Published: Tue, June 26, 2018
Industry | By Faith Ward

Supreme Court rules U.S. states can tax goods sold online

Supreme Court rules U.S. states can tax goods sold online

Online furniture retailer Wayfair, along with Overstock.com, and online electronics retailer Newegg sued to block the law and won in lower court. South Dakota had passed a bill in 2016 that said online retailers must collect sales tax if they make more than $100,000 worth of sales in their state, or do 200 transactions in their state.

South Dakota brought the lawsuit against major online retailers for failing to comply with its new sales tax law, in an effort to get the Supreme Court to revisit the Quill decision.

He added that the online titan "has the necessary infrastructure to charge and remit sales tax across all the states, many of which have differing rates and regulations" but he suggested many small internet-based retailers do not. This latest Supreme Court ruling said that earlier decision was obsolete in an era of explosive e-commerce.

Shares in the online marketplace Etsy fell more than 2% after the decision. The Supreme Court ruled today that states can force retailers to collect sales tax on online purchases.

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"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States".

Conservative Chief Justice John G. Roberts Jr. led the dissent, joined by three Democratic-appointed justices. They said local tax laws vary widely across the nation and calculating sales taxes for 10,000 local taxing jurisdictions remains a daunting task.

"A lot about our world and economy has changed in the 26 years since our nation's highest court last ruled on this issue", said Gov. Eric Holcomb. Amazon.com already collects sales tax in every state that charges it, though third-party sellers who use the site don't have to. The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it's time for outdated sales tax policies to change as well. "This decision will allow states the ability to level the playing field for all retailers". It will also directly affect sellers hocking their goods on Amazon. The Quill court ruled that the catalog seller didn't have to collect sales tax from North Dakota residents.

But e-commerce trade group Netchoice called the ruling a "blow to consumers and small online businesses", according to a statement emailed to Retail Dive. The decision means that South Dakota can now dictate some of the business operations of firms that have no representation in the South Dakota legislature.

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