The Information Technology and Innovation Foundation has issued a statement in response to the Supreme Court decision in South Dakota v. Wayfair, Inc. The case focuses on whether a state can require an out-of-state seller with no physical presence in the state to collect and remit sales taxes on goods the seller ships to consumers in the state.
“The Supreme Court has ruled that states may require out-of-state businesses to collect sales tax on consumers even if they do not have a physical presence,” said Information Technology and Innovation Foundation Vice President Daniel Castro in the statement. “The ruling is the right step forward for the digital economy. E-commerce has grown up.”
The Information Technology and Innovation Foundation is a research and educational institute. ITIF’s mission is to promote policy that accelerate innovation and boost productivity to spur growth, opportunity, and progress. Castro is also director of ITIF’s Center for Data Innovation.
In 2015, U.S. Secretary of Commerce Penny Pritzker appointed Castro to the Commerce Data Advisory Council.
Castro writes and speaks on a variety of issues related to information technology and internet policy.
In Thursday’s ITIF statement on the digital economy and e-commerce, Castro went on to say that there has been a growing need to reform the existing system for collecting sales taxes from online and out-of-state retailers.
He also said the “ruling ensures that major online businesses cannot operate as virtual sales tax havens, allowing consumers to avoid paying their fair share of sales taxes and unfairly competing with other online and brick-and-mortar retailers.”
Castro noted that not all states have participated in the efforts to streamline their sales taxes systems and urged a level playing field for online businesses and e-commerce.
“Congress has had many chances to address this issue, but it has failed to act decisively to resolve this problem,” he said. “During this time, states have struggled to collect sales tax revenue from many online businesses and consumers even as these states have worked together to simplify and harmonize their sales tax systems.”
He also said policymakers should “encourage states to streamline their sales tax systems before requiring out-of-state sellers to collect sales taxes so as to minimize compliance costs, which will ultimately be passed on to consumers,” Castro said.
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