Supreme Court Rules States Can Charge Online Shoppers Sales Tax

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The U.S. Supreme Court on Thursday ruled in favor of states being able to force retailers to collect sales taxes no matter where the seller operates its business.

The Supreme Court on Thursday overturned a longstanding precedent that states can only require retailers to collect sales tax when they have a physical presence there.

In response, online sellers Wayfair, and Newegg, said online retailers could face some 12,000 local tax jurisdictions if the Supreme Court sided with the states.

The high court ruled in 1967 and again in 1992 that companies without a physical presence in a state did not have to collect sales taxes.

For the full story, head on over to CNN Money. South Dakota expects to collect another $48 million to $58 million in taxes a year because of this ruling. Those retailers may face headaches complying with various state sales tax laws, though there are software options to help. North Dakota. They argued that a decision in a case involving mail-order catalogs was obsolete in the modern e-commerce world.

"E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule", he wrote. "Today's landmark decision is a win for South Dakota and for Main Street businesses across America that will now have a level playing field and tax fairness", Jackley said. "Now Congress must respond by passing federal legislation to create a universal federal framework for sales and use tax collection in a way that benefits businesses regardless of the state where their business resides and avoids a patchwork of state-by-state laws". Sellers who use eBay and Etsy, which provide platforms for smaller sellers, also aren't required to collect sales tax nationwide.

The biggest jewelry e-tailer, Blue Nile, now collects sales tax only in Washington, New York, and Virginia.

The Small Business & Entrepreneurship Council advocacy group said in a statement, "Small businesses and internet entrepreneurs are not well served at all by this decision".

Some proponents of overturning Quill include major retail trade organizations such as the National Retail Federation and Retail Industry Leaders Association. Chief Justice John Roberts dissented, saying Congress should be the one to decide on the issue. South Dakota took the case to the Supreme Court after Justice Anthony M. Kennedy, who wrote Thursday's majority decision, had made comments indicating it was time to revisit the issue, which the court previously ruled on in the 1992 Quill v.

The decision will also have dramatic consequences for small online retailers that do business in many states.

MA began requiring companies that conducted at least $500,000 in online sales in MA or had 100 or more transactions to collect and pay sales tax.

"States like South Dakota will now be allowed to require sellers that are selling substantial amounts of product into the state to collect and remit sales tax", he said. "As expressed in both the Supreme Court's decision and throughout oral arguments, the operations of small businesses are different than large retailers, and state tax actions targeting them raise additional legal questions that are not addressed by this decision". "For a long time, we've been pointing out a real unfairness in the fact that mega online sellers like Wayfair or Amazon or Jet were not paying the sales tax".

The case is South Dakota v. Wayfair, 17-494.

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