Supreme Court Opens Floodgates to Internet Extraterritorial Taxation in 5-4 Vote

BY Heather Greenfield
June 21, 2018

Washington — The Supreme Court has issued a ruling permitting states to tax e-commerce providers outside their own borders.

The case, pitting South Dakota against Wayfair, Overstock.com, and Newegg, was a closely watched dispute over whether these companies would have to collect taxes based on the hundreds of jurisdictions where their customers might live. While online stores already pay taxes in states where they have a physical presence, South Dakota and other states have sought to assess sales taxes based on where goods are sent.

The Computer & Communications Industry Association filed an amicus brief which argued that allowing states “to engage in extraterritorial taxation would burden internet services, and the startups and small businesses that rely on them.” The following can be attributed to CCIA President & CEO Ed Black:

“Today’s decision promises to subject small businesses reliant on e-commerce to new and burdensome tax obligations in states across the nation. As we approach the celebration of our nation’s independence, we should recall that taxation by a remote government was an injustice that animated the founding of our nation.”

“CCIA has serious concerns about the future implications for e-commerce if governments are empowered to tax those who reside beyond their borders.”

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