Supreme Court Rules All Online Purchases Can Be Subject to Sales Tax

Friday, 22 Jun, 2018

In the wake of the ruling, companies like Amazon will have to keep an eye on how each state handles sales tax legislation and whether they will have to collect the funds on behalf of third-party sellers.

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

The bottom line is that today's ruling merely paves the way for states to start to demand tax payments from online retailers. Most brick-and-mortar retailers are familiar with "customers" who come in with their smartphones to look at goods they have no intention of buying from the local business.

CNET reports that this overturns a standing 1992 decision that prevented states from collecting sales tax from online retailers that had no physical presence in their state.

A federal audit said states lost $13.7 billion in uncollected sales tax revenue previous year.

Many internet retailers had leaned on the Quill decision to avoid paying sales tax in states where they didn't have a physical presence. North Dakota. Both of those cases established that a retailer was only responsible for collecting state taxes if the retailer had a physical presence in the state. "In 1992, mail-order sales in the United States totaled $180 billion", he wrote. Although the IRS requires consumers to tally their purchases and pay all applicable taxes with their regular filing, few people do.

The majority justified the decision partly because, as online commerce has grown, these precedents now unfairly punish companies who are based within a state when compared to those who are situated elsewhere. "This decision finally levels that playing field, and I think that's all any business owner wants". The losers, said retail analyst Neil Saunders, are online-only retailers, especially smaller ones. In 2017, e-commerce retail sales reached $453.5 billion. That software, too, can be an added cost.

Chief Justice John Roberts was in the minority. The DOR decided that as long as a company is doing business in MA using computer software or hardware located in the state, or is using Massachusetts-based delivery services or payment processors, that counts as having a physical presence in the state. The lineup of justices on each side of the case was unusual, with Roberts joining three more liberal justices and Ginsburg joining her more conservative colleagues.

The 5-4 ruling overturns the court's 1992 decision, Quill Corp. v. "Today is just the beginning", says South Dakota state Sen.

South Dakota's suit stemmed from a law requiring sales taxes for any out-of-state seller that delivers more than $100,000 worth of goods.

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. Shares in large chains with more stores traded higher.

The suit was brought before the Supreme Court as "South Dakota v Newegg, Wayfair, and Overstock".

Amazon isn't the only Seattle company indirectly impacted by the Supreme Court decision.

"This is a great day for South Dakota". If state tax authorities attempt to subject remote small businesses to audits and lawsuits, there will be increased litigation across the country to protect small business from unfair burdens. The market mourned the loss of an advantage beyond convenience that e-commerce had over bricks-and-mortar.