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As noted in a recent Bloomberg article, officials in states across the country are chafing under a U.S. Supreme Court precedent from 1992 that bars state authorities from requiring retailers without a physical nexus inside their borders to collect and remit sale taxes.

The effects of the ruling are many and material, and we sketch them below for our readers in Ohio and elsewhere.

For starters, the relief from tax collection duties confers an instant and material advantage on no-physical-presence entities vis a vis competitors with a physical nexus. They are spared time and effort that is expended by on-site rivals and can additionally sell their goods at comparatively cheaper prices.

And, of course, state governments lose a huge amount of revenue that would be steadily forthcoming if sales tax collections were made and passed along.

The implications of all that are far greater now than they were back in 1992, with the explosion of online retail shopping that has occurred in recent years and is now undercutting the prospects and profits of brick and mortar stores across the country.

Those entities collect and pay taxes, note some industry analysts and commentators, so why shouldn't online retailers?

Many critics of the high court's decades-old ruling are currently holding out hope that the tribunal will take a new case on appeal that is now dangling before the court. That case involves business litigation centrally concerning issues surrounding sales-tax collection duties by online retailers, along with a state statute that directly contradicts the court's 1992 ruling.

There doesn't seem to be any great certainty which way the court might lean in the event that it does wade into the matter. Bloomberg notes that the Trump administration has stated support for the idea that all retailers should be subject to the same sales-tax rules and policies.

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Gottschlich & Portune, LLP
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Dayton, OH 45402

Phone: 937-802-2397
Phone: 937-802-2397
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