States given the OK to collect online sales tax

States given the OK to collect online sales tax

South Dakota Attorney General Marty Jackley said South Dakota businesses will now have tax fairness and a level playing field. Amazon began collecting sales taxes on purchases in every state previous year, though it does not collect sales taxes on purchases made through third-party vendors.

The cases the court overturned said that if a business was shipping a customer's purchase to a state where the business didn't have a physical presence such as a warehouse or office, the business didn't have to collect the state's sales tax.

"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", wrote Justice Anthony Kennedy in the court's opinion. "The expansion of e-commerce has also increased the revenue shortfall faced by states seeking to collect their sales and use taxes, leading the South Dakota legislature to declare an emergency".

The ruling is a win for large retailers, who argued the physical presence rule was unfair.

Chief Justice John Roberts led the dissenting opinion, in which he and Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan argued that Congress, not the court, should decide the online sales tax issue. "These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause", he wrote.

"Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", Roberts wrote. "The court should not act on this important question of current economic policy, exclusively to expiate a mistake it made over 50 years ago", Roberts wrote, referring to the National Bellas Hess Inc. v. Department of Revenue of IL case, which initiated the physical presence guideline. The decisions made it more hard for states to collect sales tax on certain online purchases, and more than 40 states had asked the high court to overrule them.

"Retailers have been waiting for this day for more than two decades".

The Supreme Court says states can force online shoppers to pay sales tax.

The court said that law effectively incentivized businesses to "avoid physical presence" in states and led to "a judicially created tax shelter".

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The precedent set by Quill was outdated, made "in the days when the Internet was in its infancy", the Food Marketing Institute (FMI) said in a statement Thursday.

South Dakota wanted out-of-state retailers to begin collecting the tax and sued several of them: Overstock.com, electronics retailer Newegg and home goods company Wayfair.

That's a big issue, considering that e-commerce sales in the US were $435.5 billion previous year, vs. $180 billion in mail-order sales in 1992 when the court issued its first ruling on interstate sales and taxes. "The current tax law was out of step with how commerce is conducted today".

Big Supreme Court win on internet sales tax - about time! That's because they typically have a physical store in whatever state the purchase is being shipped to.

"Oregonians selling their goods online will now be extorted by a litany of software providers and their allies in state governments", he said. "This was the right case and the right time for the court to act, and we couldn't be more pleased with the outcome", White stated.

The National Retail Federation trade group, said the court's decision was a "major victory" but the group said federal legislation is necessary to provide details on how sales tax collection will take place, rather than leaving it to each state to interpret the court's decision.

Now it's up to Congress to figure out a system for interstate commerce that's simple enough for small businesses to manage while still allowing states to determine how taxes will be collected.

The burden will fall disproportionately on small businesses. "This is an irresponsible decision that will have disgusting implications for any small business that sells online - including Company Folders".

Lehner thinks there are other factors that will limit the impact of the ruling.

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