The Retail Association of Maine is backing South Dakota against a lawsuit challenging that state’s efforts to collect sales taxes on online purchases made by state residents.

The association filed a “friend of the court” brief in support of South Dakota in the lawsuit being heard by the U.S. Supreme Court. The state passed a law in 2016 requiring sales taxes be collected on state residents’ internet purchases, but several online retailers, including Wayfair and, filed suit to challenge it.

The legal precedent for online sale tax collections has been a 1992 Supreme Court ruling that said retailers must only collect sales taxes in states where the retailers have a physical presence, such as a storefront or warehouse. The Supreme Court is scheduled to hear oral arguments in the South Dakota case in April and a decision is expected before the court’s term ends in June or July.

A total of 36 states and the District of Columbia have asked the Supreme Court to revisit online sales tax collections, and last year, the world’s largest online retailer, Amazon, agreed to collect sales taxes even in states in which it had no physical presence.

The Maine retail association estimates the state loses out on $40 million annually from untaxed online purchases.

Maine retailers argue that it’s unfair to require bricks-and-mortar stores to collect sales tax while many online retailers don’t. That gives the online retailers an unfair price advantage, said Curtis Picard, president and CEO of the Retail Association of Maine.

Often, he said, Maine retailers are visited by consumers who check out goods in person and then go online to order them and avoid the sales tax.

“That 5-1/2 percent is enough to have people do that,” he said.

Picard said the retail landscape has changed enough since the 1992 ruling that the high court should reconsider it.

“The internet is no longer in its infancy and consumers are choosing online platforms as additional retail channels,” he said. “A sale is a sale, and sales tax should be collected and remitted by both online-only and brick-and-mortar retailers” alike, he said.

“I believe that the Supreme Court has an opportunity to level the playing field for me and other retailers like me who have been at a disadvantage compared to internet retailers who aren’t required to collect sales tax,” said Tom Largay, a co-owner of Old Port Card Works and the Old Port Candy Co., and chairman of the Retail Association of Maine’s board.

Picard said Maine changed its rules last year to require sales taxes be collected by companies with $100,000 or more in annual online sales in Maine. Calls and an email seeking information on the new policy from Maine Revenue Services were not returned Wednesday.

A call to Wayfair for comment also was not returned Wednesday. The company has opened two call centers and customer service operations in Maine and has said it hopes to have 1,000 workers in the state.

Picard said efforts to change the sales tax law at the federal level have been held up in Congress.

Edward D. Murphy can be contacted at 791-6465 or at:

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