On Thursday, in a 5-4 decision, the Supreme Court handed down a major victory in South Dakota v. Wayfair, concluding that state and local governments can require remote retailers with no physical presence in the state to collect and remit sales taxes. After years of congressional inaction, the decision brings cities one significant step closer toward achieving Main Street fairness.
Every city leader should have questions about Wayfair‘s impact. These initial reactions and answers will help them catch up quick:
In deciding the case, Justice Kennedy wrote the majority opinions and was joined by four other justices: Ginsberg, Alito, Gorsuch (filed a concurring opinion) and Thomas (also filed a concurring opinion). Justice Roberts penned the dissenting opinion and was joined by three other justices: Breyer, Sotomayor and Kagan.
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Going forward, having a substantial economic presence in a state will be sufficient grounds for a state and local government to require a retailer to collect and remit sales taxes. This is a huge step forward in our nearly three-decades-long fight to close the online sales tax loophole.Despite some reports, however, this is not about imposing new taxes — but rather about closing an unfair tax loophole that has cost state and local governments billions in lost revenue each year. In fact, the International Council of Shopping Centers and the National Conference of State Legislatures have estimated that the loophole cost state and local governments $26 billion in lost revenue in 2015.
(Read more: CitiesSpeak)