IT&Software

U.S. court backs states over web sales tax

U.S. court backs states over web sales tax

North Dakota, that said companies can not be forced to collect sales tax from customers in a state where they don't have a physical presence like a store or distribution center.

Brick-and-mortar stores could also see some gains, since no-online-taxes meant that goods were more expensive if you bought them at an actual store.

The US Supreme Court freed states and local governments to start collecting billions of dollars in new sales taxes from online retailers, overturning a ruling that had made much of the internet a tax-free zone and put traditional retailers at a disadvantage. States had no viable way to track down everyone who wasn't paying their sales tax, which is why they wanted to force retailers to collect it regardless of where they were located.

The high court ruled Thursday to overturn those decisions.

"Rejecting the physical presence rule is necessary to ensure that artificial competitive advantages are not created by this court's precedents", Justice Anthony Kennedy wrote in the court's decision in the case, South Dakota v. Wayfair.

Chief Justice John Roberts offered the dissenting opinion, along with Justices Stephen Breyer, Elena Kagan, and Sonia Sotomayor. In preparation, state lawmakers included language in this' year's budget bills that would let the legislature move forward quickly in collecting sales tax from more online purchases. Amazon does charge sales tax in all states but does not collect taxes for most independent merchants selling on its platform.

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A 5 to 4 ruling from the Supreme Court will change that, but Kevin McCarthy with the Arizona Tax Research Association says the impact won't immediately be felt in Arizona. The bill would have taken effect if the Supreme Court or Congress had acted to allow such collections, as the high court did Thursday.

A Trump Organization representative did not respond to a request for comment from Business Insider on how the Supreme Court decision could affect TrumpStore.com. Online sellers that haven't been charging sales tax on goods shipped to every state range from jewelry website Blue Nile to pet products site Chewy.com to clothing retailer L.L. Bean.

South Dakota's attorney general, Marty Jackley, said businesses will now have tax fairness and a level playing field.

But e-commerce trade group Netchoice called the ruling a "blow to consumers and small online businesses", according to a statement emailed to Retail Dive.

Amazon.com and some other online retailers began collecting the 6 percent sales tax from MI in October 2015 under the state's Main Street Fairness Act.

"This is a great day for South Dakota".


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