Supreme Court Ruling Opens Door to Online Sales Tax

US Supreme Court Online shoppers can be forced to pay sales tax

The Supreme Court overrules the Quill case, which previously set the precedent for collecting sales tax from online sellers. Businesses had to collect sales tax only when shipping products to a state where they had a physical presence, such as a warehouse or office.

But on Thursday, the Supreme Court ruled in a 5-4 decision that states do have the right to collect sales tax from online retailers that do not have physical presences in their state.

The high court on Thursday overturned a 1992 ruling that a retailer must have a physical presence in a state to collect tax from buyers in that state.

- A Supreme Court ruling is making shopping on the internet more expensive. Wayfair said it collects sales tax on some 80 percent of its USA orders and didn't expect the decision to have "any noticeable impact on our business".

A U.S. Supreme Court ruling that overturned a tax law that enabled internet retailers to avoid charging sales tax should not chip away at Amazon.com Inc.'s (AMZN) dominance in the e-commerce market.




Conservative Chief Justice John G. Roberts Jr. led the dissent, joined by three Democratic-appointed justices. Now governments will be able to collect billions of dollars in local sales tax. "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".

Yesterday, the Supreme Court decision in Wayfair v.

"The physical presence rule has always been criticized as giving out-of-state sellers an advantage", the ruling says. Critics of the decision said it would unduly burden and harm small businesses, which the majority acknowledged was possible. It sent the law back to South Dakota's highest court to be revisited. However, smaller e-tailers like Newegg used to have a no-tax advantage.

For the many third-party sellers on Amazon's platform, it's more of a gray area. The law applies to out-of-state retailers if they have more than $100,000 in sales or complete more than 200 transactions per year within South Dakota.

You'll have to pay up if the state you live in passes laws that require online retailers to collect sales tax, says Joseph Bishop-Henchman, the executive vice president of the Tax Foundation. 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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