Supreme Court Let States Tax Online Shopping

Supreme Court Let States Tax Online Shopping

Supreme Court Let States Tax Online Shopping

The court's nine justices split five to four in overturning a prior Supreme Court decision that had held that a state can only tax sales by businesses that are physically present in that state. The law required out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and turn it over to the state. For years, brick-and-mortar retailers across the country have felt the sting of competing with online retailers who don't always collect sales tax on their goods.

Soon after the South Dakota law passed, South Dakota took it to court with retailers Newegg, Wayfair and Overstock, alleging that the companies failed to comply with their state sales tax laws.

Some major online retailers, such as Amazon, have already agreed on their own to collect sales tax nationwide.

The decision could lead to individual state sales tax laws, or Congress could step in to make more uniform regulations.

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But Nebraska won't be able to start collecting sales taxes from online retailers until next year at the earliest, after an Internet sales tax bill fell victim to a filibuster this year.

An analysis of increased Oklahoma tax collections following an agreement with Amazon.com could lend insight into how much the state stands to gain following a U.S. Supreme Court decision Thursday. So far, more than 250 companies have registered to collect sales taxes on MA consumers as a result, although the rule remains subject to a court challenge by Crutchfield, an out-of-state electronics retailer. But smaller online stores may not have been collecting sales tax, which the Supreme Court ruling could change.

"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. Because many e-commerce companies do not collect state sales taxes on purchases, they have had an advantage over brick-and-mortar businesses that do collect it.

"This will go a long way to ensure local businesses are on a level playing field with online retailers", he said. The decision is a big financial win for states. Amazon does charge sales tax in all states but does not collect taxes for most independent merchants selling on its platform. 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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