Supreme Court says states, local governments can require Internet retailers to collect sales taxes

Jun 21, 2018

The US Supreme Court has ruled states and local government can require Internet retailers to collect sales taxes.

The 5 to 4 ruling reverses a 1992 decision, in which the court ruled a retailer had to have a physical presence in that state to collect sales taxes.

North Dakota US Senator Heidi Heitkamp (D) was North Dakota’s Tax Commissioner at that time. She took that first case to court – it was called “Quill versus North Dakota.”

“We heard more and more from our main-street businesses, who said, ‘Look – it’s not fair. Why should I have to collect when I have a 10 percent, or at that time, 5-6 percent, disadvantage on what I sell?’” Heitkamp said.

Once she was elected to the Senate, Heitkamp said she worked with colleagues to have a Congressional fix to this. She said the Senate approved it, but the House wouldn’t take it up. So, she welcomes the high court’s ruling.

“Finally, after 26 years, main street business has been listened to," Heitkamp said. "They have a result. They now know they can go ahead, and their competitor is going to be held to the same level of responsibility they’re held to.”

Now that the US Supreme Court has ruled states and local governments can require Internet retailers to collect state and local sales taxes, North Dakota is ready.

State Tax Commissioner Ryan Rauschenberger said the 2017 Legislature passed a law, allowing those collections to begin as soon as the Supreme Court ruled, or Congress took action.

“So on-line retailers will very soon be registering with North Dakota," Rauschenberger said. "We’re geared up. We’re ready to go, to have all those influx of calls, and registering all of these national or world-wide on-line retailers. And those who haven’t been already will start to remit state sales tax here in North Dakota – state and local.” 

Rauschenberger said in 2014, it was estimated North Dakota was losing about $23 million in sales tax revenues per year.

“If you look at how much on-line retail has grown, we expect that to be closer to $40-$50 million," Rauschenberger said. "So, somewhere between $25 and $50 million per year of additional revenue will be generated.”

Some Internet retailers – such as Amazon – have already been collecting North Dakota sales taxes.