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Next Year’s Holiday Shopping May Be Affected By SCOTUS Ruling


shutterstock_165672314Every once in a while, the U.S. Supreme Court gets the chance to decide a case with the potential to affect our everyday lives and pocketbooks. American Business USA Corp. v. Florida Department of Revenue is one such case. If SCOTUS grants certiorari, agreeing to hear the case, it’ll be deciding whether it’s fair for a state to impose sales tax on online sales when the products bought and sold never even enter the state doing the taxing. The case originates with a Florida-based floral website, but the decision could affect much, much more.

Picture it: a consumer in California places an online order for a floral arrangement sent to her grandmother in Texas. The flowers are grown in Alabama, and then sent directly from the greenhouse to Granny in Texas. Florida is never really part of the equation – but Florida sales tax is collected at the online checkout, because the corporation that owns the website is headquartered in Florida. Seems a little weird, right?

That’s precisely the argument made by American Business USA Corp., which brought this lawsuit alleging that the collection of Florida sales tax violates the due process clause and the dormant commerce clause. According to the company, the operation and administration of a website isn’t a significant enough connection to warrant a state’s imposition of sales tax on a transaction.   The lower courts in the State of Florida flip-flopped, until the Florida Supreme Court landed on a decision upholding the tax. American Business now wants the Supreme Court to get involved.

Should SCOTUS take up the case, it could have significant implications for e-commerce. Legally, only one state can impose sales tax on any transaction; a ruling declaring the right of a state to impose tax on an essentially out-of-state transaction is one that goes to the heart of states’ sovereignty. The flower company has argued:

“Just as a Florida court cannot issue a subpoena in California, a Florida agency may not tax a flower sale that is consummated in California.”

And none of this is just about flowers. Should SCOTUS side with the State of Florida, all online shopping could be affected. As American Business wrote in its brief:

“The State of Washington could monopolize the collection of sales tax revenues by imposing a Washington sales tax on all items purchased from, regardless of where in the world the items are produced, stored, or delivered.”

Ouch. Messing with Amazon hits us where it hurts. We’ll keep you posted as this case develops.  Reply briefs are due by January 12, 2017.

[Image via Shutterstock]

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Elura is a columnist and trial analyst for Law & Crime. Elura is also a former civil prosecutor for NYC's Administration for Children's Services, the CEO of Lawyer Up, and the author of How To Talk To Your Lawyer and the Legalese-to-English series. Follow Elura on Twitter @elurananos