Supreme Court sales tax ruling to make online shopping more expensive

Adjust Comment Print

Online sellers that haven't been charging sales tax on goods shipped to every state range from, electronics retailer Newegg and jewelry website Blue Nile to pet products site and clothier L.L. Bean.

The Supreme Court of the US (SCOTUS) has just overruled 1992's Quill Corp v.

Quill stated that USA states could only change sales taxes on companies with a physical presence in the state. Then we have a handful of states who don't even charge sales tax at all. "It's exciting to have it overturned, but it's disappointing to not have a law in place". He continued to write "the rule produces an incentive to avoid physical presence in multiple states".

Gov. Pete Ricketts was among those opponents, although he had been seeking a compromise at the time the bill failed.

The decision in South Dakota vs. Wayfair is a victory for states who argued they were losing out on billions of dollars each year.

While the ruling opens the door for states to collect taxes from online businesses, there're some significant outstanding questions now that the court has made its decision.

Whatever lawmakers do, don't assume that the imposition of online sales taxes will sink e-commerce. He said the legislation would be tailored to fit within the Supreme Court ruling. Up until today's ruling, online vendors without a physical presence in a state, such as an office or a warehouse, were not required to pay any sales tax when a resident bought something.

Kennedy was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito, and Neil Gorsuch to make the decision.

And the state would likely see a $20 million per year revenue boost by levying such a tax, according to a Legislative Finance Committee analysis. "This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both", National Retail Federation CEO Matt Shay said in a statement. The Commerce Clause must not prefer interstate commerce only to the point where a merchant physically crosses state borders. But it also means costs will go up for consumers and small online businesses might struggle with disparate tax rates around the country.

Only five states do not have a state-wide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. In 2014, Amazon, the largest online retailer, began collecting the tax in Florida after it opened a series of "fulfillment centers" in the state. The Supreme Court heard arguments in the case in April.

The Trump administration backed South Dakota in the case, arguing that no one could have foreseen how rapidly e-commerce would expand.

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

The report includes material from the Associated Press.