What the Supreme Court’s online-sales-tax decision means for Md., Va.

UPROXX  Shutterstock

UPROXX Shutterstock

Some online retailers have already been collecting some state taxes. "The Internet's prevalence and power have changed the dynamics of the national economy", he wrote.

Today the Supreme Court upheld South Dakota's law, with a 5-4 decision that states could, indeed, force sales taxes on residents' online purchases from out-of-state retailers.

The high court on Thursday overturned a 1992 ruling that a retailer must have a physical presence in a state to collect tax from buyers in that state. They say they already pay other taxes, but they do not mind this decision today at all. The court found the standard doesn't jibe with current-day online retailing.

This led to an interesting scenario a few months ago when Connecticut's Department of Revenue Services (DRS) sent some Newegg customers an unexpected tax bill.

The ruling overturned a 1992 Supreme Court precedent and potentially paves the way for consumers to pay more for their online purchases. "Technology has also allowed for compliance with state tax laws to become a lot easier too", said Tax Commissioner Ryan Rauschenberger.

Quill was a catalog (not e-commerce) retailer that had no presence in North Dakota.

However, Amazon only collects sales taxes on its third-party sellers for two states, Washington and Pennsylvania.

Japan & Senegal sweeping all before them
Coming in the third minute, it was the second fastest red card in World Cup history and the first of this year's tournament. Die Mannschaft beat Costa Rica 4-2 in a thriller in Munich, followed up by a 1-0 win over Poland.

"We're reviewing the decision", was all agency rep James Gazzale said in an emailed statement. 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. Customers bore the responsibility for paying those taxes, but many were unaware of the responsibility, and states felt they were losing out on potentially billions in lost revenue. Even President Donald Trump has railed against the unfairness of online companies' sales tax exemption.

However, under the new ruling, NY consumers would have to pay sales tax even though Newegg has no physical storefront in the Empire state. For example, the popular electronics seller B&H only charges sales tax in NY and New Jersey, where it has a physical presence.

"(The prior decision) puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers", Justice Anthony Kennedy wrote for the majority.

The ruling could create a serious legal headache for smaller businesses, according to a dissenting opinion from Chief Justice John Roberts.

Sellers that use eBay and Etsy, which provide platforms for smaller sellers, also haven't been collecting sales tax nationwide. "Big victory for fairness and for our country".

"This is a great day for South Dakota". Meanwhile, Amazon's expansive operations meant it was already charging sales tax nearly everywhere.

Latest News