Supreme Court Rules States Can Require Sales Tax for Online Purchases

Supreme Court Rules States Can Require Sales Tax for Online Purchases

Supreme Court Rules States Can Require Sales Tax for Online Purchases

But the practical effect in MA may be more about providing clarity than gaining any substantial new revenue, since MA already started collecting taxes from online sales previous year - despite a lawsuit challenging those collections.

It's clear that the court's decision will mean extra cash for states.

The Supreme Court's ruling was praised by a number of retail groups, organizations representing state and local governments, right-leaning think tanks such as the Tax Foundation and American Enterprise Institute, and a bipartisan group of lawmakers.

However, one online retailer, Nick Martin, the owner The Pro's Closet, argued in a 2014 BRAIN opinion piece that a system to collect state taxes nationally would be a burden on small operations.

Justice Anthony Kennedy wrote the majority decision, joined by Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito, and Neil Gorsuch.

The retailers refused to collect sales tax - citing a 1992 law that prohibited states from collecting sales tax from retailers that did not have a "physical presence" in their state, such as a store, warehouse or sales representatives.

State Sen. Peters, a Republican, has always been active in pushing for a system that forces retailers to collect state sales taxes. "New Hampshire small businesses do not have the time or resources to become tax collectors for other states". The state also provides sales tax collection software for free for any business that wants it, and using that software immunizes the business from audit liability.

Lower courts ruled against the state's law, following the physical presence precedent. Texas had estimated it was losing $1 billion a year in sales taxes because of the law. Before this ruling, Amazon, for example, collected sales tax only from customers in Washington and Pennsylvania. This latest Supreme Court ruling said that earlier decision was obsolete in an era of explosive e-commerce.

Retail trade groups praised the ruling, saying it levels the playing field for local and online businesses. "They have very different needs and challenges than larger online retailers", the company said.


But even with the court's decision, not all remote sales are likely to be taxed.

Kennedy also wrote that the concerns of small retailers, who do minimal online sales, could be dealt with by Congress or by a further court case.

Chief Justice John G. Roberts Jr. disagreed in his dissent.

Justice Roberts filed a dissenting opinion in which Breyer, Sotomayor, and Kagan joined. The law requires 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.

Following an earlier indication by the court in 2015 that it would reconsider the Quill decision, the South Dakota legislature chose to charge companies that deliver more than $100,000 worth of goods or services or have more than 200 separate transactions within the state its 4.5 per cent sales tax.

Nonetheless, the ruling is a big win for brick-and-mortar retailers, who have railed for years against the unfair advantage given to internet retailers by avoiding sales tax. Soon after the law went into effect, South Dakota sued online retailers Wayfair, Newegg and Overstock for allegedly failing to comply.

This overturned two Supreme Court rulings: 1967's National Bellas Hess, Inc. v. Department of Revenue of IL and 1991's Quill Corporation v.

"This is a great day for South Dakota".

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