US Supreme Court Rules on Internet Sales Tax Case

Internet Sales Tax
June 26, 2018

The US Supreme Court overturned decades old precedent that prohibited states from collecting sales tax on purchases made from out of state retailers. Currently, only retailers with a physical presence or “click through nexus” have had to charge sales tax on purchases their customers make. Now, Michigan could enact legislation forcing all retailers, no matter where they are located, to collect and remit sales tax to Michigan on purchases made by Michigan residents.

This could be a serious windfall of revenue for the state. While some view last week's ruling as one that would level the playing field between online retailers and brick-and-mortar stores, others view this as potentially debilitating to small online retail startups who do business in multiple states that will now have to comply with upwards of 14,000 sales tax jurisdictions.

The Michigan Chamber is vetting the Supreme Court ruling and will be working with the Chamber's Tax Policy Advisory Committee members to chart a path forward. Director of Tax Policy and Regulatory Affairs, Dan Papineau, will be meeting with Treasurer Khouri as soon as this week. 

We will be at the forefront of how to handle this unique situation, hitting the ground of the both the legislative and executive branches hard. However this shakes out in the end, we need to make sure future sales tax policies are fair, thoughtful, not retroactive, and not rushed. Major changes to every states’ sales tax statutes are coming and all businesses will need time to make adjustments. 

For more information on this subject, please contact Dan Papineau at dpapineau@michamber.com.