Supreme Court ruling lets states collect sales tax from online purchases

States stand to pocket billions as Supreme Court rules internet businesses must collect sales taxes

The U.S. Supreme Court in Washington

Judge Napolitano breaks down the cases.

A divided Supreme Court ruled Thursday that states may require online retailers to collect billions of dollars of sales tax revenue owed to them. The vote was 5 to 4. It passed a law requiring online retailers with $100,000 in sales of goods or with more than 200 transactions to collect and remit a sales tax.

In giving a victory to the states, the high court said that rule is outdated.

In the digital era, the costs of complying with different tax regimes "are largely unrelated to whether a company happens to have a physical presence in a state", Kennedy wrote.

"There was a time when we wanted the United States, as a matter of policy, to protect nascent internet businesses by keeping down the tax burden, but that time is long gone", he said.

States will be able to force shoppers to pay sales tax when they make online purchases under a Supreme Court decision Thursday that will leave shoppers with lighter wallets but is a big win for states. The case challenges South Dakota's application of its sales tax to internet retailers who sell into South Dakota but have no property or employees in the state. That was before the surge of online sales, and states have been trying since then to find constitutional ways to collect tax revenue from remote sellers into their state.

E-commerce sales in the fourth quarter of 2017 increased to $119 billion, up more than 3% from the previous quarter and almost 17% from a year earlier, according to U.S. Census Bureau data.

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The Trump administration had encouraged the Supreme Court to overturn the previous rulings and allow South Dakota to collect the sales tax.

Forty-one states back the effort, saying the problem is growing worse as e-commerce continues to grow nationwide.

Customers were generally supposed to pay the tax to the state themselves if they don't get charged it, but the vast majority didn't.

"Congress should immediately move legislation along the lines of the No Regulation Without Representation Act", Mr. Moylan said. But half of Amazon's sales are from third-party Marketplace sellers, who for the most part don't collect sales taxes.

The U.S. Supreme Court today handed down its anticipated decision in South Dakota v. Wayfair.

Congress two decades ago exempted most online sellers.

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