UPDATE: Locals react to Supreme Court’s internet sales tax decision
The U.S. Supreme Court’s decision Thursday allows states to collect sales taxes on purchases from online retailers, even if that company doesn’t have a physical presence in that state.
States have said they’ve lost billions of dollars annually in revenue because they couldn’t collect sales tax on certain online purchases.
"To overturn a decision like this is incredibly rare," said UNL law professor Adam Thimmesh
He said the last time this issue came before the Supreme Court was in 1992—when it doubled down on its stance about the physical presence rule.
But he said as the economy evolved, that changed some attitudes.
"Supreme Court today recognized that that physical presence rule was greatly limiting states in their ability to impose sales taxes on a growing amount of commerce that’s conducted online," Thimmesh said.
Mayor Chris Beutler said the court’s decision is good and fair. He said not only would cities get a piece of the state sales tax, but it will also even the playing field for local, brick–and–mortar businesses.
"Everybody will have to pay the tax," Beutler said. "All of the out–of–state retailers will have to pay the tax. And so the advantage they had over local vendors will disappear."
But the state would benefit most, if the legislature passes a law implementing the Supreme Court decision.
Lawmakers were debating one such bill from Sen. Dan Watermeier this last session. That bill was stalled by a filibuster.
Professor Thimmesh said the next chance for that bill might not be until January, but the legislature could call a special session to try and implement the internet sales tax.
The U.S. Supreme Court overruled two decades–old decisions today.
It allows states to collect sales taxes on purchases from online retailers, even if that company doesn’t have a physical presence in that state.
States have said they’ve annually lost billions of dollars in revenue because they couldn’t collect sales tax on certain online purchases.
Lincoln Mayor Chris Beutler said the court’s decision is good and fair.
"Sales taxes available to the cities declined consistently over time because of the growth of online sales," Beutler said. "Taxes are not paid on online sales…and so, it was a constant drain on resources."
On Thursday, Gov. Ricketts issued a statement about the Supreme Court’s decision, saying any revenue increases from enforcing sales tax laws should be steered toward property tax relief.
The state won’t be collecting right away. The legislature still has to pass a law implementing what the court decided.