-- Indiana will likely end up in court over an online sales tax law.
passed a law this spring claiming the state has a right to collect sales
taxes from companies using only online transactions, The Indianapolis Star
But a 25-year-old
Supreme Court case prohibits states from collecting sales tax from
businesses unless they’ve got a physical presence in the state.
This means states
are losing out on sales taxes, one of its largest sources of revenue. More
than 40 percent of Indiana’s $18 billion revenue in 2016 came from sales
Hershman, R-Buck Creek, who sponsored the Indiana bill, said he anticipates
“We welcome the
litigation,” Hershman said.
committee chair Luke Kenley, R-Noblesville, said he’s worried stores that
operate within Indiana and pay the 7 percent state sales tax are at a
“It’s becoming a
bigger problem and a bigger issue of fairness,” Kenley said. “It’s kind of a
big issue to our brick-and-mortar stores because they’re at a disadvantage
here, and they do something for the state by operating in the state and
employing people in the state.”
The new Indiana law
requires online retailers that make 200 separate transactions or have sales
totaling more than $100,000 annually in the state to collect and remit the
South Dakota passed
a similar law in 2016. Online companies Wayfair Inc., Overstock.com Inc. and
Newegg Inc. are suing the state. The case is being debated in South Dakota’s
top court and could make its way to the U.S. Supreme Court.
Opponents of online
sales tax, such as e-commerce businesses trade association NetChoice, argue
it would be “bureaucratic gymnastics” for companies to have to adhere to
differing tax codes in every city and state.
Indiana has made
agreements with nearly 2,000 companies, including Amazon, to collect some
online sales tax.