SCOTUS Rules States Can Force Online Retailers To Collect Sales Tax

Heads up, consumers!

The Supreme Court has ruled that states can, in fact, force online retailers to collect sales tax.

BREAKING NEWS: Supreme Court rules 5-4 that states can collect sales tax on internet purchases, even if the seller has no physical presence in the buyer’s state https://t.co/m9cPy5jLIk

— Fox News (@FoxNews) June 21, 2018

The 5-4 decision broke with 50 years’ worth of legal rulings that barred states from imposing sales taxes on most purchases their residents make from out-of-state retailers.

The decision was a victory for South Dakota, which had asked the court to uphold its recently passed law imposing an internet sales tax.

“Our state is losing millions for education, health care and infrastructure, and our citizens are harmed by an uneven playing field,” said Marty Jackley, South Dakota’s attorney general.

Justice Kennedy wrote the majority opinion.

Justice Anthony Kennedy, who wrote the majority opinion, said the physical presence rule put brick-and-mortar businesses at a disadvantage, because they had to charge sales taxes but internet retailers did not. That rule “prevented market participants from competing on an even playing field,” Kennedy wrote.

Some big retailers that sell online already charge sales taxes. WalMart, for example, has stores in all 50 states, so it is required to do so under the physical presence rule.

South Dakota concluded in 2016 that the explosion in online sales changed the market drastically. 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.

Internet companies opposed to the South Dakota law appealed. They said local tax laws vary widely across the nation and calculating sales taxes for 10,000 local taxing jurisdictions remains a daunting task.

Retailer eBay warned that taxing internet sales would place “crushing burdens on small online businesses, causing many to curtail operations and damaging the national economy.”

Thursday’s ruling did not require all Internet companies to collect sales taxes. While larger companies certainly are now obligated to do so, the decision suggested that small retailers, who sell on eBay, for example, will not face the requirement.

Some say this is a big win for states’ rights.

Big win for states rights. I worked on this issue extensively, and it’s good to have the majority of the Supreme Court rule in favor of states. https://t.co/a4TKd8Fv2y

— Jason Chaffetz (@jasoninthehouse) June 21, 2018

Your thoughts?

h/t NBC