The American Lighting Association (ALA) joined several prominent industry trade groups in filing an amicus brief to the Supreme Court of the United States to support the State of South Dakota in the case of South Dakota v. Wayfair – a case about the collection and remittance on sales tax from internet companies.
In addition to ALA, the collective group includes the American Supply Association, the American Veterinary Medical Association, the Auto Care Association, the Home Furnishings Association, Jewelers of America, the National Association of Electrical Distributors, the National Association of College Stores, the National Ski and Snowboard Retailers and the National Sporting Goods Association.
Currently, states are unable to require businesses without a physical presence in the state to collect and remit taxes, so the tax often is not paid. This sales tax loophole creates a price disadvantage for local brick-and-mortar businesses.
The amicus brief was written to bring to the court’s attention points of view that would not otherwise be brought to its attention by the parties in the case. ALA has long championed such efforts to support lighting retailers, who are currently dealing with the burden placed on them by the practice known as showrooming, the ongoing trend of consumers receiving the benefit of ALA members’ training and knowledge, only to then go online to purchase products.
“ALA’s retail members have spent considerable time and financial investments to develop and train their staff for the benefit of customers,” said ALA Vice President, Government Engagement Michael Weems. “Revenue lost because of the showrooming phenomenon is hurting long established, family-run businesses. Companies are closing their doors. Jobs are being lost. If a change to the status quo does not come, the long- term results will have a significant impact on the businesses and the communities they serve.”
In 2016, lawmakers in South Dakota passed a bill which became law requiring internet companies doing more than $100,000 in annual sales to collect and remit sales tax regardless of whether the company has a physical presence in the state.
Internet retailers Wayfair, Overstock.com and Newegg sued the state and won a ruling from the Supreme Court of South Dakota in September of this year. The state court ruled in favor of internet sellers, citing the 1992 case in which the U.S. Supreme Court ruled in favor of Quill Corporation in Quill v. North Dakota, a case that predated the explosion of internet sales. In this ruling, the U.S. Supreme Court stated that a business must have a physical presence in a state for that state to require it to collect sales taxes. However, the court explicitly stated that Congress can overrule the decision through legislation. Legislation is pending in both the U.S. Senate and the House of Representatives.
ALA has long supported the work of the marketplace fairness coalition, which includes developing responsible legislation such as Marketplace Fairness Act and the Remote Transactions Parity Act, two bills that would allow states to close this loophole.
