Supreme Court says states can force online shoppers to pay sales tax

Jun 21, 2018, 19:11
Supreme Court says states can force online shoppers to pay sales tax

South Dakota then filed a lawsuit to declare that the new law was valid, a suit that eventually found its way to the Supreme Court.

The Supreme Court overturned a 1992 ruling on Thursday, giving states the authority to force online retailers to collect sales tax in states where they have no physical presence.

Thursday's ruling involves a dispute between the state of South Dakota and Boston-based Wayfair Inc., along with other two other online sellers, Overstock.com Inc. and Newegg Inc. Recently that has been expanding with States pushing to get sales taxes on sales even when the company does not have a physical presence in that area. This decision overturned a 1992 ruling, which allowed these platforms to use the internet as a tax-free haven.

Alternatively, some people argue that the costs associated with being forced to comply with these new regulations could put some smaller retailers out of business entirely.

Small online businesses will be the hardest hit, said Chris Cox, a lawyer for e-commerce industry group NetChoice.

Amazon has always been the "poster child" for this problem/opportunity as they have been the dominant online-only retailer for some time.

That will open the door to more states passing laws similar to South Dakota's. Forty-five of the 50 states impose sales taxes.

Yet a majority of the states say they are losing billions in revenue, and they are supported by many large, so-called brick-and-mortar retailers like Wal-Mart that do pay sales tax, regardless of whether their sales are done in stores or online.

Justice Anthony Kennedy wrote that the physical presence rule "each year. becomes further removed from economic reality and results in significant revenue losses to the states". Louisiana is beefing up its efforts to collect taxes on purchases made from out-of-state in...

Brick-and-mortar retailers in states are required to collect taxes on a state's behalf.

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