Supreme Court's E-Commerce Ruling Could Help Amazon

Supreme Court's E-Commerce Ruling Could Help Amazon

Supreme Court's E-Commerce Ruling Could Help Amazon

IN lawmakers anticipated the ruling in 2017 when they passed a law that imposed sales tax on companies that did at least $100,000 worth of business or more than 200 separate transactions in the state in a year. For decades, these sales tax laws were only applicable on purchases that were made from retailers who had a physical presence within that state.

South Dakota's case was supported by 35 states and the federal government and saw the Supreme Court undo a 1992 ruling in which it had held that the mail-order company Quill did not have to collect sales taxes in North Dakota. He believes the new ruling could bring a significant amount of revenue to the Mountain State.

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 ruling is a victory for states that said they were losing billions of dollars in revenue every year, and for large retailers that had argued that the physical presence rule meant they were playing by different rules than online-only sellers.

"(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.


Right now, it's a law that Alabama doesn't currently have, but shopper Barbara Barnaby says if the state does decide to force online shoppers to pay state sales tax, she'll feel the impact.

Some online retailers, like Amazon, already collect the tax on certain items, but sales tax is not collected from third party merchants using the site to sell their goods.

"Being put at an nearly 10 percent disadvantage when you're selling a hardware item is significant pretty significant for a small business", said Mitchell.

"We were hoping one way or another it would be overturned, either by the Supreme Court or Congress", he said.

The case the court ruled in has to do with a law passed by South Dakota in 2016. South Dakota opened the door for states to require online, out-of-state retailers to collect sales tax on their behalf. "We have long fought the battle to defend Main Street businesses and now with today's ruling, all businesses will compete on a level playing field", South Dakota Republican Governor Dennis Daugaard said. This will add a new layer of complexity for small businesses that were previously selling without sales tax, but the specific rules will vary by state.

Related news



[an error occurred while processing the directive]