What Online Retailers Say About the Supreme Court's Tax Ruling

Supreme Court rules that internet sales can be taxed by states

The case originated from a lawsuit that the state of South Dakota had filed against four online retailers, including the online furniture retailer Wayfair.

The top court in the USA has ruled that states can force online companies to collect sales tax from their customers.

The high court has said for more than 50 years in various rulings that states can not collect taxes from sellers without a "physical presence" in those states.

Shares in online retailers like Amazon.com (amzn), Wayfair (w), Etsy, (etsy) Overstock.com (ostk) and eBay (ebay) all fell in the wake of the decision.

The National Retail Federation called the decision "a major victory" for retailers.

Brick-and-mortar retailers are also celebrating the news.

It also should be noted that those taxes are typically built into the advertised price, so consumers would see the difference before the checkout screen, whereas sales tax is added on.

The court held that its prior "physical presence rule" was "unsound and incorrect" and so prior decisions from 1967 and 1992 were both overruled.

Governor Pete Ricketts reacted to the ruling. North Dakota standard that remote businesses need a physical presence to be taxed.

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"This is neither the first, nor the second, but the third time this court has been asked whether a state may obligate sellers with no physical presence within its borders to collect tax on sales to residents", Roberts wrote.

"We're reviewing the decision", was all agency rep James Gazzale said in an emailed statement.

The Supreme Court's 5-4 opinion Thursday overruled a pair of decades-old decisions that states said cost them billions of dollars in lost revenue annually. Prior to the ruling, if you lived in NY and bought a TV from a retailer like Newegg - which has no physical stores in NY state - you wouldn't have to pay sales tax on your purchase.

Online shopping may be about to get more expensive.

Trump has repeatedly made clear that he thinks online retailers should collect sales taxes. Forty-five of the 50 states have sales taxes.

A 2011 report issued by the Indiana Fiscal Policy Institute found the state is likely losing about $77 million in sales taxes on these e-commerce transactions each year. Justices Ruth Bader Ginsburg, Clarence Thomas, Samuel Alito and Neil Gorsuch joined his opinion. While the Supreme Court spoke approvingly of the law, it sent it back to South Dakota's highest court to be revisited in light of the court's decision.

The federal Government Accountability Office estimated last november that states could have collected between $8.5 billion and $13.4 billion in sales taxes in 2017 if they had expanded taxing authority.

"This is a great day for South Dakota". The firm already collects sales tax on the goods it sells directly, but it does not always do so for products sold by independent merchants using its platform.

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