Supreme Court Decision Will Cost Consumers

Supreme Court Decision Will Cost Consumers

Supreme Court Decision Will Cost Consumers

Online furniture retailer Wayfair, along with, and online electronics retailer Newegg sued to block the law and won in lower court. That older case prevented states from collecting a sales tax from retailers without a physical presence in their state.

The 5-4 decision made by the U.S. Supreme Court on Thursday, June 21, will now allow states to collect sales taxes from online businesses whether they have a physical location in that state or not.

The court overturned a longstanding rule that states can collect sales taxes only on transactions if the retailer has a "bricks and mortar" presence in that state. 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.

"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", wrote Justice Anthony Kennedy in the court's opinion.

Chief Justice John Roberts, joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor, dissented.

E-commerce sales in the fourth quarter of 2017 increased to $119 billion, up more than 3% from the previous quarter and almost 17% from a year earlier, according to U.S. Census Bureau data.

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The high court decided that states have the right to mandate sales charges from retailers whether or not they have a physical location within the state.

Yesterday, the Supreme Court decision in Wayfair v.

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Remote sellers will be required to collect and remit sales tax to North Dakota if they make a minimum of either 200 sales or $100,000 in sales per year in the state, according to Rauschenberger. By early 2017, Amazon was collecting sales taxes in all states that have sales taxes, but it was doing so only for merchandise it sells directly, not for merchandise other retailers sell on its platform.

"Startups and small businesses may benefit from the physical presence rule, but here South Dakota affords small merchants a reasonable degree of protection", the ruling says.

But NetChoice, a trade association for e-commerce firms, warned small businesses would have trouble complying with the different tax requirements in each state. Third-party vendors on Amazon often don't collect the tax. That means the case will be sent back to South Dakota for a final decision.

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