing rapidly. In five years, it is estimated that this monetary amount could reach $2 billion plus over a five-year period and will continue to grow in subsequent years.
This is not a new or additional tax, but rather the collection of a tax that is already in place – line 27 of the Kentucky 740 Individual Income Tax Return.
“This income — that we should already be receiving according to Kentucky statutes — will have a great impact in Kentucky,” said Senator Ridley. “It could be utilized to assist our schools, such as providing textbooks for students and restoring funding for education initiatives and other services eliminated in the last budget as well as assist with the pension crisis.”
Congress also addresses this sale and use issue in the “Market Fairness Act,” which seeks to collect the taxes due each state by putting the responsibility on the internet retailer rather than the consumer.
“This also levels the playing field for Kentucky’s local retailers,” added Senator Ridley. “Without requiring online and catalog retailers to collect the sales tax, the local retailers are at a disadvantage. Our local businesses are important to the vitality of our communities. Our ‘mom and pop’ stores support our local Little League teams, but Wayfair does not financial sponsor teams not put money into the local park, senior citizens center or other community projects and activities. If anyone needs a hand up, it would be the local retailers.”
Today’s 5 to 4 decision came after more than 40 states and the Trump administration asked the Supreme Court to overturn the 1992 decision in Quill v. North Dakota that restricts states from collecting sales tax from retailers that do not a physical presence in those states. According to an article in The Washington Post, they said a decision in a case involving mail-order catalogues is obsolete in an era of e-commerce.
Justice Anthony M. Kennedy wrote today’s majority decision, saying that dramatic technological changes had made the court’s previous ruling obsolete, and that it unfairly disadvantaged traditional brick and mortar stores. Chief Justice John G. Roberts Jr. who wrote the dissent, stated, “The court should not act on this important question of current economic policy, solely to expiate a mistake it made over 50 years ago.”
The Supreme Court challenge was brought by South Dakota. The state passed a law requiring retailers with more than $100,000 in annual sales or 200 transactions in the state to pay a 4.5 percent tax, according to The Washington Post. Although technically consumers are required to pay sales tax on all purchases, it is practically impossible to collect without the retailer applying it at the point of sale.
“Kentucky faced this same issue of not being able to collect the taxes,” said Senator Ridley. “Without online retailers applying the tax at the point of sale, it is almost an impossibility to collect it. As we all know, online shopping is becoming more prominent. By not being able to have the online retailer apply the taxes at the point of sales, our state is losing money every day and brick and mortar stores are being treated unfairly.”
A Government Accountability Office audit said that states missed out on about $13.7 billion in tax revenue in 2017.
According to The Washington Post: “Retailers said overturning Quill would allow states to go far beyond the model legislation that South Dakota passed, requiring collection by retailers with a single sale in a state or perhaps trying to force the companies to comply retroactively. Congress, the retailers argued, could implement national rules rather than open up the companies to having to deal with the specific requirements of what they say are 12,000 taxing jurisdictions nationwide. They also said it was a problem that was shrinking rather than expanding.”
More retailers, such as Amazon, Walmart, Target and Apple, are collecting the taxes. However, others such as Wayfair, Overstock and Newegg, do not collect the taxes, according to the court briefs.
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