SCOTUS Decision Signals Death of Sales Tax-Free Internet Purchases

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South Carolina's main retail association said the state could collect an added $250 million a year in tax revenue - money from S.C. shoppers that could be used to hire school resource officers, retain teachers or fill vacancies at understaffed state agencies.

The court's nine justices split five to four in overturning a prior Supreme Court decision that had held that a state can only tax sales by businesses that are physically present in that state.

The Supreme Court ruled that states can require online businesses to collect sales tax, even if that business doesn't have a physical footprint there.

The Supreme Court just voted to close a loophole that has seen American consumers dodge billions in sales tax on online orders since 1992.

Stock prices for major online retailers fell after the decision was announced.

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"Any state with sales taxes already has some sort of variance when it comes to exemptions and reporting rules", he said. The court found the standard doesn't jibe with current-day online retailing.

The 5-4 opinion, "threw out a precedent that had blocked online sales taxes", Axios explained.

As part of the decision, Justice Anthony Kennedy, who wrote for the majority, pointed out how much the landscape has chanced since 1992. Kennedy also said the previous ruling effectively created tax shelters for retailers.

Quill was a catalog (not e-commerce) retailer that had no presence in North Dakota.

Under the ruling Thursday, states can pass laws requiring out-of-state sellers to collect the state's sales tax from customers and send it to the state.

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"We're reviewing the decision", was all agency rep James Gazzale said in an emailed statement. "This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both". Retailer eBay warned that taxing Internet sales would place "crushing burdens on small online businesses, causing many to curtail operations and damaging the national economy".

Whatever lawmakers do, don't assume that the imposition of online sales taxes will sink e-commerce. In a dissenting opinion, Chief Justice John Roberts argued that this change could disrupt online marketplaces as a whole, and therefore should be in the hands of Congress rather than the courts. "Big victory for fairness and for our country". 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.

The Massachusetts law went into effect, but was challenged in court by a company, Crutchfield Corporation, which said it violated federal law. More than 10,000 jurisdictions collect sales taxes, with differing rates and rules.

"This is a great day for South Dakota".

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