INDIANAPOLIS — Indiana has filed a lawsuit in defense of a new law that would allow the state to collect sales tax from out-of-state businesses.
The law, which took effect July 1, requires businesses that sell at least $100,000 in the state annually or have 200 separate transactions to collect sales tax, even if they don’t have a physical presence in the state.
Gov. Eric Holcomb said Monday that he wants the U.S. Supreme Court to overturn its 1992 ruling that said out-of-state retailers don’t have to collect and remit sales tax if they don’t have a physical presence in the state. He said the court needs to revisit the ruling because of online sales growth and improvements in software and technology.
Attorney General Curtis Hill filed the lawsuit in Marion County Superior Court on behalf of the state Department of Revenue. It’s been filed against Boston-based home goods retailer Wayfair Inc. and Utah-based closeout retailer Overstock.com Inc.
The lawsuit is in response to another lawsuit the American Catalog Mailers Association and NetChoice filed in June challenging the state’s new sales tax law and its implementation. It aims to level the playing field between Indiana businesses and out-of-state businesses that sell products online.
More than 40 percent of the state’s $18 billion revenue came from sales taxes in 2016. E-commerce sales rose by almost 15 percent between 2016 and 2017, while retail increased by just over 5 percent, according to the U.S. Department of Commerce.
An Indiana Fiscal Policy Institute and Ball State University study estimates the state lost around $77 million in 2012 because it couldn’t collect online sales taxes.
The Indiana sales-tax law is similar to a law put forth in South Dakota, which could reach the U.S. Supreme Court.