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States should watch for caveats in online sales tax decision, public finance researcher says

Thursday, June 21, 2018

LAWRENCE — While Thursday's divided Supreme Court ruling marks an important milestone in the ongoing shift in how the federal government has approached taxation of online sales, there are important caveats for states to consider, according to a University of Kansas researcher of public finance.

According to media reports, the ruling is a win for states that argued they were losing out on billions of dollars annually under two prior decisions that influenced online sales tax collection.

Jacob Fowles, associate professor in the KU School of Public Affairs & Administration, is available to discuss the decision's implications for states and local governments. Fowles teaches graduate courses on public finance and policy analysis. His broad research interests involve the application of organizational theories developed in public administration, economics and political science to the study of education finance and policy.

"While the decision is clearly a big win for state governments, it needs to be considered within a broader context. It was a 5-4 decision, which signals that the ruling may still be open to future challenge. Second, in many states, the previous standards for nexus meant that significant proportions of online sales were already subject to sales taxes before this ruling," Fowles said. "Finally, the court was clear in saying that a big factor in their decision in favor of South Dakota was the relative simplicity of the state's laws. So more complex revenue collection systems may still not be allowed."

To arrange an interview with Fowles, contact George Diepenbrock at 785-864-8853 or gdiepenbrock@ku.edu.