Supreme Court rules states can force online retailers to collect sales tax

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Supreme Court rules states can force online retailers to collect sales tax

North Dakota case that instructed states could not collect sales tax from retailers who do not have a physical presence in their territory. So it passed a law requiring all but the smallest retailers, including Internet companies, to collect taxes on the sales they make in the state, even if they had no physical presence there.

Brick-and-mortar stores could also see some gains, since no-online-taxes meant that goods were more expensive if you bought them at an actual store. For states, the big win will come if they are ultimately able to collect the millions they say they've lost in sales tax dollars. The state appealed the decision, and the Court reversed its 1992 decision on Thursday. Soon after the law went into effect, South Dakota sued online retailers Wayfair, Newegg and Overstock for allegedly failing to comply.

The US Supreme court has overturned a 1992 ruling that forced e-commerce companies to collect sales tax only in states where they had a physical presence.

The administration's revenue department went after some online-only sellers past year by creating a rule that imposes taxes on vendors whose apps or cookies exist on local consumers' phones and computers. By early 2017, Amazon was collecting sales taxes in all states that have sales taxes, but it was doing so only for merchandise it sells directly, not for merchandise other retailers sell on its platform.

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

For Parham, the decision is a big win for local businesses. She says the court decision will "level the playing field for IL brick-and-mortar retailers". Online sellers that don't charge sales tax on goods shipped to every state range from jewelry website Blue Nile to pet products site Chewy.com to clothing retailer L.L. Bean. "No longer should out-of-state online only businesses have an unfair price advantage over our friends and neighbors who own local businesses". 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.

"This is a great day for South Dakota".

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