Corporate Law Blog

Taxing of online sales may be decided by Supreme Court

Kentucky is one of a minority of states that require collection of taxes for out-of-state online sales.  Known as the Amazon tax, deciding whether such taxes should be allowable could be taken up by the United States Supreme Court.

Two lower courts came to differing opinions as to whether such a tax should be allowed and this is the reason why the matter appears to be going to the nation's highest court.  However, it's not known whether the justices will want lower courts to fight over the issue more before the Supreme Court will actually hear arguments over the matter.

The Supreme Court had ruled in 1992 that states could not place a sales tax upon an out-of-state company because this could result in "an unconstitutional burden on interstate commerce." It must be remembered that this ruling took place before sales on the internet were a reality.

This earlier ruling did not rule out Congressional authority to put such a tax into place. In fact, the U.S. Senate has already passed a bill called the Marketplace Fairness Act that would allow states to collect these taxes online. However, it does not appear likely that Congress will approve this act allowing it to become law.

We will need to wait and see if the Supreme Court actually takes any action on this matter. Under any circumstances, business interests may still wish to speak to experienced business and corporate tax attorneys in the event that tax controversies do arise. Attorneys can help businesses prepare strategies to anticipate possible tax implications concerning particular actions. Attorneys can also provide representation should disputes lead to litigation.

Source: UPI, "'Amazon tax' headed for the justices?" Michael Kirkland, Nov. 10, 2013